NB Power gives itself 100 days to right the ship

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April 8 will be a big test for NB Power.

That’s when the public utility is scheduled to start a 100-day planned outage at the Point Lepreau nuclear plant, the underperforming generator that produces nearly one-third of the province’s electricity.

Eight hundred workers and hundreds of contractors will replace aging motors and other equipment that’s over 40 years old on the non-nuclear side of the plant, the technology that’s been breaking down over the last few years, causing sudden, expensive outages.

We need to get that plant up and operating as quickly as possible.

Lori Clark

It will happen just when the New Brunswick Energy and Utilities Board considers NB Power’s request for the highest rate hikes for its customers in generations. It is seeking increases of 23 per cent for residential and big industrial customers over the next two years, slightly less for small and medium-sized businesses.

“We need to get that plant up and operating as quickly as possible,” Lori Clark, NB Power’s CEO, told a committee of MLAs at the legislature on Friday. “It is key to NB Power’s success and key to our financial results. So having supplemental labour in there during the outage is critical.”

Doing the work won’t be cheap.

Dominique Couture, a spokesperson for NB Power, told Brunswick News to replace the energy lost during the shutdown will cost $86 million. And in terms of capital spending, the job will set the utility back $137 million, spread out over two years, for a total of $223 million. Another, shorter planned outage, will also take place next year.

NB Power refurbished the nuclear side of the plant in 2012, at a cost of $2.5 billion, a project that was over budget by $1 billion and took 37 months longer to complete than expected. But the public utility didn’t do similar work to other important parts of the plant, leading to frequent breakdowns.

While most Candu reactors around the world operate close to 90 per cent of the time, Lepreau’s average over the last five years has been 78 per cent. That ends up costing ratepayers tens of millions in replacement power and repairs.

To right the ship, NB Power has hired outside personnel from Ontario Power Generation, or OPG, to help with the upgrades.

OPG runs four nuclear plants on behalf of Ontario ratepayers, with a much better track record of success.

“When we came out of refurbishment in 2012, we had a new nuclear side to the station, but there’s a generation side or secondary side to the station that had very little work done to it,” Clark said. “It still in some cases has original motors in it from when the plant was built and a number of components that need to be replaced. We had thought over time, we would replace some of those components, but when we look, some of those estimates were too optimistic about how the plant would run.”

NB Power is also in commercial talks with OPG to look at co-owning Lepreau, which first began operating in 1983 about 50 kilometres southwest of Saint John on the coast. If that deal goes through at the end of this year, the new NB Power-OPG consortium would likely sell power back to NB Power exclusively through a power purchase agreement.

The hope is that by improving the plant’s performance, both utilities would benefit financially.

Ontario Power Generation will be looking to profit from this, but there are a lot of liabilities around Point Lepreau and are they taking on any of those?

David Coon

Clark wouldn’t shed much light on how the deal would work, other than that it makes sense to run Candu reactors as a fleet and use expertise from across Canada to make them perform better.

Green party Leader David Coon, who thinks nuclear energy is too expensive and environmentally hazardous, predicted the price of electricity from Lepreau will only get higher, increasing the burden on residential customers.

“They’re going to have to build the costs into the price of electricity,” Coon told reporters during a break. “It also raises the question: what about the liabilities? Ontario Power Generation will be looking to profit from this, but there are a lot of liabilities around Point Lepreau and are they taking on any of those? We have lots of questions.”

Much of NB Power’s $5-billion debt burden or liabilities are tied to Lepreau. Deciding who owns that debt is key because the utility is supposed to pay off the arrears by selling people electricity from the plant.

Liberal deputy leader René Legacy raised questions about the nature and timing of the Progressive Conservative government’s decision last fall to grant NB Power an additional two years to pay down its debt by about $1 billion.

To me, political interference is making decisions for votes.

René Legacy

The plan had been to pay down debt ahead of big, expensive revitalization projects at Lepreau, the Mactaquac hydrostation near Fredericton and the Belledune Generating Station in northern New Brunswick.

Clark told the committee that NB Power officials had been trying to convince the government that providing it with two more years to pay down the debt would help customers absorb stiff rate increases. Without the extra time, the rate hike request would have been even higher.

“This was about the possibility of a snap election,” Legacy told reporters, referring to a tumultuous political period last year when Premier Blaine Higgs was worried that Tory rebels within his caucus would make it difficult for him to govern. He warned repeatedly that he could call an early vote.

“It’s all related to the premier, who wanted to go to an election in the fall and didn’t want to have, what, a more than 40 per cent hike over the next three years hanging over us. So he found a quick fix.”

Both the premier and Energy Minister Mike Holland have denied the debt repayment delay had anything to do with an early election, which is scheduled to take place on or before Oct. 21.

They also say that political interference in the past has left NB Power with rates that are too low and unable to meet its financial obligations.

“To me, political interference is making decisions for votes,” Legacy said. “And that’s a perfect example of what’s happened. So the fact that it benefited NB Power, that doesn’t change the fact we should let them run their business and keep politics out of it.”