Canadian nuclear plant rehab goes awry

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POINT LEPREAU, N.B., Canada — The guardhouses stand at the end of a tree-lined road in this rural, forested province, and their occupants aren’t welcoming visitors.

Beyond the gates, an effort to refurbish Atlantic Canada’s only nuclear power plant isn’t going well. The 25-year-old reactor at Point Lepreau was supposed to be refreshed, refitted and running full-tilt last September after a $1 billion repair. Atomic Energy of Canada Ltd., the crown corporation that built the reactor, was to have demonstrated the efficacy of refurbishing nuclear reactors that would otherwise have to be retired.

Today, nobody knows when the plant will be back online, except that it won’t be any earlier than 2011. The company's engineers are currently trying to figure out how to restore seals on critical components inside the reactor vessel of the provincially owned plant, 40 miles east of Lubec, Maine. CEO Hugh MacDiarmid has admitted that they had “overly optimistic scheduling assumptions” and “inadequate planning and preparation” at Lepreau.

The fallout has been considerable for New Brunswick, Atomic Energy of Canada and the Canadian nuclear industry generally, raising concerns about the wisdom of refurbishing the Candu-6 reactors, which have been installed at plants in Argentina, Romania and South Korea. Candu-6 units are also being refitted at a plant in Ontario, and are being contemplated at another in Quebec.

Many existing reactors worldwide are near the end of their lifetimes and need extensive rehabilitation to continue operating. The refit at Point Lepreau was supposed to be a shining model of what Atomic Energy of Canada could do for its old plants.

“AECL is terribly behind, terribly over budget, and terribly cash-flow negative on their refurbishment projects,” said Toronto-based energy consultant Tom Adams. “The federal government keeps writing big checks for AECL and they’re not happy about it.”

New Brunswick’s 750,000 citizens are on the hook for a replacement power bill estimated at $800 million — twice what was originally expected — and have been told by their government that electricity rates will have to go up by an additional 3 percent as a result. Uncertainties swirling around the nuclear plant, which normally produces more than 30 percent of the province’s electricity, helped prompt and then scuttle a proposed sale of the provincial utility, NB Power, to rivals Hydro-Quebec amid public acrimony.

“When we were going through negotiations with Hydro Quebec, they’d say: ‘You want me to pay $1.8 billion for an asset that you don’t know when it might start generating electricity,'” said New Brunswick Energy Minister Jack Keir, who hoped the deal would wipe out the provincial utility’s $4.8 billion debt. “I think they started to ponder the risk they were taking on, and Point Lepreau played a role.”

Not all of the delays were the doing of Atomic Energy of Canada. In October 2008, two $10 million turbine rotors destined for the plant would up at the bottom of Saint John’s harbor after falling off a barge. The manufacturer, the German engineering giant Siemens, is suing local contractor J.D. Irving Co. over the incident.

Some fault the province for having signed up for the refurbishment after their own experts at the public utilities board concluded in a 2002 report that the project represented an “economic risk” that was “not in the public interest.”

“The government should not have been the party making the ultimate decision,” said Gordon L. Weil, a regional energy expert based in Harpswell, Maine, who has closely followed the New Brunswick power sector. “You’re always better off when you have economic judgments being made, not political judgments.”

“I think they were very impressed by the idea that they would have a significant part of their base load power coming from a generator that was environmentally better than burning fossil fuels, would be in service for 25 years, and wouldn’t have to be worried about,” Weil added. “All of that was and maybe still is attractive as a reason to refurbish Lepreau.”

“It was the right decision,” said NB Power spokesperson Kathleen Duguay. “If you think long term, this plant will be running for 25 or 30 years. When it’s operating safely and reliably, it will be making money.”

Even if the refurbishment works out for New Brunswick, it hasn’t helped Atomic Energy of Canada’s standing with the federal government, which decided this past December that it would sell much or all of its stake in the company’s reactor division. “Politicians of every stripe in New Brunswick are screaming for federal government compensation for replacement power costs associated with the delays,” said Adams. “This makes AECL even less popular with its federal government sponsors.”

“AECL is learning from their experiences here and will be able to do better in future in Romania, China or Argentina, but New Brunswick isn’t going to get any benefit,” said Keir. “The federal government should be at the table with us paying for AECL to get into that learning curve.”

Atomic Energy of Canada spokesperson Dale Coffin said that the technical problems at Lepreau were “being worked through” and the question wasn’t “if they will be solved, but when.” He said reactor refurbishment was still “a very viable business” for the company, as it is much cheaper than building a replacement reactor.

“The issue right now is that we don’t know when it will be finished,” Keir said. “Until they have a solution, they can’t fix it, and replacement power is costing us $1 million a day.”