Province wants compensation for AECL delays

Point Lepreau nuclear refurbishment faces three-year delays, AECL complications, and $30 million monthly cost overruns, as NB Power and New Brunswick seek federal compensation from Ottawa; Stephen Harper declines new funding, citing contractual obligations.

New Brunswick Energy Minister Craig Leonard is demanding the federal government pay full compensation for the massive cost overruns associated with the delays at the Point Lepreau nuclear refurbishment project.

He was responding to questions that remain about the NB Power deal from the Liberal Opposition on the same day Prime Minister Stephen Harper was in Saint John, N.B., at an economic roundtable and told reporters that Ottawa won't give the province any new money to help with the costs of the Lepreau delays.

Leonard told the legislature there is no reason why New Brunswick taxpayers and NB Power ratepayers, despite a rate freeze pledge made earlier by the Tories, should pay for the cost overruns associated with the nuclear refurbishment project that is now three years late.

Atomic Energy of Canada Ltd. and NB Power had originally planned to have Atlantic Canada's only nuclear reactor again generating power in September 2009.

However, the federal nuclear agency ran into problems with the $1.4-billion refurbishment project. The new timeline would have the reactor operating again in the fall 2012.

Leonard said New Brunswick has incurred expenses because of the delay.

"Full compensation with regards to the Lepreau file is basically the deferred amounts, whether it is replacement costs or excess human resource costs, that we had to incur because of delays at AECL during the project," Leonard said. "That is what we are looking for out of the federal government."

The refurbishment and retubing contracts were originally signed by the government when Conservative Bernard Lord was premier, and they included penalty clauses for delays in the project. The contracts, however, did not cover all of the financial obligations associated with project delays.

NB Power estimates the delays are costing the company $30 million a month.

The additional costs are being placed into a deferral account and will be paid back over the life of the refurbished reactor, in a province whose energy sector is in flux, once it is operating again.

Harper told a news conference in Saint John that Ottawa would not offer any new cash to help defray the costs of the delays.

"Atomic Energy of Canada Ltd. will respect its contractual obligations with the province of New Brunswick," Harper said.

"This is already very expensive project for New Brunswick. It is already a very expensive project for the federal government as well."

Harper has said in the past the federal government will honour its contractual obligations but has not indicated Ottawa will pay any additional costs.

Leonard said the longer the delay extends, the more important it is to get extra funds out of the federal government.

"The longer that this goes on, the more we move away from the contract position and that... is into a range of where you have to look at the project and determine whether three years' delay on an 18-month project is reasonable, and we don't feel it is," Leonard told reporters.

The former Liberal government had threatened to file legal action over the reactor for the delays.

Liberal MLA Donald Arseneault said he hopes Premier David Alward backs up Leonard on his tough talk surrounding negotiations with the federal government on the Point Lepreau file.

"I hope that the Alward government is going to play hardball with the federal government, because so far the prime minister of Canada has pretty well said they will honour the contract that [Bernard Lord's Tory government] signed," Arseneault said.

"If the new minister of energy, Craig Leonard, wants to play hardball with the federal government on this issue to make sure we are well compensated for this learning curve of AECL, the official Opposition will support that."

New Brunswick Premier David Alward said he will continue to push the federal government to pay for cost overruns.

Following a private meeting with Harper in Saint John, Alward said while there's still no agreement, the prime minister did ask for an update on the refurbishment after recent Ottawa spending on AECL projects.

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