New Brunswick move threatens AECL sale

AECL Point Lepreau delay underscores Candu refurbishment risks, cost overruns, and replacement power burdens for New Brunswick, as Ottawa pursues AECL restructuring and privatization and Hydro-Québec deal talks to offset rate impacts.

New Brunswick has dealt another blow to Ottawa's attempt to sell troubled Atomic Energy of Canada Ltd., threatening to launch a messy lawsuit over delays to AECL's refurbishment of the Point Lepreau nuclear station unless Ottawa agrees to cover the province's related costs.

While AECL is responsible for the actual cost overruns at the Lepreau plant, New Brunswick must cover the cost of replacement power. Energy Minister Jack Keir said that the 18-month delay in the project has already cost electricity users $125-million, and the province wants compensation from Ottawa for it.

In a recent interview, Mr. Keir acknowledged that the threat of a lawsuit by the province – made when Premier Shawn Graham met with Prime Minister Stephen Harper – could undermine the government's effort to sell AECL.

“That's why we had the discussion with the Prime Minister and said, ‘It's better for you, it's better for us, it's better for AECL if we resolve this thing internally, that we don't have to take this thing to court,” he said.

Natural Resources Minister Lisa Raitt announced last month that Ottawa has launched a formal process to sell the Candu division of AECL. The publicly owned nuclear company has long depended on the federal treasury, but has required growing support in recent years.

Last year alone, Ottawa provided $300-million to AECL to cover cost overruns for retooling projects at Point Lepreau, in Ontario and in South Korea – and that's on top of $351-million allocated for work on its new advanced Candu reactor and at its Chalk River research facility.

Ms. Raitt warned AECL's board seven months ago that it must get better control over its operations, particularly as the government was intent on restructuring the corporation with the aim of finding private-sector buyers.

“Containment of such [cost] pressures is critical to protecting the fiscal framework of the government, and to preserving the brand and value of AECL in the restructuring,” Ms. Raitt said in a letter to AECL chair Glenna Carr last June. The letter, stamped “secret” by federal officials, was among documents Ms. Raitt inadvertently left at CTV's news bureau last summer.

Mr. Keir said that AECL launched the first-of-a-kind refurbishment of its Candu 6 reactor at Point Lepreau knowing that it was likely to face delays in the 18-month schedule, which has since doubled. He said New Brunswickers shouldn't have to pay for AECL's “learning curve.”

The costs could climb to $400-million if New Brunswick is unable to conclude a proposed sale to Hydro-Québec of its debt-burdened utility. If the deal is concluded, Hydro-Québec would be responsible for providing New Brunswick with low-cost power after April 1.

The $125-million would cover the province's costs to the end of March. If the Quebec deal falls through, New Brunswick would have to buy replacement power for the full 18-month delay at an estimated cost of $400-million.

A federal spokesman refused to say whether Ottawa is prepared to negotiate.

“The government of Canada will respect its contractual obligations,” said Dimitri Soudas, a spokesman for the Prime Minister's Office.

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