IBEW Local 37 (Fredericton NB Canada) Fights to preserve electrical jobs and public power in New Brunswick

Daily Gleaner | E-Brief
Article published: Aug 31, 2004

N.B. eyes Lepreau offers
Fitch: province is considering private investors

The New Brunswick government is once again pondering private investment in the Point Lepreau nuclear generating station to help offset refurbishment expenses.

Energy Minister Bruce Fitch says NB Power has received a "number" of unsolicited proposals from private firms interested in Atlantic Canada's only nuclear reactor.

"There have been a number of unsolicited expressions of interest, so that is part of the information that we need to digest over the next few months to come to the right decision on Lepreau," Fitch said in an interview.

The Conservative government will decide sometime this fall whether to mothball Lepreau or spend $1.4-billion refurbishing the plant to expand its lifespan.

The minister declined to provide details about how many firms want to invest in the facility, or what type of deals the government is considering.

"You have to be careful, when any type of negotiations like that are ongoing, that you don't jeopardize any of those talks," he said.

The government can't sell the nuclear station, but it can lease the facility to a private company.

The Electricity Act, which will come into effect Oct. 1, permits cabinet to enter into a lease, partnership, joint venture or operating agreement with a private company at Lepreau.

NB Power is in talks with Atomic Energy of Canada Ltd. (AECL).

Lepreau, a 635-megawatt facility, generates about 30 per cent of New Brunswick's electricity and must be re-tubed or shut down by 2008.

A refurbishment would expand Lepreau's lifespan by about 25 years but the idea has received mixed reviews.

In 2002, the regulatory Public Utilities Board scuttled NB Power's proposal to refurbish the plant by partnering with AECL.

The board ruled the project - then estimated to cost $845 million - was too risky.

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Robin Jeffrey, an international nuclear expert, raised a number of red flags in an April 2004 review prepared for the provincial government.

Jeffrey pegged the total refurbishment cost at $1.4 billion and made a series of recommendations in a 21-page report. He stopped short of giving verdict, instead making a series of recommendations for government to consider before making a final decision.

One of Jeffrey's recommendations was to seek out private investors in Lepreau through lease or alternative ownership structures.

He also raised red flags about NB Power's contracts with AECL. Jeffrey found taxpayers would assume too much risk if the refurbishment project went over-budget and advised the utility to renegotiate its deals.

NB Power is now in the process of renegotiating those contracts and hopes to have the new deal structure ready before the government makes a final decision on refurbishment.

Ian Dovey, a spokesperson for AECL, said the corporation is still interested in Lepreau and its negotiations with NB Power are ongoing.

"The refurbishment project is the most economical way for New Brunswick to have safe, reliable electricity," he said.

Meanwhile, the union representing most of the 700 employees at Lepreau has stepped up a public relations campaign to win New Brunswickers' support for refurbishment.

Ross Galbraith, of the International Brotherhood of Electrical Workers (IBEW), said the union prefers that the private sector stay out of Lepreau, but it is not out of the realm of possibility.

"We are in favour of publicly owned power. We feel that has served us well for a very long time," he said.

NB Power is also searching for other sources of energy if the government nixes the refurbishment project. Utility engineers are now doing a cost analysis of alternate electricity sources and utility officials are reviewing fuel prices that have been on an upward trend over the past year.

Fitch said all these factors are being factored into the government's final decision on Lepreau.

"I want to be in a position where the government can say this is the right decision to make because of these reasons," Fitch said. "Any decision you make is going to be wrong in someone's eyes and it is going to be right in someone's eyes."

The renewed search for private-sector involvement in Lepreau represents the second time the Tory government has toyed with the idea.

The government once considered an outright sale of the facility, but that idea was later rejected.

AECL, British Energy and Emera - the company that owns Nova Scotia Power and Bangor Hydro - have all expressed interest in Lepreau in the past.

There is already a precedent for private-sector involvement in nuclear plants in Canada. In 2001, Ontario Power Generation (OPG) entered into a limited partnership with Bruce Power to operate eight of the province's nuclear reactors.

Bruce Power must pay annual escalating lease fees and rent payments over its 18-year contract. The contract can be renewed after 2018 for another 25 years.

Bruce Power sells its nuclear energy on the open market, including to OPG.

OPG, as owner of the facilities, is responsible for decommissioning the power plants. The annual rent fees paid by Bruce Power can be increased every five years to offset eventual decommissioning costs.