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Setbacks slow Bruce Power reactor restarts

Tyler Hamilton: November 05, 2009

First the cost overrun was announced. Now it's the dreaded delay.

Nuclear operator Bruce Power originally hoped the two reactors it was refurbishing would be back in service in late 2009 or early 2010. But one of the project's key investors, TransCanada Corp., disclosed Wednesday that the first of the two reactors now won't be online until mid-2011, with the second reactor following about four months later.

It's the latest sign that the nuclear "renaissance" in Canada is off to a slow start, if not stalling altogether.

Plans to build a new nuclear plant in Ontario are on hold and the only two refurbishment projects in the country – the restart of Bruce A Units 1 and 2 northwest of Toronto and the overhaul of the Pointe Lepreau plant in New Brunswick – are over budget and more than a year behind schedule.

"Bruce and the partners are in the middle of taking a really comprehensive look at cost and schedule," Alex Pourbaix, president of Trans Canada's energy division, told analysts during an earnings call.

Asked whether the delay would increase the cost of the project, Pourbaix said TransCanada doesn't expect a material impact.

The original cost of the project was $2.75 billion, but an independent review revealed in April 2008 that costs had climbed at least $350 million and the overrun could reach $650 million.

TransCanada then confirmed this past July that the project would cost at least $3.4 billion, adding it "may exceed that amount by approximately 10 per cent" – or another $340 million.

This would bring the total overrun to nearly $1 billion, or 36 per cent above the original cost estimate.

Bruce spokesperson Steve Cannon said the delay had largely to do with Atomic Energy of Canada Ltd. and the challenges it had using a "first-of-a-kind" robotic tool that cuts out old fuel channels and other components so new ones can go into the reactors.

It was the same explanation given in early 2008.

"The good news is much of the never-before-done work is now behind us," Cannon said. "There's a lot of work left to do, but most of it is conventional power plant construction activity."

TransCanada estimated that 75 per cent of the project is now complete and that $3.1 billion has so far been spent.

The question is whether the remaining 25 per cent can be done over the next 20 months without hitting more hurdles.

The company said it is working closely with Bruce Power to improve productivity and project management.

"There have been recent, significant successes in this area."

Amy Tang, spokesperson for Energy and Infrastructure Minister George Smitherman, said reduced electricity demand in Ontario means the delay is unlikely to have much impact on system reliability or the government's strategy to close coal-fired plants.

She added that electricity consumers are also protected from additional cost overruns.

The government's original 2005 contract with Tiverton, Ont.-based Bruce Power stipulated that all cost overruns would be equally shared for the first $300 million. Beyond that, the province would be required to pay only a quarter of the added cost.

That contract was amended in July so that the province wouldn't have to cover any costs beyond $3.4 billion.

"Any potential cost overruns as a result of the delay are going to be covered by Bruce," said Tang.

Industry critics, however, point out that Bruce may simply pass on those additional costs to crown-owned Atomic Energy, meaning taxpayers ultimately pick up the tab.

Bruce Power is co-owned by uranium miner TransCanada Corp., Cameco Corp., BPC Generation Infrastructure Trust, and two unions representing Bruce Power workers. Cameco, however, opted out of the Bruce A refurbishment project.