New Brunswick’s Crown electrical utility is in the midst of a major shakeup precipitated by two closely related problems: a poorly performing nuclear reactor and a ballooning debt it has been unable to pay down.
Last month, New Brunswick Power announced Lori Clark had been appointed president and chief executive officer, a position she held in an acting capacity since last summer, when board chair Charles Firlotte declared a “significant transformation of the organization” was required. Mr. Firlotte himself stepped down three days later.
Then came revelations the utility is negotiating a potential partnership with Ontario Power Generation aimed at improving operations at the Point Lepreau Nuclear Generating Station, a plant NB Power has owned and operated for 40 years.
NB Power spokesperson Dominique Couture said the talks are aimed at providing the plant with sufficient financial and human resources to improve performance.
“The status quo is not an option for NB Power,” she wrote in a statement. “Any outcome will result in a partnership, not a sale.”
The utility has more than a dozen generating facilities, including hydroelectric and coal-fired generating plants, and purchases power from wind facilities. The 660-megawatt Candu 6 reactor at Point Lepreau – Atlantic Canada’s only reactor – plays a crucial role, often supplying one-third or more of New Brunswick’s total annual electricity output.
Originally commissioned in 1983, Point Lepreau was refurbished from 2008 to 2012, blowing past a planned 18-month schedule. The overhaul cost $2.4-billion, $1-billion more than the original estimate. But senior NB Power officials promised its return to service would afford “the financial flexibility” necessary to pay off $1-billion of debt over the following decade, as compared to $4.7-billion in debt on its balance sheet at that time.
Instead, Point Lepreau became a financial millstone, suffering repeated equipment failures and unplanned outages. In recent years, the utility has increased spending at the station in hopes of improving reliability.
In some years, that seemed to pay dividends: in 2019 the World Association of Nuclear Operators awarded the facility a high performance score, its best showing since tracking began in 1995. But in a filing to the New Brunswick Energy and Utilities Board last October, the utility admitted it was losing a race against “a growing backlog of deficient equipment” at the aging plant.
“The rate of completed maintenance at the station has steadily improved year over year, yet the rate of equipment degradation has gradually exceeded this,” the filing stated.
Most recently, early on Dec. 14, Point Lepreau suffered a partial loss of power due to a fault with an electrical cable that tripped the reactor’s shutdown systems. Two hours later, plant staff discovered a heavy water leak in the reactor building. A presentation by NB Power attributed the water leak to an instrumentation line that had failed due to “high cycle fatigue.” The reactor remained offline for more than a month.
The timing of this latest outage was particularly unfortunate. New Brunswick’s electricity demand peaks during the coldest months. Uranium is NB Power’s second-least expensive fuel behind hydropower; when Point Lepreau goes down, the utility must resort to more expensive options to supply electricity.
In financial results for the nine months ended Dec. 31, NB Power reported that costs for electricity and fuel purchases had soared $380-million higher than the same period the previous year.
“The replacement power for the winter unplanned outage at [Point Lepreau] was purchased at a time when electricity prices were higher than typically seen due to a scarcity event,” the report stated. “This led to a higher per day replacement cost than has been seen in the past.”
The consequence – a $380-million increase in NB Power’s debt – is particularly unwelcome. Two years ago, New Brunswick’s then-auditor general Kim Adair-MacPherson signalled alarm at NB Power’s debt-to-equity ratio, which then exceeded 90 per cent.
“No other peer utility” in Canada had reached that level, she said in a statement at the time. The government has mandated NB Power to lower that ratio to 80 per cent by 2027.
NB Power and OPG characterized their recent negotiations as being at an early stage, and offered few indications of where they might be headed. OPG has the largest fleet of Candus worldwide, with 10 reactors at its Darlington and Pickering stations either operating or under refurbishment.
“OPG and Point Lepreau have strong existing ties and have, in past, shared resources and expertise, including during refurbishment of Point Lepreau Generating Station,” OPG spokesperson Neal Kelly said in a statement.
Peter Tabuns, the Ontario NDP’s energy critic, said Ontarians deserve to know about any obligations OPG is considering taking on before any deal is announced.
“We want to know that Ontario is not going to be stuck with a liability,” he said. “I don’t see why on Earth ratepayers in Ontario would want to take on a potential debt for a plant that, frankly, is not doing well.”
Ontario Ministry of Energy spokesperson Michael Dodsworth said the government supports the talks. “Any deal would have to be made in the best interests of Ontario and New Brunswick,” he added.
NB Power’s calls for outside assistance for its existing reactor raises questions about its enthusiasm for building and operating new ones at the same facility. It has partnered with ARC Clean Technology Inc., a private company, to construct an ARC-100 reactor before the end of this decade.
The utility is also working with another private company, Moltex Energy Canada Inc., on what it calls the Stable Salt Reactor – Wasteburner (SSR-W), which would be fuelled by recycled fuel waste from the existing Candu reactor, with a planned completion date in the early 2030s.
The ARC-100 and SSR-W are characterized as Generation IV reactors, denoting untested, cutting-edge designs for which no operating experience exists. Candus are classified as Generation II reactors, which include the earliest commercial power reactors.
New Brunswick government spokespersons did not respond to questions from The Globe and Mail, including about the basis for the province’s confidence in NB Power’s ability to build and operate next-generation reactors. In an annual state of the province address in February, Premier Blaine Higgs celebrated his government’s continuing support.
“By supporting both ARC and Moltex, our government is positioning New Brunswick as a leader in new nuclear,” he said.