N.B. Power spending heavily on hired guns to fix its Lepreau problem

N.B. Power's ongoing rate hearing has been told that plans to spend $88.4 million over three years on outside experts to help fix chronic reliability problems at the Point Lepreau Nuclear Generating Station might not show results immediately but will pay off eventually.

"The intent of the agreement is to establish consistent, sustainable, long-term performance, not to make short-term gains," said Jason Nouwens about a contract the utility has struck with Laurentis Energy Partners Inc.

Laurentis is connected to Ontario Power Generation and is providing experienced managers from the company's nuclear operations to supervise the running of Lepreau for at least the next three years.

The deal has attracted dozens of questions from multiple intervenors at N.B. Power's rate hearing.

The arrangement includes bonuses of $8 million in Year 3 of the agreement if Lepreau begins to perform better.  

"That's why the performance fee is based on the third year of the agreement, where we're looking for consistent, sustainable performance improvement," said Nouwens, the director of regulatory and external affairs at Lepreau.

N.B. Power did try and attract a partner to invest in Lepreau, including OPG, but the plant's poor production record in recent years undermined that effort.

"It just didn't work out," N.B. Power's senior vice-president Darren Murphy told the hearing last week.

"Unfortunately, timing is everything and to talk about the sale of a station when it's struggling performance-wise is just not an adequate nor responsible time to think about sales."

Although OPG would not invest its own money in Lepreau, Murphy said being able to hire the utility's expertise is "a really good option" that N.B. Power is counting on to solve what has become the utility's thorniest problem.

Over the last four years, Lepreau has been offline for a combined 616 days for scheduled and unscheduled reasons. It's an average of 154 days a year, which is more than double the downtime the utility is hoping for in the years ahead.

Evidence presented at the rate hearing shows that every day of avoided downtime at Lepreau would save N.B. Power an estimated $1.9 million.

That is giving N.B. Power management confidence that even at a price of $88.4 million over three years, turning Lepreau over to new and experienced leadership should more than pay for itself.

"This agreement really constitutes an opportunity for Point Lepreau and N.B. Power," said Nouwens.