NB Power looking to settle lawsuits over power plant refurbishment cost - report

NB Power looking to settle lawsuits over power plant refurbishment cost - report | Insurance Business

NB Power looking to settle lawsuits over power plant refurbishment cost - report
NB Power is looking to settle claims with its insurers for delays and cost overruns over the refurbishment of the Point Lepreau nuclear generating plant, according to reports.

In a letter addressed to Court of Queen’s Bench clerk Amanda Evans last month, NB Power’s lead lawyer Kenneth McCullogh said that the parties in the current action “have agreed to participate in a mediation in November 2017.”

“If that effort is unsuccessful we expect the discovery process to be completed by the end of Q2 (June) 2018 and that shortly thereafter the matter will be ready to be entered for trial,” McCullogh explained.

Eight Lloyd’s underwriting-led insurance companies denied pay outs for damage to the reactor’s outer shell (also known as the calandria) when it was improperly polished with coarse wire brushes during the refurbishment process back in 2009. The polishing purportedly caused microscopic scratching, so when new tubes were fitted into the calandria, the scratches led to numerous tubes failing critical air leak tests.

All of the tubes fitted – 380 in total – had to be removed and replaced. This caused a 22-month setback to the power plant refurbishment project (which was finally finished after four and a half years) and cost the energy company hundreds of millions of dollars.

NB Power’s insurers rejected claims that the outer shell had been “accidentally physically damaged” by the polishing mistake. Instead, the insurers blamed negligence by the power company and its contractor, Atomic Energy of Canada Ltd. (AECL).

The power company and AECL filed lawsuits 64 months ago, with the case dragging longer than the refurbishment itself. NB Power’s claim against the insurers is for $320.1 million, which is only a portion of the cost overruns.

Since its operation began in November 2012, Point Lepreau has encountered several problems and consistently missed its energy production goals. CBC reported that as of March 31 this year, the power plant has operated 194 days less than NB Power originally projected for its first five years, costing the company almost $200 million in reduced production.


Related stories:
Look “long term” for oil and gas coverage: Energy Broker
Point Lepreau Nuclear power plant insurance battle goes to court as Atomic Energy sues Lloyds