NB Power's faith in Lepreau challenged at EUB rate hearing
Nuclear plant has missed targets in each of the five years since $2.5B refurbishment
NB Power's belief that the Point Lepreau nuclear plant will soon be operating for year-long stretches at nearly full capacity — even though it has come nowhere near that since its refurbishment — came under intense scrutiny at the utility's rate hearing Tuesday.
"It [Lepreau] has under-performed, would you agree?" asked Energy and Utility Board lawyer Ellen Desmond, addressing a trio of senior NB Power executives who took questions for a second straight day.
"I would agree the targets we set we did not meet," replied Lori Clark, NB Power's senior vice-president of operations.
"But if you look at the numbers, we are getting closer to the forecast that we put in place and the last few months of the operation of Lepreau have been very good."
Skeptical of projections
Lepreau has attracted attention at NB Power's rate hearing partly because it has faced so many problems since coming online after a $2.5 billion renovation in 2012 and partly because so much of the utility's long-term financial projections are based on it operating trouble-free in the future.
Desmond was particularly skeptical of long-term financial projections based on the assumption Lepreau will routinely operate at an annual 98 per cent capacity factor in the future, even though it hasn't managed any better than 79 per cent in the first five years following refurbishment.
"Doesn't historical experience, Ms. Clark inform your forecast in terms of being reasonable?" asked Desmond.
"Wouldn't it be difficult for people to accept that the forecast is reasonable based on what we've seen to date?"
Wouldn't it be difficult for people to accept that the forecast is reasonable based on what we've seen to date?- Ellen Desmond, EUB lawyer
NB Power has told the hearing it intends to invest up to $150 million more into Lepreau to upgrade the non-nuclear side of the plant to improve its reliability. Clark said that, and the guidance of new NB Power vice-president Brett Plummer will improve operations significantly.
"The investments we are making now and the investments that were made at the time of refurbishment allow us greater certainty of how long the plant will operate and how it will operate," said Clark.
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"There are various external groups that we consult with regularly and there would be some that would view rates we have in the future are conservative and that the plant should be able to operate at a higher capacity factor — 96 to 98 per cent."
Public intervener's doubts
But Desmond wasn't the only one expressing doubts. Public intervener Heather Black also questioned whether NB Power is banking too much on Lepreau's troubles being eliminated.
She asked if the assumption Lepreau will begin operating without problems presents an "asymmetric" risk to the utility.
"Meaning that there is more likelihood of it being worse than better?"
"From a mathematical or statistical point of view I think that would be true," said Darren Murphy, NB Power's chief financial officer.
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"But it is not unfounded that there would be improvements in station performance based on the progress we're making in certain areas."
Black has been questioning whether NB Power is employing too much wishful thinking in its long-term financial planning, including about Lepreau, and warned it will be NB Power customers who pay if it is wrong.
"Future ratepayers are the ones that bear the risk if NB Power fails to have a sufficient level of equity when the time comes it needs it," she said.
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