Provincial cabinet has approved $5.5 million in funding for Maritime Electric to cover replacement energy costs while the Point Lepreau nuclear power plant continues working toward achieving full generating capacity.
The plant’s refurbishment has been plagued by years of delays, spills and a billion dollars more than the original $1.4 billion price tag.
It was scheduled to re-open in September, but that was once again pushed back to December as the plant continues to test its ability to safely operate at over 35 per cent of its full capacity.
In the meantime, Maritime Electric must continue to purchase replacement energy. The P.E.I. utility has had to do this for the last four years while the power station has been offline.
That’s why this $5.5 million payment is the latest in over $43 million in similar payments made to cover energy cost overages as well as operation and management commitments related by Point Lepreau being offline.
“It’s been an onerous task to keep this money going in,” Finance Minister Wes Sheridan said Tuesday.
“But while (the plant) is down, we have to provide for that.”
Sheridan said he hopes to recover these costs from Atomic Energy of Canada Ltd. (AECL), the federal Crown corporation doing the refurbishment.
The contract with AECL states it must shoulder these kinds of added costs caused by delays.
“(The contract) specifically states that they will be compensating us if it goes overtime, and we’re three years over so we’ve had conversations with them and we fully expect that we’re going to be compensated,” Sheridan said.
“But for this time and to get us past this last hump where expectations were (opening) the end of September, we are now going to be on the hook for six to eight weeks more.”
The plant is now scheduled to be up and running at full capacity December 1st.
Sheridan said he is very excited to see the plant has begun generating energy and is working toward revving up to 100 per cent power generation.
“That means the extra costs for replacement energy will be no longer needed.”
Don’t expect to see a drop in energy prices in December when the plant is providing its cheaper power to P.E.I.
When electricity rates were stabilized with the 2010 Energy Accord, major jumps or dips in energy costs for consumers were replaced with a 14 per cent rate reduction in rates as part of a five-year power purchase agreement with NB Power.
After the deal's first two years, power rates were set to increase with the rate of inflation, which the government expected to be about 2.5 per cent annually.
With the HST on the way, which will mean a nine per cent tax increase on electricity, Sheridan said government is still trying to decide what to do with the previously planned 2.5 per cent increase that would take effect in the coming year.
“We’re in the midst of trying to make that decision right now… trying to decide exactly where that’s going to fall out and what’s the best way in which to ensure Islanders that continuity will be followed,” Sheridan said.