A BIG Surprise

Wow.  I thought I had it bad when the Ravenswood project built by my firm came in a couple of percent above budget, and 2 months late.  A combination of Hydro One delays, and a bout of flu in the contractor’s workers lead to the delays, and higher interest charges.

But today, Transcanada, one of the partners on the Bruce refurbishment announce that the project could be as much as 24% over budget.

I suppose in the nuclear business, that is good.  After all, the Darlington plant was almost 3 times over budget.  And the Pickering refurbishments also ballooned to more than double their projected cost.

Fortunately, if you are an investor in Transcanada or Cameco, two of the owners of the Bruce plant, you don’t need to worry.  The first $250 million of cost overruns will be shared equally between the owners and the electricity rate payers.  After that (and we are well past that), the ratepayers will only pick up 25% of the cost overrun.  Easy come easy go.

But with nuclear, the emphasis is always on the last part of that phrase.

In 2005, Duncan Hawthorne, CEO of Bruce Power said, “It’s (the refurbishment) a destiny issue for the industry.  The success of this project spawns other projects and the failure of this probably means that we wouldn’t want to do it again. Everybody knows what’s at stake here.”

When, oh when, will the government figure out that Mr. Hawthorne is right.

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