Natural Resources Committee on Dec. 13th, 2016

[The Chair, Liberal, James Maloney]

Good morning, everybody. Welcome to our last meeting of this session.

Today we have two witnesses in our first hour.

First, we have Brett Plummer from New Brunswick Power Corporation.

Mr. Plummer, I hope you can hear us. It's unfortunate that you're not able to join us in person, but I understand you have some pretty severe weather there. You are ably represented by Ms. Duguay here today. Thank you for joining us.

Mr. Gandhi from Aecon Construction is on video conference.

You will each have the floor for a presentation of up to 10 minutes. Then I will turn it over to questions from the committee members.

I will now open the floor, and perhaps I'll start with you, Mr. Plummer.

[Brett Plummer, Chief Nuclear Officer and Vice-President Nuclear, New Brunswick Power Corporation]

I appreciate that, Mr. Chairman. I apologize for not being there in person. We had severe weather, and I could not get a flight out yesterday.

Good morning, Mr. Chairman and members of the committee. It is an honour to appear before you today. My name is Brett Plummer. I am the vice-president nuclear and chief nuclear officer at NB Power, at Point Lepreau nuclear generating station. I'll start by providing an overview and sharing some information with the committee. I want to take this opportunity to thank the committee for engaging us in this process.

Most of you are familiar with New Brunswick Power. Since our beginning in 1920 as the New Brunswick Electric Power Commission, New Brunswick Power has expanded and continues to expand to meet the increasing electricity needs of New Brunswickers.

New Brunswick Power is a crown corporation and has been given the mandate from the Province of New Brunswick to operate like a commercial enterprise to provide safe, reliable service in a manner that secures competitive rates for its customers and to maintain and enhance shareholder value through efficient operations and long-term debt and asset management.

Our strategic plan is the foundation for business plans, investment decisions, and business initiatives. NB Power has some of the lowest electricity rates in Canada, with approximately 65% of the cost of providing electricity being the capital cost, interest, and fuel from generating facilities. NB Power has constructed a diverse fleet of generating stations, which enables NB Power to shelter its commercial rates from significant fuel spikes in oil, natural gas, and coal. We pride ourselves on a diverse system. That has been a key to our rate stability over the last 30 years.

NB Power has also successfully exported electricity to neighbouring customers to keep the rates lower. We have a combined total generating capacity of 3,513 megawatts, plus additional installed capacity of 295 megawatts of wind and 444 megawatts of other capacity provided by third parties through power purchase agreements or PPAs. We also import electricity from Quebec or New England when electricity markets are favourable. Most days, New Brunswickers receive their power from a combination of generation sources, such as nuclear at Point Lepreau, and thermal, hydro, wind, natural gas, and biomass from the power purchase agreements.

New Brunswick Power has developed one of the most diverse generation fleets in North America to meet the very unique daily and seasonal power needs of New Brunswickers.

NB Power is committed to finding new ways of putting renewable energy sources onto the existing grid as we work toward the New Brunswick government-mandated goal of having 40% of our in-province energy come from renewable sources by 2020.

NB Power is a strong partner with all levels of government and our customers in responding to the critical issue of climate change. We are committed to achieving renewable energy and emissions targets while keeping rates low and stable for customers and supporting sustained efforts to adapt and respond to our changing climates.

With global leaders recognizing the need for action on climate change and limiting the generation of greenhouse gases in particular, nuclear continues to play an essential role in meeting New Brunswick's commitment in energy needs.

NB Power continues to make progress with one of our partners, Siemens Canada, on building an integrated smart grid in New Brunswick. This innovative strategy to upgrade our infrastructure and digitize our grid will help NB Power better optimize our assets, integrate more renewable energy, and offer our customers more choice, conveniences, and control over their usage in order to help keep our customer rates low and stable.

I'll now provide you with a brief overview of Point Lepreau nuclear power generating station. In the 1980s we entered the nuclear industry and commissioned Point Lepreau generating station. Point Lepreau nuclear generating station plays an integral part in our energy mix. It's located on the southern coast of New Brunswick, near Saint John. Point Lepreau is a CANDU 6, CANDU standing for “Canadian deuterium uranium”. It's a 600-megawatt reactor, which is 600,000 kilowatts. It began its commercial operation on February 1, 1983. It is the foundation of our provincial power supply and the source of electricity for more than one-third of New Brunswickers' provincial energy requirements. Because of its important contribution to the province, the station underwent refurbishment, starting in the spring of 2008, to extend the operating life for an additional 25 to 30 years.

With global leaders recognizing the need for action on climate change and on limiting the generation of greenhouse gases in particular, nuclear will continue to play an essential role in meeting New Brunswick's commitment and energy needs.

Thank you for the opportunity to appear before the committee as part of its study on the future of Canada's oil and gas and mining and nuclear sectors. We're happy to answer any questions you may have.

[The Chair, Liberal, James Maloney]

Thank you very much, Mr. Plummer.

Mr. Gandhi, over to you.

[James Gandhi, Director, Business Development, Aecon Construction Group Inc.]

Good morning, Mr. Chair, committee members, and Mr. Plummer.

I thank the committee very much for inviting Aecon to express our views on some very important topics. I feel honoured to present my views today.

I'll take this privilege to start with a brief introduction about Aecon. Aecon is Canada's largest publicly traded construction company, with about 12,000 seasonal and full-time employees. We've been in business for 140 years. Aecon has been engaged with the Canadian nuclear industry for almost five decades. We are proud to be a key part of the industry's mission-critical Darlington refurbishment project. Currently, Aecon Nuclear employs 1,650 staff and trade labourers throughout the various nuclear projects in Ontario and almost an equal number of indirect jobs through our suppliers and subcontractors.

Leveraging over 50 years of experience and top-notch qualifications, Aecon is also part of the international supply chain of safety-rated modules for Westinghouse's new reactors under construction at V.C. Summer and Vogtle in the U.S.A., and we support more than 300 direct and indirect jobs.

Thank you.

[The Chair, Liberal, James Maloney]

Thank you very much.

I'm going to open the floor to questions.

Mr. Lemieux.

[Denis Lemieux, Liberal, Chicoutimi—Le Fjord, QC]

Thank you, Mr. Chair.

I want to thank the two witnesses for their presentations.

My first questions are for Mr. Plummer.

Do you understand me when I speak in French?

[Brett Plummer]

I can hear you.

[Denis Lemieux, Liberal, Chicoutimi—Le Fjord, QC]

Okay. Thank you.

Many people have told the committee that nuclear power production is very expensive. There are the costs involved in building and operating a plant, the very long-term nuclear waste storage costs, and the costs involved in refurbishing and dismantling plants when they're at the end of their life.

If you take into account all the costs, do you think nuclear power is competitive with other green energy, such as wind power or solar power?

[Brett Plummer]

I think both types of energy have their place in the market. When you look at nuclear and you look at baseload, you look at a very stable production of electricity to serve our customers over the long term. When you look at renewables, we need to work through some of the issues of whether or not the wind is blowing or the sun is shining, and how we're going to store that energy. There's a mix here, and I think you really need to have a diversified energy mix, as we do at New Brunswick Power.

If you look at nuclear, even though the capital costs are high and you talk about long-term storage and even the decommissioning costs, with all those costs factored in, our costs at Point Lepreau are still very competitive with the rest of the region and even globally.

[Denis Lemieux, Liberal, Chicoutimi—Le Fjord, QC]

On that note, I see that you're already exporting electricity to the United States. As part of your strategies, have you already considered the possibility of increasing your nuclear power production capacity in order to export to the United States?

[Brett Plummer]

Exporting electricity to the United States is being taken under consideration, as we sit there and come up with a comprehensive, integrated plan on what we are going to do in the province of New Brunswick, and also with our partners in Canada and New England, as we transition to a low-carbon economy. We will develop that plan. It is being considered.

[Denis Lemieux, Liberal, Chicoutimi—Le Fjord, QC]

Earlier, you spoke about your goal of having 40% of your energy come from renewable sources by 2020.

What strategies will you use to achieve this goal?

[Brett Plummer]

Again, with the mandate that has come out recently on the transition to a low-carbon economy, I think that we, together with our partners and consulting and engaging first nations, communities, the provincial government, and the federal government, need to come up with that comprehensive plan on how we are going to transition from carbon to renewables, and also how nuclear fits into the mix. That plan has not been developed yet. There has been a lot of consideration and discussion, but the formalization is not there yet.

[Denis Lemieux, Liberal, Chicoutimi—Le Fjord, QC]

Thank you.

My next questions are for Mr. Gandhi.

SNC-Lavalin and your business obtained a $2.75 billion contract as part of the update of the Darlington Canadian nuclear power plant. You said earlier that you already had experience in this area, in Canada.

That said, have you carried out similar work outside Canada?

[James Gandhi]

The contract for Darlington is a fifty-fifty joint venture between SNC-Lavalin and Aecon. It's a two-phase contract. The first phase of the contract, which is definition, is $600 million. The second phase of the contract, which is execution, is $2.75 billion. Aecon is a 50% partner of that joint venture, so we will recognize a revenue of about $1.3 billion over the next 10 years.

Aecon has executed many large, complex EPC programs before in the nuclear space. For example, Aecon was part of the balance of plant refurbishment activities for the Bruce units 1 and 2 restart. That was a five-year program, and the total was $600 million. It was a joint venture between SNC-Lavalin and Aecon Nuclear. Before that, Aecon was part owner of a company called Canatom, which built the Darlington and Bruce units. This company was formed in 1973, and Aecon sold its share to SNC-Lavalin in 2004. That's when SNC started SNC Nuclear. During those years, the CANDU unit construction...and this company also acted as a construction management company for the Wolsong CANDU units in Korea.

Apart from the nuclear experience, Aecon is heavily engaged with large infrastructure projects, for example the Eglinton LRT, which is North America's largest P3 project. It's about $5.3 billion, and Aecon owns 30% of that project. Aecon has been engaged in many large, complex EPC projects before.

[Denis Lemieux, Liberal, Chicoutimi—Le Fjord, QC]

In terms of the refurbishment of the Darlington nuclear power plant, which will take about 10 years, how many jobs do you plan to create here in Canada?

[James Gandhi]

For the Darlington project, total refurbishment, it's close to 14,800 jobs, direct and indirect. Aecon is playing a significant...a portion of the significant scope of this Darlington refurbishment contract.... At peak, Aecon is expecting to hire close to 1,800 trades and 400 staff members. Currently, we are sitting at 1,200 trades and staff members in total. These are all [Technical difficulty—Editor]

[The Chair, Liberal, James Maloney]

That's okay. The member was out of time anyway.

[Voices]

Oh, oh!

[The Chair, Liberal, James Maloney]

That's the new way of keeping track of time.

Mr. Barlow, it's over to you.

[John Barlow, Conservative, Foothills, AB]

I guess I'll direct my questions to Mr. Plummer.

[Voices]

Oh, oh!

[John Barlow, Conservative, Foothills, AB]

Mr. Plummer, thanks very much for being here. I understand that battling the weather out there has been a bit tricky, so even though you are the only one we have on video conference right now, I guess that says something about the technology that you have.

I'm not overly familiar with nuclear. That's one of the reasons I've been enjoying this part of the study so much: I'm learning a lot about some of the options and technology that we have in Canada. I did a little bit of research on Point Lepreau, and I understand that there have been some technical and mechanical issues with the refurbishment that you've been going through since 2008. Those issues have caused the plant to go off-line several times over the last few years due to maintenance and breakdowns. It's my understanding that those breakdowns are not part of the nuclear-generation portion of the plant per se, but maybe some other mechanical issues. Can you expand on some of the issues that you've been facing with the refurbishment of the facility?

[Brett Plummer]

Yes. We did refurbish the facility back in 2008. It was returned to commercial operation at the end of 2012-13. Yes, predominantly, the refurbishment was focused on the reactor side of the plant, which we call the primary side of the plant. We replaced the pressure tubes and some of the primary instrumentation. There was also money invested in replacing the low-pressure turbine rotors, as well as in putting in a digital control system for the turbine generator.

Most of the other secondary side, conventional side, power plant components are original. Basically, the difficulty we had last year was around our equipment reliability. We're improving our equipment reliability by having a more aggressive, preventive maintenance cycle. We're evaluating every component and subcomponent, determining its failure mechanism, and determining how to prevent failure and anticipate failure to make the plant more reliable in the long run.

We're undergoing that process right now. If you look at our power history for the five months into 2016, this year, we ran continuously until the outage. We had a good outage. It went a few weeks long because we had some additional work that we had to do based on discovery, but we came out of the outage and, with the exception of one upset, we've run continuously to this point. So, the effort that we're putting into improving our equipment reliability is paying off, and it will get more reliable and more predictable as we finish this process.

The process of equipment reliability is not directly related to the refurbishment of the pressure tubes and the reactor proper.

[John Barlow, Conservative, Foothills, AB]

Are the breakdowns then...? You've had the technology, or the plant, operating since 1983, and you're saying that you're having this aggressive preventive maintenance and some issues with...is it quality? Is this an issue with the design of the CANDU 6, or is this something where, during the original construction, there were maybe some parts or pieces of the infrastructure that weren't up to snuff? Is this a construction issue or is this a design issue?