Niagara Falls energy project may cost $1.6B; Tunnel double original estimate
Submitted by OCAA on Sat, 03/21/2009 - 04:30.
March 21, 2009
Niagara Falls energy project may cost $1.6B
Ontario's largest energy megaproject could cost more than double the original estimate and be completed more than three years late.
The Niagara Tunnel project was budgeted at $600-million and was supposed to be completed by June, 2010. Ontario Power Generation admitted months ago that it was behind schedule and over budget, but in an interview, OPG has revealed for the first time its internal estimates of the potential overruns.
"Under the most pessimistic scenario that we've looked at, we've assumed that this project could be completed in late 2013 and that the price could jump to perhaps $1.6-billion," said John Murphy, vice-president of OPG, in an interview with the Global News program Focus Ontario.
The tunnel is designed to deliver more water from the Niagara River to the Sir Adam Beck generating stations, increasing their capacity by about 1.6 billion kilowatt/ hours -- enough electricity to power a city of 160,000 people, according to OPG.
Work on the tunnel officially started in August, 2006, with Premier Dalton McGuinty flipping the switch on the massive $35-million boring machine, nicknamed "Big Becky."
The tunnel is the widest of its kind in the world, 1.5 times the diameter of the railway passage underneath the English Channel.
Big Becky is the biggest mechanism of its kind. The tunnel is to run as deep as 140 metres, along a 10.4-kilo-metre route directly under the city of Niagara Falls.
But the dig ran into problems almost from the beginning. The boring machine is currently going through a layer of rock known as Queenston shale. It is proving to be brittle, with chunks continually crumbling off the ceiling -- a phenomenon known as overbreak -- which is greatly complicating the project.
"Right now they are able to advance only about 7 to 8 metres a day," said Rick Everdell, OPG's project director for the Niagara Tunnel. The original goal was an average of 15 metres a day.
The tunnel is only one-third finished after more than two and a half years of work.
The project is overseen by an Austrian firm, Strabag AG, which has long experience in building railway tunnels in the Alps.
It won the contract in a competitive bidding process.
Ontario ratepayers were set to cover the entire $600-million price tag. Now the engineering company and OPG are haggling over their shares of the cost overruns. Mr. Murphy said they expect to announce a deal sometime in April.
He said that even at the inflated prices, the project is a good deal for Ontario.
"Under those scenarios the cost of power from this plant would be less than 7¢ a kilowatt, which is extremely economical as far as power goes in this province," he said.
OPG's critics say the cost overrun should serve as a warning as Ontario moves ahead with plans to buy two new reactors at the Darlington nuclear station. The last cost estimate for that project was $26-billion.
"I think this is a very clear message to Energy Minister [George] Smitherman that he should not give Ontario Power Generation a big blank cheque," said Jack Gibbons of the Clean Air Alliance.