March 1, 2004

NB Power files $2B lawsuit to protect Coleson Cove benefits

New Brunswick Power is suing the Venezuelan state oil company PDVSA and its subsidiary, Bitor, for $2 billion in connection with a fuel supply agreement for Orimulsion(r), a fuel to be used at the refurbished Coleson Cove generating station.

The oil-fired power plant is being refurbished, at a cost of $750 million, in order to meet more stringent environmental standards. Advanced emission control equipment to be installed will significantly reduce emissions and improve the facility's environmental performance; its operating life will be extended to 2030.

The project also involves converting the plant from oil to Orimulsion, a move which would lower fuel costs substantially and help finance the cost of the environmental control equipment. NB Power and Bitor signed a 20-year fuel supply agreement establishing terms for the sale of Orimulsion to be used at Coleson Cove.

NB Power has so far invested or committed more than $600 million to the refurbisment project, based on its agreement with Bitor and PDVSA and assurances by the companies, as well as the Venezuelan Energy and Mines Minister, that the commitment to supply Orimulsion to Coleson Cove would be honoured. By not fulfilling its supply agreement, Bitor and PDVSA are depriving NB Power and its customers of very significant economic benefits, said Stewart MacPherson, president and acting CEO of NB Power.

The $2 billion claim in the utility's lawsuit represents the financial benefit of using Orimulsion at the power station over the 20-year life of the supply agreement. The statement of claim being filed in the Court of Queen's Bench of New Brunswick will seek to require Bitor and PDVSA to carry out the fuel supply agreement or pay damages.

Meanwhile, construction work at Coleson Cove will continue in order to complete installation of the environmental equipment and life extension upgrades. Work on the new Orimulsion fuel delivery system, however, has been halted because of the legal action.

More information is available from Jeffrey Carleton at NB Power, 506/458-4723.

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