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CALGARY, Alberta (Reuters) - The cost of refurbishing two units at the Bruce nuclear station in Ontario has jumped as much as 24 percent to C$3.4 billion ($3.46 billion), as engineers have been forced to develop new tools to replace parts, one of Bruce's owners said on Thursday.
TransCanada Corp, which has a 50 percent stake in the massive plant on the shore of Lake Huron, said the refurbishment of Bruce A units 1 and 2 is now expected to cost C$3.1 billion to C$3.4 billion by the time the work is done in late 2009 or early 2010.
The previous estimate was C$2.75 billion.
The company, best known for its gas and oil pipelines business, said the project is 60 percent done, having started work in 2006.
The reintroduction of the units will add 1,500 megawatts to the Ontario power grid, Canada's largest.
TransCanada said Atomic Energy of Canada Ltd has had to design and test new equipment to replace the internal components of the reactor.
"As a result, Unit 2, which is the lead unit, has borne many of the first-of-a-kind risks which impacted overall costs for the project," the company said.
The units were first placed into service in 1977 and were taken off line in 1995 and 1997.
TransCanada said it expects the after-tax return on its investment to be in the middle of its 9.5 percent and 13.5 percent target range.
"In the event of a further 10 percent increase in capital costs, our unlevered after-tax return on the project would be approximately 10 percent," Chief Executive Hal Kvisle said in a statement.
Last year, the Bruce owners unveiled a C$1 billion expansion to the refurbishment project to install new fuel channels in unit 4.
Shares in TransCanada slipped 45 Canadian cents to C$36.95 on the Toronto Stock Exchange.
Its partners in Bruce Power are uranium miner Cameco Corp, the Ontario Municipal Employees Retirement System, Power Workers' Union, and the Society of Energy Professionals.
Reporting by Jeffrey Jones; Editing by Scott Anderson