"The facts are this, that we and Bruce announced a $2.75 billion project that could cost more," said Glenn Menuz, vice-president of TransCanada.
"As a result of the first part of our comprehensive cost review, we have determined that it's highly likely the cost is going to exceed $3 billion, so we have increased the authorized funding for the project."
Energy Minister Gerry Phillips played down the 10 per cent increase, calling it "in the ballpark" of the contract. "I'm quite satisfied," he said. "This (increase) was mainly designed to speed up the project."
Jan Carr, CEO of the Ontario Power Authority, the provincial agency that signed the deal, called TransCanada's disclosure an example of "extreme caution" in an era of heightened corporate governance.
But critics of the deal said Ontario electricity ratepayers, who were left to shoulder the massive cost overruns of past Ontario nuclear projects, could be in for a bad case of déjà vu.
"The increase in costs on this project is more than all the wind turbines we've put up so far in the province," said Keith Stewart, an energy expert with WWF-Canada. "This is a huge amount in overruns that we were told wouldn't happen this time."
Ratepayers still have bad memories of two reactor restarts at Pickering A, which cost three times their initial $800 million price tag. Darlington and Bruce generating stations also have a history of cost overruns.
Stewart said the inability to accurately predict costs in a major nuclear project is the nature of the beast.
One of the largest infrastructure projects in North America, the refurbishment of Bruce A units 1 and 2 is now 60 per cent complete and will eventually add 1,500 megawatts to the provincial grid, enough to power more than a million homes.
The provincial government struck an agreement with Bruce Power in 2005 to restart the idle Candu reactors, a deal that was criticized last year by the auditor general for exposing Ontario electricity ratepayers to cost overruns.
Under the contract, Bruce Power pays the initial $2.75 billion and electricity users share the cost of any overruns up to $3.05 billion, after which the partners in the project – TransCanada and the Ontario Municipal Employees Retirement System – cover three-quarters of any overruns and users one quarter.
Industry experts say the project's ability to come in on time and within budget could determine how Ontario proceeds with similar projects in future.
Duncan Hawthorne, chief executive of Bruce Power, said the project has entered an "onerous" stage being led by reactor designer Atomic Energy of Canada Ltd., the Crown corporation at the centre of a recent medical isotope crisis.
"A big piece of this depends on how AECL's work progresses in the next three or four months," said Hawthorne.
"This is a big test for AECL... if they're looking to refurbish all these reactors in Ontario."