TVO Gets Good News in Ongoing Dispute with Areva

Finnish power company Teollisuuden Voima Oyj (TVO) in July celebrated another win in ongoing legal proceedings with French nuclear company Areva. The two companies have been at odds for years concerning cost overruns and delays at the yet-to-be-completed Olkiluoto 3 (OL3) nuclear reactor in southwest Finland.

July’s partial award is the second to be decided in TVO’s favor by the International Chamber of Commerce (ICC) in Stockholm. At issue is who should be responsible for the massive cost overruns. So far, it looks like Areva is going to be footing the bill.

“The Areva-Siemens consortium is claiming €3.52 billion against TVO in relation to the delay and cost overruns of the project. The claim includes payments delayed by TVO under the construction contract, and penalty interest totaling about €1.45 billion and €135 million in alleged loss of profit. TVO has counterclaimed costs and losses of €2.6 billion to the end of 2018, having revised its loss figure from €1.8 billion to the end of 2014,” the World Nuclear Association explained on its website.

OL3 (Figure 1) has been in the works since 2000 when TVO filed an application for the plant. In 2002 the plant was approved by Parliament. At that point, it was assumed the plant would be in service by around 2009, making it the first new nuclear reactor built in Western Europe in more than a decade. By 2003, the Olkiluoto site was secured, and Areva NP and Siemens were contracted to build the 1,600-MW European Pressurized Water Reactor (EPR).

28.10.2015 OL3
1. Stuck in the middle. The Olkiluoto 3 nuclear reactor under development in southwest Finland is at the center of a years-long legal dispute between Finnish power company Teollisuuden Voima Oyj (TVO) and a consortium of Areva and Siemens. The plant is delayed nearly a decade and has suffered massive cost overruns. The International Chamber of Commerce in July granted a partial award in the dispute in favor of TVO. Courtesy: TVO

TVO, Areva NP, and Siemens in December 2003 finalized a turnkey contract for €3.2 billion for the plant, which was scheduled to come online in mid-2009. Construction began in 2005, but unfortunately for all involved, things did not go as planned. The plant is now scheduled for completion in December 2018, and the price tag has reached roughly €8.5 billion.

TVO and the Areva-Siemens consortium have been in disagreement about who should be paying for the overruns. From the past two partial awards ordered by the ICC, it would appear that TVO has the upper hand. “The OL3 EPR was procured as a fixed-price turnkey project from a consortium (supplier) formed by AREVA GmbH, AREVA NP SAS, and Siemens AG. The supplier consortium companies are jointly and severally liable for the plant contract obligations,” a TVO press release says.

The July 2017 award “addressed the preparation, review, submittal, and approval of design and licensing documents on the OL3 project. This comprises the key facts and matters that the supplier relies upon in its main claim against TVO, as well as certain matters that TVO relies upon in its claims against the supplier,” the release says. However, the award does not take a position on the claimed monetary amounts.

The ICC issued another partial award in November 2016, which addressed the early period of the project including time schedule, licensing and listenability, and system design. That award was also granted in favor of TVO. “TVO considers its claims to be well-founded and has considered and found the claims of the supplier to be without merit. The partial award provides material confirmation for this position,” a November 2016 press release says.

This isn’t the end of the fight, however, as TVO notes: “The arbitration proceeding is still going on with at least one further partial award to come, before the final award where the Tribunal will declare the liabilities of the parties to pay compensation.”

While liability is being decided, work continues at the plant, which completed cold functional tests on July 1, 2017. “This is an important step in plant commissioning. The hot functional tests scheduled for autumn are the next major milestone. Once this stage has been successfully completed, OL3 will [fulfill] the preconditions for the granting of the operating [license] in early 2018. There are still several important milestones to be met before the start of the regular electricity production at the end of 2018,” Jouni Silvennoinen, OL3 project director, said in a release.

The cold-run testing stage spanned roughly four weeks, with dozens of tests being conducted at different pressure levels. During the testing, main coolant pumps were started for the first time, and the pressure in the reactor coolant system was increased gradually to the maximum design value, significantly exceeding normal operating pressure.

Abby Harvey is a POWER reporter.

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