FREDERICTON, New Brunswick – The New Brunswick government will go ahead with a $1.4 billion overhaul of the aging Point Lepreau nuclear power plant near the Maine border, announcing Friday that Atomic Energy of Canada Ltd. has been hired as the general contractor.

The contract includes a fixed price and substantial penalties for AECL if the federal Crown corporation fails to meet the September 2009 completion date.

But Premier Bernard Lord warned that the deal with AECL means the province will assume a substantial amount of risk.

“We acknowledge that New Brunswick is taking on more risk than we had originally intended,” Lord told a news conference. “I think it’s important for everyone to realize that.”

The premier criticized the federal government for refusing to contribute $400 million to the project, suggesting Ottawa was responsible for increasing the financial risks associated with the project.

The 22-year-old plant, which is about 25 miles from the eastern Maine border, was supposed to be pulled from service in 2008. The refurbishment is expected to extend its life by another 20 to 25 years.

The plant, near Saint John, New Brunswick, employs 700 people and provides 30 percent of the province’s energy requirements. It is the only nuclear power plant in Atlantic Canada.

Construction of Lepreau began in May 1975 and was completed in late 1981. The plant generated its first power in 1982 and began commercial operation in February 1983.

In 2002, New Brunswick’s Public Utilities Board scuttled NB Power’s proposal to refurbish the plant, saying the project, then estimated to cost $845 million, was too risky.

That estimate was boosted to $1.4 billion in a report prepared for the province in 2004 by an international nuclear expert.

Earlier this year, Lord said the province could be forced to mothball Lepreau and build coal-fired generating plants to meet the province’s energy needs if Ottawa failed to cover some of the costs.

But the federal government said it wouldn’t contribute funds because such a grant would set an expensive precedent that would prompt other provinces to seek similar deals.

Lord said the province had been misled and betrayed by Ottawa, but he dumped the idea of building more coal-fired plants.