March 6, 2012
Ontario nuclear project’s multi-billion dollar question goes unanswered
What’s the price tag of renewing Ontario’s nuclear generating fleet?
The multi-billion-dollar answer is no clearer – and perhaps murkier – after Thursday’s announcement of the first contract to overhaul the four reactors at the Darlington nuclear station.
- There is no over-all price tag for the massive Darlington overhaul project.
- There is no price tag for the two new nuclear units being planned for the Darlington station.
- Ontario has not yet subjected its long term energy plan to public hearings.
On Thursday, the province announced that SNC-Lavalin Nuclear and Aecon Construction have been awarded a $600 million contract for planning to replace all the tubes that hold the nuclear fuel bundles and coolant in the reactor cores at Darlington.
A separate contract will be awarded for executing the plan.
The retubing is one of seven separate jobs involved in overhauling the middle-aged plant.
Energy minister Chris Bentley argues that the new approach protects Ontarians.
With a firm plan and detailed cost estimates in place for each component of the project, the province will be able to hold contractors to the terms of the deal; taxpayers and ratepayers won’t be at risk for cost over-runs.
That’s a change from past practice, he says, when the public ended up on the hook for massive over-runs, which are still being paid off through the debt retirement charge on every hydro bill.
The new system is “a responsible approach,” he argued:
“They can plan down to 30-minute increments to make sure that when the actual refurbishment work starts, they have the right project at the right price according to the right specifications.”
The flip side of the new approach, however, is that there is no over-all target – however unrealistic – for the latest project.
Bentley declined to name a cost Thursday, and again Monday under questioning from Peter Tabuns of the New Democratic Party.
“This government does not have a particularly good record on these matters,” said Tabuns. “It is trying its best to hide the real cost of power from the families in Ontario.”
(In fairness, all three parties, when in power, have produced wildly inaccurate forecasts of nuclear project costs.)
The Ontario Clean Air Alliance – a foe of nuclear power – noted that in 2010, Ontario Power Generation estimated the Darlington overhaul’s lifetime cost at $8.5 to $14 billion, in filings with the Ontario Energy Board. The alliance argues the final cost could be double that.
Mark Winfield, a professor at York University, worries that by carving the job into slices, the province risks spending billions before the final cost becomes clear. At that stage, it may have spent too much to back out.
While Bentley argues that the new approach will off-load risk onto the private contractors, Winfield says that the private sector has traditionally negotiated contracts that protect investors from risk.
The privately operated Bruce A nuclear station’s project to restart two mothballed units has gone $2 billion over its original cost estimate, to $4.8 billion. But part-owner TransCanada Corp. still projects earning a 9 per cent return, according to information released last October.
Winfield notes that the province’s long term energy plan, released in November, 2011, has never been submitted to the Ontario Energy Board for public hearings as expected.
While it underpins current energy policy, he argues, the plan’s assumptions “are collapsing on multiple fronts.”
For example, demand for power is not growing as the plan forecast; conservation and renewable energy are stronger alternatives; the flood of shale gas onto the market is changing the economics of natural gas.
The future is so uncertain, he says, that committing billions to long-term projects like nuclear ventures “are things you would want to approach with great care.”
But no energy board hearings on the plan have been scheduled, though it was released in November, 2010.
Also hanging fire is the proposal to build two brand new nuclear units at Darlington. While the plan has cleared one regulatory hurdle neither the design, builder or cost of the project are yet known.