Electricity Consumer Protection Pledge FAQ

Electricity Consumer Protection Pledge: Frequently Asked Questions
 
1.       What is it?
 
A.       The Electricity Consumer Protection Pledge is a promise from politicians to not allow nuclear power companies to pass their cost overruns on to Ontario’s electricity consumers and taxpayers.
 
2.       Why is it needed?
 
A.      Every nuclear project in Ontario’s history has gone massively over budget and it is the province’s hard working families that end up paying the bills. On average, the real costs of Ontario’s nuclear projects have been 2.5 times their original cost estimates. Nevertheless, Ontario Power Generation (OPG) is now proposing to spend billions of dollars to re-build its aging Darlington nuclear reactors. If OPG is given another blank cheque to re-build its Darlington Nuclear Station, Ontario’s consumers and taxpayers will once again be on the hook for billions of dollars of cost overruns.
 
3.       Are renewable and natural gas-fired power producers allowed to pass their cost overruns on to consumers and taxpayers?
 
No. The Government of Ontario has signed more than 1,000 contracts with solar, wind, bio-energy, water and natural gas-fired electricity suppliers. None of these suppliers are allowed to pass their cost overruns on to Ontario’s consumers and taxpayers. Only nuclear projects get to stick consumers with their cost overruns. It is time to end this sweetheart deal.
 
4.        How can the Premier of Ontario ensure that government-owned Ontario Power Generation (OPG) is not able to pass its future nuclear cost overruns on to the province’s consumers and taxpayers?
 
A.      To proceed with its proposed Darlington re-build project and protect consumers and taxpayers, OPG must find an independent third party (e.g., AECL/SNC-Lavalin, Areva, General Electric) that will agree to re-build its reactors pursuant to an all-in, fixed-price contract.
 
5.       Will new nuclear projects proceed in Ontario if they are required to compete on a level playing-field with renewable and natural gas-fired combined heat and power projects?
 
A.      In the past, the nuclear industry has low-balled their cost estimates to persuade our political leaders that nuclear power is a low-cost option to keep our lights on. But, they never keep their promises. To date Ontario has completed 11 nuclear projects and all of them have gone massively over budget - on average by 2.5 times.
 
If the nuclear industry is told that they will no longer be allowed to low-ball their cost estimates and pass their cost overruns on to Ontario’s hard families, they will be forced to submit honest price bids that reflect their true costs. Under this level playing-field scenario, the market will reveal that Ontario’s electricity needs can be met at a much lower cost by wind, water, bio-energy and natural gas-fired combined heat and power plants; and by water power imports from Quebec.
 
 For example, in 2008, the Government of Ontario launched a competitive procurement process for the construction of two new nuclear reactors at the Darlington Nuclear Station and four companies were invited to submit bids, namely,  Areva, Atomic Energy of Canada Limited (AECL), GE Hitachi Nuclear Energy and Westinghouse Electric Company. According to the Government’s original proposal, the bidders would not be required to submit a fixed price bid. That is, the winning bidder would be allowed to pass its cost overruns on to Ontario’s electricity consumers. However, when George Smitherman became Minister of Energy he amended the procurement process to require the bidders to submit fixed price bids. AECL was the only company that submitted a fixed price bid, but its price for building new nuclear reactors was three times higher than forecast. As a consequence, the Government of Ontario had a severe case of sticker shock and cancelled the nuclear procurement process. Minister Smitherman said that Ontario would only proceed with the construction of new nuclear reactors if the Government of Canada will subsidize their cost.   Prime Minister Harper has refused to do so.
 
In 2010 Vermont recently signed a 26 year electricity supply contract with Hydro Quebec for water power imports at a price of only 5.8 cents per kWh – that is less than one-third the cost of re-building the Darlington Nuclear Station.
 
6.       Where do our political leaders stand?
 
A.      Premier Dalton McGuinty, NDP Leader Andrea Horwath and Green Party Leader Mike Schreiner have all pledged that they won’t allow nuclear power companies to pass their future cost overruns on to Ontario’s consumers and taxpayers. Unfortunately, Conservative Party Leader Tim Hudak has not said what he will do to protect consumers and taxpayers despite his party’s strong support for expanding the use of nuclear power. We’ve asked – a number of times.