The CANDU reactor bankrupted Ontario Hydro

Norman Rubin

March 1, 2000

Like me, you can probably remember when the economics of the CANDU nuclear reactor were debatable – when many intelligent, honest people believed that nuclear power was cheap, or at least affordable. Those times are long gone.

Consider Ontario Hydro, the world’s largest customer of CANDU reactors with 20. It amassed an unrepayable or “stranded” debt of $23.3 billion by the time it was broken into smaller companies a few months ago. The CANDU is responsible for most, if not all, of this enormous shortfall.

Even before then, the financial ledgers of this once proud company showed that the company had no value – in fact, it had a negative net value of $6 billion – primarily because the CANDU reactors, plagued with poor reliability and premature shutdowns, were worth less than they cost to build, even after depreciation.

Recent losses from the CANDU reactor at Point Lepreau have also destroyed the net asset value of NB Power.

As if these dismal operating losses weren’t enough, this failed technology has also left an enormous legacy of long-lived cancer- and mutation-causing radioactive wastes. Cleaning up after this failed experiment will cost us all a fortune: For example, Ontario Hydro recently estimated the cost at $18.7 billion in today’s dollars – more than twice the value of all the company’s generating stations!

Fortunately for us, Canada is a wealthy country, and we can afford to cover these bad debts and toxic cleanup costs without spending our food money. But with a track record like that, it’s not surprising that Ottawa’s reactor salesmen have no hope of selling any more CANDU reactors to Ontario Hydro, NB Power, or any other utility company in Canada, the United States, the European Union, or most other regions of the world.

Instead, like a desperate drug dealer, Ottawa is cynically focusing its sales pitch on the few customers that might still be interested: poor countries, especially human rights violators with military ambitions and high levels of corruption. Our officials either don’t know or don’t care that this technology will create multibillion-dollar losses and toxic cleanup costs, which in poor countries will almost surely be paid for from funds earmarked for the essentials of life.

With a few unaccountable officials making multibillion-dollar reactor deals behind closed doors, the corruption is not surprising. Canada’s last two sales to South Korea – reminiscent of earlier sales to South Korea and Argentina – were made with the help of a bribe paid by an agent of Atomic Energy of Canada Limited (AECL), a federal government Crown corporation, to AECL’s customer, the utility company president. Both were finally convicted of bribery in South Korea, but the Canadian government refused to investigate the participation of its own nuclear sales force. South Korea is still one of AECL’s best prospects.

Since the CANDU is a prime source of plutonium and tritium, military ambitions are also not surprising among Ottawa’s reactor customers. Just over a year ago, our early reactor sales to India and Pakistan led to the testing of nuclear weapons. To make matters worse, the physical deterioration of those countries’ reactors has compromised Canada’s stand against nuclear weapons proliferation: Either we idly watch their CANDU reactors become more decrepit and risky or we share our technical information, providing them with more opportunities to misuse our technology and materials for military purposes. Either way, Canadians face embarrassment for having made the world less safe.

But the cost of CANDU exports is more than Canada’s good name. Ottawa continues to sustain this sales effort with taxpayer funds for CANDU development, and for billion-dollar below-market loans to poor countries like China and Turkey. Without these taxpayer funds, the exports would stop. And 10 or 20 years from now, facing huge losses and cleanup liabilities like ours, our foreign reactor customers may well renege on repaying their loans to Canada.

When Ottawa sold the CANDU reactors to Ontario Hydro and NB Power in the 1960s and 1970s, all parties no doubt honestly believed that the investment would pay off. But today, no one realistically believes that China, Romania, Thailand, or Turkey will succeed where Ontario Hydro and NB Power so thoroughly failed.

If you find this whole situation outrageous, as I do, please support us, and join us in spreading the word and the outrage. Together, we must help make this “accepted” activity socially unacceptable, like drunk driving, or planting land mines, or blowing smoke in somebody’s face. Tell your federal representatives, your neighbours, and your newspapers that selling reactors to poor countries has got to stop.

Sincerely,

Norman Rubin
Director, Nuclear Research

 

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