January 13, 2002
TORONTO – Ontario’s multibillion-dollar effort to refurbish ailing nuclear plants is running years behind schedule and hundreds of millions of dollars over budget, Southam News has learned.
Restarting the four mothballed nuclear reactors that make up the Pickering A unit will cost $1.5 billion, $400 million more than previously estimated, and take at least a year longer than forecast.
Meanwhile, separate efforts to update the province’s other power stations are running three years behind schedule and information comparing current cost estimates with original projections is sketchy at best.
In its 1997 annual report, Ontario Hydro said it would spend $4.9 billion between 1997 and 2001 to refurbish the 12 reactors kept in service at the Bruce B, Pickering B and Darlington power station. The price tag included the cost of purchasing replacement power during temporary reactor shutdowns.
Ted Gruetzner, a spokesman for Ontario Power Generation, a successor company to Ontario Hydro, now says the provincially owned company has not kept track of replacement power costs. The latest estimate for reactor upgrades alone, he says, is $1.4 billion for a project that will run through to 2004. Gruetzner said the total includes some work already done on the four reactors at the Bruce B nuclear station, which the Ontario government leased to British-owned Bruce Power in May.
Southam News tracked the delays and escalating costs through Ontario Hydro and OPG annual reports, recovery plan documents and quarterly financial results issued since 1997.
Energy Minister Jim Wilson defended the performance of the government’s power-generating company: “The government is satisfied as the shareholder on behalf of the people of Ontario,” he said in an interview. “They (OPG) even got into having to develop some new technology along the way to bring these reactors back. So while it may be taking longer and it is costing more, I can’t blame the company or the people doing the work given that it has been fully explained to us all the way along.”
Wilson said the government in 1997 went ahead with one of the most ambitious nuclear recovery programs in the world because Ontarians had already invested heavily in the construction of the nuclear stations.
“There has been some unforeseen work that has had to be done at considerable cost, but I still think at the end of the day, and we’ve looked at it very carefully all the way along, that relatively emission-free, inexpensive power (from nuclear reactors) is going to be very much in demand, particularly in the competitive electricity market that we are about to open (to competition).”
Gruetzner says the improvements have been worth the money, time and effort. After receiving a 58.5 rating out of 100 in 1997 on an international index that measures nuclear plant performance, the rating for Ontario nuclear stations has climbed to 81.4, he said. Although U.S. plants are still ahead with a 91-point rating, “we’ve made substantial progress,” in terms of plant safety and efficiency, Gruetzner insisted.
Others are more skeptical.
“The Ontario government is the only shareholder in OPG and ultimately (the cost overruns and delays) will have an impact on electricity rates and it won’t be a positive impact,” says Liberal energy critic Sean Conway, noting also that OPG pays an earnings-based dividend to the provincial government for use against the $21-billion debt run up by Ontario Hydro.
In OPG’s third-quarter financial results, costs associated with refurbishing the Pickering A station were cited as one reason earnings fell to $228 million in the first nine months of 2001 compared to $534 million the year before.
Ontario Hydro launched its ambitious plan to refurbish Ontario’s nuclear reactors in 1997 following a devastating internal review of its nuclear division. The company’s president at the time resigned over the safety and management problems pinpointed by the team of American nuclear experts brought in to examine the nuclear operations and the recovery plan was adopted.
Under its terms, eight reactors at the Pickering A and Bruce A power stations were mothballed to free up resources for improvements at the Bruce B, Pickering B and Darlington nuclear stations, where 12 reactors remained in use.
Conway, who sat on a legislative committee that reviewed the nuclear division’s woes, said there were doubts from the start about Ontario Hydro’s cost estimates and schedule. Historically, he says, when it comes to Ontario’s nuclear assets “you could always count on the costs being higher, the time being longer and the problems being more intractable.”
But the province was also dependent on nuclear generation for 60 per cent of its electricity needs and billions had already been invested to build the nuclear stations, he said.
“This is one area of public policy where there needs to be much stronger, much more vigilant public oversight,” Conway said. “Unfortunately, we know less about the hydro successor companies today than we did about Ontario Hydro three or four years ago and we didn’t know much back then.”
Although OPG is still a government-owned enterprise, the Harris Tories have exempted it from freedom of information legislation, Conway said. He noted that the company, which as of May 1 will have to compete with other firms to sell its electricity, is also using its new status as a competitive enterprise to hide what it says it commercially sensitive information.
Tom Adams of the watchdog group Energy Probe said “every nuclear construction project ever undertaken in Ontario has been over budget and behind schedule. So in some ways history is repeating itself.”
He said OPG’s claim that it hasn’t tracked the replacement power costs associated with the overhaul of its 12 operating reactors is more of “the same old story.”
“The lack of detailed accounting for these things is one of the techniques that the nuclear industry has used to keep people in such a muddle that they can continue to claim with a straight face that they are cost effective,” he said, noting that original costs of the refurbishing project ranged as high as $8 billion.
“The whole problem of nuclear accounting has been a swamp from the beginning.”
Anatomy of a nuclear recovery: Plan One
Pickering Station A
OPG’s restart of four mothballed reactors at the Pickering A nuclear station will now cost $1.5 billion rather earlier estimates of $1.1 billion, according to OPG’s 2001 second-quarter financial report. The increase, the utility said, is the result of the “discovery of new work requirements related to plant condition, costs incurred to ensure environmental compliance and a delay in the project schedule.” Back in 1997, Hydro officials quoted in the industry mainstay Nucleonics Week said the project would cost $800 million to $900 million.(*) Ontario Hydro’s 1997 annual report said all of the Pickering A reactors would be put back into service between 2000 and 2002. The latest prediction in the company’s third-quarter financial report says the first of the reactors will come back into service only in mid-2002 with the rest to follow at six month intervals.
Anatomy of a nuclear recovery: Plan Two
Nuclear Asset Optimization Plan for 12 reactors at Pickering B, Bruce B and Darlington power stations.
The 1997 annual report said it would cost $4.895 billion to purchase replacement power (during temporary shutdowns) and refurbish the 12 reactors at the three stations. The project was to be completed between 1997 and 2001. OPG officials now say the company did not track the cost of purchasing replacement power. The latest forecasts say it will cost $1.4 billion just to sort out problems at the reactors and take until 2004, three years longer than planned. In the meantime, the Ontario government in May 2001 signed a long-term lease with Bruce Power which gave the British-owned firm responsibility for the four operating reactors at Bruce B and the mothballed Bruce A station.