Ottawa won’t say if taxpayers on hook

Tyler Hamilton
Toronto Star
January 24, 2007

Canada’s minister of natural resources was cagey yesterday when asked if the federal government is prepared to share the financial risk of building new Candu nuclear reactors in Ontario.

He did say, however, that federally owned Atomic Energy of Canada Ltd. will have to compete on its own merits if it hopes to sell reactors in the province.

“AECL is going to have to compete,” said Gary Lunn, speaking to reporters yesterday after giving a speech at the Economic Club of Toronto.

“We believe in a free market system. I think AECL can compete on its own to give a turnkey contract – a guaranteed fixed price on the construction of nuclear reactors.”

Unanswered is whether Canadian taxpayers will be on the hook – and if so, by how much – if AECL went over budget or experienced delays.

“There’s clearly substantial risk in there that isn’t quantified but is borne by the federal taxpayer,” said Tom Adams, an energy analyst with Energy Probe.

“Lunn saying, ‘a deal is a deal.’ That just doesn’t cut it when it comes to a Crown corporation. AECL doesn’t have any assets of its own at risk, so this is all government money.”

Ontario Energy Minister Dwight Duncan has made it clear he is willing to consider any nuclear technology – home-grown or foreign – if the end result is a deal that protects the province’s taxpayers and local jobs.

The energy ministry estimates the province will need 1,000 megawatts of new nuclear generation before 2020, possibly more if existing reactors can’t be refurbished.

Duncan recently told the Toronto Star he expects Ottawa to share in the risk of any new Candu project, particularly if Ontario chooses AECL’s next-generation Advanced Candu Reactor design, which several sources say is still on the drawing board.

“There’s risk associated with time, investment and cost,” said Duncan. “When you’re the first using a new technology there’s got to be a premium for that.”

Even the Candu 6 design, which has been built on time and on budget in China and South Korea, could be a risky bet for Ontario if the federal nuclear regulator moves forward on plans to impose stricter international safety standards.

Ottawa, meanwhile, fully expects the province to go with AECL reactors. Lunn said last month it was “imperative” Ontario choose the technology. Yesterday, Lunn spoke more generally about the “renaissance” in nuclear power and how the emission-free energy source is key to achieving an “ultra-low carbon” economy, particularly for oil-sands development.

His optimism contrasts with comments last week from Jim Rogers, chief executive of U.S. power generator Duke Energy, who told the North Carolina Utilities Commission that, despite the company’s plans to build new reactors, the disposal of spent nuclear fuel and financial risks remain huge barriers for the industry.

“I’m not a true believer,” Rogers told the commission. “We’re talking about a renaissance in nuclear. I don’t see it.”

Earlier this month, federal Liberal Leader Stéphane Dion expressed his own reservations about nuclear power, citing concerns about radioactive waste and how to safely store it.

Still, the expected boom in international reactor sales has sparked speculation that Ottawa is considering selling all or part of AECL’s commercial business. Lunn wouldn’t say if the government is exploring privatization, but confirmed that his department has been approached about it.

“From time to time, even under my watch, there are various companies that come forward expressing interest in AECL,” he said. “But it’s not something we’re discussing at this point.”

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