Harry Koza
Globe and Mail
January 27, 2006

Energy Probe has just released a study of Atomic Energy of Canada Ltd. (AECL). I’m a big fan of Energy Probe because, while they may be tree-hugging enviro-activists, their often libertarian economics mesh nicely with my own, scary, right-wing hidden agenda, so I read it with interest.

Their basic thesis is that federal subsidies to AECL since its inception in 1952 amount to $74.9-billion of today’s federal government debt, or about 12 per cent of the entire outstanding amount.

They get that figure by taking the total amount of direct subsidies ? or "investment," as governments like to call it these days when they spend your money ? to AECL ($20.9-billion, adjusted for inflation) and calculating the net present value in today’s dollars, including compound interest at actual government borrowing rates, which all comes to $74.9-billion.

And that’s not all. AECL is a Crown corporation, which means the taxpayer is also on the hook for a huge whack of contingent liabilities, stuff such as eventually having to pay for the decommissioning and disposal of radioactive wastes in a facility that will have to keep them safe for thousands of years; or the $1.5-billion loan issued in 1997 to the Chinese government so it could buy a couple of Candu reactors on a turnkey basis (AECL is on the hook for any cost overruns) for a fraction of the amount it cost to install one here, like, say, at Darlington.

Anyway, what have taxpayers received for their $75-billion? Well, basically, bupkis.

The provinces that rely on AECL technology, Ontario and New Brunswick, have the only energy systems that need continual injections of government subsidies, er, investment, to stay solvent. They also have the fastest rising electricity rates in Canada.

In foreign markets, the customers for AECL’s Candu technology have a nasty habit of using it to help them make nuclear weapons. India and Pakistan, both Candu customers, have tested nuclear weapons. Romanian dictator Nicolae Ceaucescu, another Candu customer, met an aptly nasty end before he could get around to it. AECL has been developing a new reactor for the export market since 1989 and still has not had a design certified for safe use. It may be another five years before it does. Meanwhile, the competition has certified designs and is winning international sales.

If instead of being dumped into the black hole of AECL, that $75-billion of taxpayers’ money had been invested in the Canadian economy, Energy Probe contends, it would be worth $194.6-billion today. That calculation assumes that all the cash pumped into AECL was borrowed money instead of tax revenue (like there’s a difference? It’s still your wallet), and uses 7.5 per cent as a rate of return.

Of all the myriad wayward Crowns, AECL is one of the federal government’s more egregious money pits, which is really saying something. It has always been good at extracting money from governments: ?You say it’s a massive, really expensive way to boil water, but it also makes toxic waste that lasts for millennia? Who do we make out the cheque to??

Since 1952, during federal Liberal governments, AECL has added $4.313-million a day to the national debt. During Conservative administrations it averaged $2.554-million a day.

If I were PM, my secret agenda would be to take a chainsaw to the forest of deadwood Crown corporations, and use the savings for something productive, such as, oh, I dunno, a honking big tax cut. I’d start with AECL. It’s toast anyway, unless it can somehow manage to find some unsuspecting punter gullible enough to buy another six-pack of Candus.

Dalton McGuinty, come on down! Ontario is committed to building more nukes to meet the province’s soaring electricity demand. That must have something to do with the recent proliferation of commercials on TV from the Canadian Nuclear Association, telling us how nuclear power is great because it is so clean, affordable and reliable. There’s one on TV about every 15 minutes, and let me tell you, when some quasi-government agency or lobby group starts running slick commercials more frequently than even the government’s relentless barrage of gambling ads, it’s going to cost you money. Naturally, this has to do with bonds, as do most things, one way or another.

Say you’re a provincial government, or some kind of quasi-sort-of-not-privatized-semi-public utility or whatever the former Ontario Hydro has metastasized into these days, and you want to finance yet more big expensive water boilers. You’ll need to issue a fat crop of new bonds. And if I were a potential lender to that enterprise, I’d be very leery if they planned on buying more clapped-out Candus from AECL. I’d want a very juicy yield, the most restrictive covenants I could think of, and a government guarantee. So, unless Stephen Harper shares my agenda of clear-cutting the deadwood Crowns, hang on to your wallet.