Thomas Adams and Norman Rubin
Energy Probe
October 20, 1997

Good evening. My name is Tom Adams, Executive Director of Energy Probe. Joining me today is Norman Rubin, Energy Probe’s Director of Nuclear Research. Energy Probe is a national environmental and consumer advocacy organization specializing in energy issues. In Ontario our foundation has approximately 20,000 supporters. We have been actively addressing issues related to Ontario Hydro for about 25 years. Since 1982, with the publication of a book by our colleague Lawrence Solomon called Breaking up Ontario Hydro’s Monopoly, Energy Probe has been advocating a power system for Ontario based on the principles of customer choice. Since then we have been continuously advocating competition, fair and open access to the electrical grid for all power producers, financial accountability, and strict environmental regulation.

The purpose of our presentation today is to briefly summarize what went wrong and why, to outline the extent of the nuclear problems that beset Ontario, and to address two questions we consider key to this Committee’s deliberations:

• What can we expect to go wrong (& right) in future?
• Where does Ontario go from here?

We will close our prepared remarks by presenting our recommendations to the Committee.

We have provided materials in a briefing binder for each member of the Committee. The materials, most of which are archival, illustrate some of the key moments in Ontario’s nuclear history. As the materials document, Energy Probe clearly warned Ontario Hydro about the business risks of nuclear investment strategy in 1981, we attacked the official estimates of nuclear cost as incomplete in 1989, in 1989 through 1991 we analyzed a steady decline in nuclear reactor reliability that was already mathematically demonstrable. In all three cases, our predictions based on factual evidence have come true; in all three cases, Ontario Hydro and its political masters continued to increase the province’s nuclear risks despite that evidence.

The scope of Ontario’s nuclear problems are sweeping and grave. The health and security of Ontarians and our environment are threated by the continuing operation of our nuclear plants. Taxpayers and rate payers are facing probably tens of billions of dollars of costs caused by uneconomic nuclear investments. Electricity reliability in Ontario is now hanging by a thread. To keep the lights on this winter, Ontario Hydro is hoping to restore Bruce units 3 and 4 to partial service and the four Darlington units to full service (they are now limited to 55% of their full output due to safety concerns over a design flaw). If these units are not restored or if other unexpected difficulties arise we could see industrial customers cut back, Ontario Hydro appealing to consumers to cut consumption, periodic brownouts due to planned voltage reductions, or worse.

What went wrong, the safety of Ontario’s reactors, and the role of liability

Energy Probe agrees with Ontario Hydro that Hydro’s nuclear problems can be attributed to bad management. But while Hydro’s recent reports focus on bad management of reactor operating staff, our analysis is more fundamental: we think that Hydro’s worst management decisions were made when Hydro decided to "bet" tens of billions of dollars on an experimental, untested, and inherently unsafe technology. That error was made in the 1970s and early 80s. It was compounded by Hydro management decisions throughout the 1980s to maximize nuclear production and delay nuclear maintenance. Those decisions successfully deferred Hydro’s day of reckoning until Darlington was virtually complete — thereby thwarting the short-term goals of Hydro’s critics. They also assured Hydro’s financial and political demise in the longer term. The 1980s were a triumph of political gamesmanship and empire building over wisdom and prudence. Unfortunately, Ontario Hydro management is still playing for a Hydro "win", rather than an Ontario "win".

The creative nuclear accounting that let Hydro pretend it was a provider of low-cost electricity in the 1980s is reaching even more absurd lengths in the late 1990s. As a result, Hydro is planning to run fiscal deficits comparable in size to this Government’s painful spending cuts. In addition, Hydro is planning to leave our children with environmental liabilities for nuclear cleanup that will cost $15 billion in today’s dollars, according to Ontario Hydro’s own estimates. Just as in the 1980’s, the goal is to freeze the price of electricity, while the cost of electricity continues to skyrocket. That strategy may or may not work until the next election, but it cannot work for long.

Even more ominous, Hydro persists in applying wishful thinking to the field of nuclear safety. Throughout the IIPA report — despite its rather honest and brutal examination of Hydro’s human failings — there is a laboured attempt to convince the reader that the CANDU reactor is an inherently safe, forgiving piece of technology. It’s worth remembering that virtually every analysis of actual technological disasters, from Bhopal to Chernobyl to the Challenger, have found that a root cause of each of those accidents was the owners’ overestimates of the safety of the technology.

Many Ontario residents now know that a federal law called the Nuclear Liability Act protects Ontario Hydro and all its suppliers from liability for any reactor accident except the most trivial. Specifically, Ontario Hydro’s insurers would be responsible for the first $75 million of damages, and the designers, suppliers, and builders would not be responsible for any damages at all. Federal parliament could appropriate funds for victims, if Parliament chose to do so. As some of you may know, Energy Probe, the City of Toronto and Dr. Rosalie Bertell were unsuccessful in striking down this law in the lower court, and were unable to proceed to appeal, largely because of Ontario Hydro’s energetic defense of this federal law in court. So if (God Forbid!) there is a major reactor accident in Ontario, the polluter will definitely not pay.

Meanwhile, as Ontario’s reactors start to shut down, we are entering a period of instability and risk:

• Morale among Hydro’s nuclear operators is at an all-time low;
• the field of nuclear energy and reactor safety, which used to appeal to some of the best and brightest of technology students when I was in university, is now correctly seen as a "dead-end job";
• Hydro can no longer afford its traditional style of "gold-plated engineering" to solve its nuclear problems, simply because Hydro’s customers and competitors can now undercut Hydro’s costs.

We believe this situation places an unrealistically difficult burden on the federal Atomic Energy Control Board — an agency historically much closer to, and more comfortable with, the nuclear industry than the concerned public. In short, we believe it is unrealistic for this Committee to expect a safe "sunset" for nuclear energy in Ontario, especially as long as those who can do the most to protect the people at risk are artificially protected from being responsible for their neighbours’ losses.

Energy Probe’s Recommendations to the Ontario Select Committee on Ontario Hydro Nuclear Affairs:

1. The eight reactors at Pickering A and Bruce A should be written off and the units permanently closed.

2. The Committee should urge the government to investigate all opportunities for financing future nuclear investments (beginning with Ontario Hydro’s planned ~$1.6 billion for "nuclear recovery") outside the public purse — e.g. out of the ~$9 billion Ontario Hydro pension fund, or by outside-financed equity transfer to Ontario Hydro’s unions.

3. Ontario Hydro’s financial reporting should be thoroughly revised to accurately report all expenditures and liabilities. In particular:

   3a. Ontario Hydro should not be allowed to capitalize any costs related to operating or maintaining its reactors.

   3b. Depreciation of nuclear assets and all financial implications related to depreciation period should be based not on 40 years of reactor service life as is currently the case but on 25 years.

   3c. Nuclear waste disposal and decommissioning liabilities should be funded in an external account. If Ontario Hydro is unable to produce the money (roughly $2.8 billion) it has collected from customers for the purpose of nuclear waste disposal and decommissioning, the government must produce the money, to avoid burdening future Ontarians with the costs of cleaning up after us.

    

4. The government of Ontario should break up Ontario Hydro with a view to permitting customers to buy power from producers of their choice and making power producers accountable to customers and investors.

    

5. The Committee should recommend that the Ontario Government begin a transition to a world of full nuclear accident liability. The Ontario Government should legislate that as of a date certain in the near future (perhaps 2005) no nuclear reactor will be permitted to operate in Ontario unless its owners and operators are liable without limit for the off-site consequences of a reactor accident, and have demonstrated the capability of discharging that liability.