Tom Spears with files from Richard Brennan,The Windsor Star
The Ottawa Citizen
August 19, 1997

Reactor shutdowns make shambles of plan to pay $15B cleanup bill

Just last year, Allan Kupcis, president of Ontario Hydro, sat in an Ottawa hotel room describing how the utility would cover the $15-billion cost of retiring its nuclear stations and radioactive waste.

It would do that, he assured reporters, even though the $2 billion collected for that purpose had all been spent on other things.

Today Mr. Kupcis is gone — he resigned suddenly last week in Hydro’s nuclear fiasco -and so is his plan.

Meanwhile, an all-party legislative committee with the power to subpoena witnesses will be formed to look into the "scandalous behaviour" at Hydro that has thrown the utility into a tailspin. Ontario Energy Minister Norm Sterling said yesterday that last week’s report on Hydro by U.S. nuclear experts was so disturbing that the public must know how it fell from grace and where it is going from here.

The damning report, which cited serious mismanagement and safety concerns, was only hours old when it was announced that Mr. Kupcis had resigned and seven nuclear reactors were to be closed indefinitely.

Some of the reactors face closing 20 years ahead of schedule. But there’s not a single penny in the bank to pay for the decommissioning (cleaning up radioactivity at plant sites) or permanent disposal of highly radioactive used uranium fuel.

And that means taxpayers are on the hook for a $15-billion debt, says Hydro’s biggest critic, Norm Rubin of Energy Probe, an independent group in Toronto that has argued for years Hydro’s reactors would not last their allotted 40 years.

As Mr. Kupcis explained in last year’s interview, the plan was to set aside money earned by the nuclear stations to pay for their eventual decommissioning.

Nuclear plants were supposed to last 40 years, by Ontario Hydro’s estimates. The two stations recently picked for shutdowns (Pickering station A and Bruce station A) had started operations between the mid-1970s and early 1980s; they had, on average, half their working lives left, with plenty of earning power.

Now the earning power is gone. But the cost of cleaning up a plant that has run for 20 years is no different from the cost of cleaning up one that ran for 40 years. Each is a big pile of concrete and steel with radioactive components at the centre. "That’s a totally unfunded liability," says Mr. Rubin.

"Everyone’s talking about (Hydro’s) $32- or $33-billion debt, and nobody’s talking about this other $15 billion" in cleanup costs, he said yesterday.

"The situation has taken a dramatic turn for the urgently worse.

"The earning power of the nuclear units and their ability to set aside money for the job has just dropped by a bunch, and the cost of decommissioning and waste disposal don’t drop proportionately."

"Obviously we have to factor all that (reactor closings) in the financial plan," Hydro spokesman Terry Young said yesterday.

Last week’s announcement means that eight of Hydro’s 19 reactors will be out of action. (One reactor at Bruce A was already down.)

Hydro says the shutdowns will allow for an intensive retraining program that will bring its operations up to par.

As much as $8 billion will be spent on retraining, capital costs and generating replacement power at fossil-fuel stations.

That has nothing to do with the $15 billion it will cost, sooner or later, to retire the nuclear stations.

The $2 billion collected so far for decommissioning came from a surcharge on electrical bills in Ontario in recent years, at a rate of one-tenth of a cent for every kilowatt hour a customer uses. It’s possible that amount could be raised to cover the earlier closings of some reactors, he said.

If that doesn’t raise enough cash, the taxpayers are stuck. The Ontario government guarantees all of Hydro’s debts.

Mr. Kupcis confirmed last year that even the $2 billion collected for these costs had been spent to retire Hydro’s earlier debts — money it borrowed in large part to build nuclear stations, especially the $14-billion Darlington station.

Mr. Kupcis argued there was plenty of time to raise more money in the future by selling electricity from the nuclear plants. Those plants currently supply about two-thirds of Ontario’s electricity.

He said Hydro would sell bonds to cover future cleanup costs if it hadn’t enough cash on hand. In the meantime, the $2 billion remains on Hydro’s books as a provision for cleanup costs.

There’s no provision for the remaining $13 billion.

"They set aside money on the basis that everything was going according to plan," said Mr. Rubin.

He says Hydro should have been saving more in the early years of the reactors in case they didn’t last as long as the theory said they should.

"They’re not talking about waste. How can they slough off $13 billion?" asked Normand de la Chevrotiere, a Kitchener resident whose summer cottage is just outside the Bruce nuclear site. Mr. de la Chevrotiere is also a critic of Hydro’s finances, and has been fighting Hydro plans to expand waste storage at the Bruce.

He has been exchanging letters with Canada’s auditor general, Denis Desautels, arguing that Hydro should be forced to set more money aside for future cleanups.

"If they’re serious about their commitment (to future cleanup of radioactivity), show me the money," Mr. de la Chevrotiere said.

And he said Hydro is likely to have trouble selling billions of dollars worth of bonds for radioactive cleanup.

"If you’re borrowing for a business that’s going to generate revenue, that’s one thing," he said.

"When you’re borrowing to sink waste in the ground and get nothing back, I think lenders would be more reluctant to lend."