Energy Probe

Romanian reactor’s faulty environmental assessment

Posted on January 14, 2002 by energyprbe

Thomas Adams and Norman Rubin

January 14, 2002

Energy Probe’s Supplementary Comments on Atomic Energy of Canada Limited’s (AECL’s) Cernavoda Reactor 2
Environmental Assessment Summary

Introduction:

Energy Probe has formally endorsed the elaborate and carefully documented Comments by Non-Government Organizations (PDF file) on Atomic Energy of Canada Limited’s (AECL) Cernavoda Reactor 2 Environmental Assessment Summary (henceforth “NGO Comments”), largely prepared by David Martin and the recently tragically deceased Irene Kock, both of Sierra Club of Canada’s Nuclear Project. In addition, we hereby submit the following supplementary comments on this Environmental Assessment (the EA).

The context of this Environmental Assessment, including “other impacts”:

This EA review is being conducted under a process with outrageous shortcomings – detailed in the NGO Comments and in the comments from our sister organization Probe International. Briefly, these include incomplete disclosure, rushed time lines, and total lack of accountability. Perhaps even more outrageous is the fact that this EA review is apparently the only opportunity for the citizens and taxpayers of Canada and Romania to participate in the decision of their two governments to proceed with this project at taxpayers’ expense and risk.

Obviously, any assessment of whether or not this publicly funded project is worthy to proceed must properly include an Environmental Assessment, but it must also properly include an assessment of the project’s other impacts – both its expected impacts (costs and benefits) and its possible impacts, or “risks.” These other impacts are primarily the commercial costs, benefits, and risks that ordinary, private buyers and sellers routinely consider and weigh in deciding whether or not to proceed in a business transaction. In the case of government-agency transactions like the export of AECL’s CANDU reactors to a foreign country like Romania, the citizens of both countries are entitled to a full assessment of these costs and benefits and risks, not just the predicted impact on the local water temperature, etc. As flawed as this EA process is as an assessment of environmental costs, benefits, and risks (and it is deeply flawed), it is positively worthless as an assessment of the other impacts of this project. The lack of an open assessment of these other impacts – either in Canada or in Romania – renders this EA review an absurdity, especially given the current unwillingness of private buyers and sellers anywhere in the world to begin construction of nuclear generating stations, CANDU or otherwise. That unwillingness suggests prima facie that the non-environmental impacts of this project are likely strongly negative, when fully integrated.

Put bluntly, the level of environmental impact that might be acceptable in return for a least-cost supply of reliable electricity produced at the risk of willing investors, is one thing; the level that might be acceptable in return for a publicly subsidized, unreliable source of electricity (like Pickering-A, Bruce-A, or Point Lepreau, for example) at the continued risk of taxpayers as unwilling investors, is clearly another.

It is important to note that the commercial risks and net costs of CANDU reactors used to be theoretical, but are now painfully real: The two Canadian utilities with significant nuclear investments relative to their size – the former Ontario Hydro and New Brunswick Power – were essentially bankrupted (brought to a state where their liabilities exceeded their assets) by their CANDU reactor investments, despite receiving extensive subsidization and monopoly privileges from their governments. By not expressly addressing the significant likelihood that Cernavoda-2 will also be a drain on public finances and an unreliable source of electricity, this EA does not judge the project’s environmental impacts against the proper standards. And it certainly provides no rational basis for concluding that this project is worthy to proceed.

The EA’s inadequate assessment of the need for Cernavoda-2:

The needs assessment for the reactor in the EA documents is a reflection of classical central planning. There appears to be no consideration of competition as an alternative means of meeting the electricity needs of Romanians. There appears to be no consideration of whether the reactor investment could stand on its own as a private venture – not surprising given the obvious answer to this question. The EA repeatedly assures the reader that the electricity the reactor will produce will be inexpensive – without any supporting figures, assumptions or calculations. Unfortunately, Canadians have no recourse against AECL for similar assurances, now demonstrably false, concerning past reactor projects, and Romanians are presumably no better protected in this project. Such unaccountable assurances from a usually unreliable source have no credibility, in our view. It is ironic that Canadian jurisdictions are generally escaping the very form of central-planning decision-making that AECL – a Canadian corporation – adopts without question in this EA. (Or it may not be ironic, considering how often we have heard Canadian nuclear officials expressing envy of their Soviet counterparts.)

Past Environmental Assessments of Canadian nuclear projects:

The EA report claims that: “The CANDU 6 technology has undergone environmental assessments, both in Canada and internationally, starting with the Canadian panel review of Point Lepreau Unit 1, in New Brunswick in 1977, and including the Chinese environmental assessment of the Qinshan Phase III Project. Each of these projects was approved to proceed.” But the environmental assessment of the Qinshan Phase III Project was secret and not independently adjudicated. The complete Cernavoda-2 EA documents are secret and the EA will not be subject to independent adjudication.

It is understandable but unfortunate that the EA document does not recount the most striking fact about environmental assessment reviews of CANDU reactors in Canada: All recent public environmental assessment panel reviews of planned nuclear expansions in Canada – most notably the federal assessment of the non-existent Point Lepreau Unit 2 and the provincial (Ontario) environmental assessment of the then Ontario Hydro’s so-called “Demand/Supply Plan,” which envisaged the construction of 10 (non-existent) CANDU reactors – contributed to the sensible and beneficial decisions not to construct those reactors. It is also worth noting that the most recent environmental assessment panel review of a nuclear proposal from the author of this EA – AECL – was the federal panel review of AECL’s concept for deep geological disposal of radioactive waste (“spent fuel”). That review was charged with deciding whether or not AECL’s concept was “safe” and “acceptable,” and whether or not it should receive approval to proceed to the next step – selection of an underground disposal site. After nine years of deliberation, that independent panel:

• unanimously concluded that AECL’s concept was not acceptable;

• could not reach agreement on whether or not AECL’s concept was safe; and

• unanimously recommended that approval not be given to AECL to proceed to site selection.

In short, the record of the CANDU reactor and AECL before public, independent EA panel reviews is at best mixed, and the recent record is one of consistent rejection, either during the review or afterwards. This fact sets the context for (a) the inadequacies of this EA and (b) the Canadian government’s decision to leave the Cernavoda-2 decisions in the hands of AECL and EDC, rather than submitting them to an independent panel review.

Cernavoda-2 design flaws:

The Cernavoda-2 design repeats many of the flaws of CANDU designs used in Canada. For example:

• Like all Canadian CANDUs, the station will have open loop service water systems, a design that increases environmental insults compared to closed loop systems. Radioactive waste getting into the service water will be collected and discharged into the environment via the Active Liquid Waste Treatment (ALWT) System. Based on the Canadian experience, we assume that little or no treatment will be applied to the waste before discharge, relying on the obsolete belief that “the solution to pollution is dilution.”

• Similar to the Pickering Station, the cooling water intake comes from a shipping canal, making the station particularly vulnerable to marine security threats – perhaps an understandable oversight, since security threats don’t even exist in the EA (see below)!

• The Emergency Water Supply System is shared between C1 and C2, a safety shortcut that is not permitted by US nuclear regulators. This oversight is also understandable, since the possibility of two-unit accidents at Cernavoda 1 and 2 is dismissed with the wave of a hand in the EA (see below).

The EA’s treatment of decommissioning:

The EA’s claims regarding decommissioning are especially false and misleading: “Canadian experience indicates that decommissioning nuclear facilities can be carried out without significant adverse health and environmental effects. The ICRP 60 occupational dose limit (Section 2.2.4) was not exceeded by any of the 130 workers decommissioning the Gentilly 1 NPP over a two-year period, and the average dose was 0.35 mSv·a¹.” Nowhere in the documents does AECL admit that G1 was a failed prototype reactor that operated for no more than a few hundred full-power hours and therefore contained only a tiny fraction of the radioactive contamination that would be experienced if C2 operates for any significant period of time, nor the fact that the decommissioning is not yet complete, and has not included dismantlement – the activity that most people think of as “decommissioning” (as indicated in the NGO Comments).

The EA’s (non-)treatment of sabotage, terrorism, human malice:

The EA completely ignores the threat of malicious action. There is no indication that even the minimal security enhancement required in Canada after the events of 2001/9/11 are being considered for C2 (or C1). The main summary document contains not a single reference to any grammatical forms of the words “sabotage,” “terror,” or “malice”(!).

Among the many passages displaying accidental or intentional ignorance of the possibility of malicious action are the following:

“For the Cernavoda NPP Site, these potential events included meteorological events, hydrological events (including flooding due to water level variations), earthquakes and human-induced events (such as land, sea and air traffic accidents).” [Most “normal people” understand all too well that “human-induced events” include more than just accidents! Why doesn’t AECL?]

. . .

The definition of abnormal events: “within the context of the environmental assessment, “abnormal events” refer to process system failures, component failures or operational occurrences that result in a release of radioactive or non-radioactive substances. However, abnormal events exclude:

• events in which one of the safety systems is required to limit the consequences of releases from radioactive substances.

• events that result in fuel failure, and

• events where the normal operations regulatory limits are exceeded.

[At least they were good enough to tell us they were leaving out the important categories.]

. . .

Accidents are defined as: “a failure of a process system or component or a procedure which, in absence of a protective or mitigative action either automatic or operator-initiated, could lead to a significant release of radioactive material within and/or outside of the plant.” [But they are assuming that the “protective or mitigative action” always occurs. We wish the real world worked that way.]

. . .

Cumulative or simultaneous abnormal events would be unlikely because the two units [Cernavoda 1 and 2] operate independently . . . There could, however, be exceptional circumstances where accidents could occur at both units with higher than normal releases, doses and effects. Such occurrences, however, would be highly unlikely given the extensive operational experience from western-designed NPPs. [We all used to make similar statements about simultaneous accidents in high-rise office towers, but they sound foolish since 2001/9/11. Given the large but unknown contribution of seismic events to total CANDU accident risk, this didn’t really sound very smart before 2001/9/11, either.]

Conclusion:

Both before and after reviewing this EA summary, Energy Probe does not believe that the costs and risks of this project are acceptable to Canadians, Romanians, or the environment.

Posted in Nuclear Economics, Nuclear Plant Security, Nuclear Power, Towards Shutdown | Tagged nuclear costs | Leave a comment

Pickering A slow start

Posted on January 13, 2002 by Other News Sources

April Lindgren
Southam News
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.

Posted in Nuclear Economics | Tagged nuclear costs | Leave a comment

Chronic Insecurity: Three Case Studies

Posted on January 13, 2002 by Other News Sources

TomPaine.com
January 13, 2002

The Project on Government Oversight investigates, exposes, and seeks to remedy systemic abuses of power, mismanagement, and subservience by the federal government to powerful special interests.

The following is an edited excerpt from “U.S. Nuclear Weapons Complex: Security At Risk” by the Project On Government Oversight. See POGO’s Web site for the full text of this excerpt and the entire report.

Three case studies provide an insight into how the [Department of Energy’s security] system has failed: the plant at Rocky Flats, outside of Denver, Colorado; Technical Area-18 (TA-18) at Los Alamos, New Mexico; and the Transportation Security Division, which travels the United States interstate highways. The repetition of problems in these case studies should make it clear that these problems are systemic, constant and recurring.

Rocky Flats

Rocky Flats, outside Denver, Colorado, was a major weapons production facility during the Cold War where the plutonium parts for nuclear weapons were milled and fabricated. Tens of tons of plutonium [PU] as well as uranium [HEU] are stored at Rocky Flats. DOE is currently in the process of shutting down the plant and de-inventorying — sending the PU to Savannah River and the HEU to Oak Ridge. Currently, there are still large quantities of Special Nuclear Materials (SNM) at Rocky Flats that are attractive to terrorists. Wackenhut Security, a private security firm, supplies the protective force. Kaiser-Hill LLC is the prime contractor managing Rocky Flats.

In 1992, members of the Wackenhut security force were upset because they argued federal oversight was too overzealous. This tension between federal overseers and the contractor is highly unusual in the DOE complex. In a July 16, 1992 letter to Terry Vaeth, DOE Manager at Rocky Flats, Timothy P. Cole, President of Wackenhut Services Incorporated stated, after taking over security at the site in July 1990:

“During our first few months we were racing to prepare for an upcoming DOE OSE Inspection and Evaluation. Further, the plant mission was undergoing intense scrutiny based on safety and environmental concerns. Those priority issues coupled with fundamental security needs put us in a position of vulnerability from a performance measurement standpoint. There weren’t enough hours in the day. The Protective Force supervisory ranks and the number of cleared, trained Security Inspectors were inadequate for accomplishment of the security mission …

“The purpose is not to make excuses, explain away, or otherwise disclaim our performance deficiencies. We have privately and publicly accepted responsibility for all of our actions and stepped up to problems and emphasized corrective actions rather than arguing the issues….

“I must tell you very frankly that we have been exposed to ‘management terrorism’ and ‘organizational sedition’ for well over a year….

“The DOE management oversight process at RFO [Rocky Flats Office] is, in my opinion, heavily slanted toward the negative to include specific ‘targeting’ of people in management as well as individual members of the Protective Force.”

As even Cole acknowledged, Wackenhut was having trouble performing some basic security duties. For example, according to sources, in a surprise security test at that time, federal security overseers passed through a secured entrance with a pistol in a coffee can — an obvious breach of security.

Wackenhut President Timothy Cole’s letter warned Rocky Flats federal security officials, “The distrust, doubt and fear our Security Inspectors have for certain DOE officials is unhealthy and may lead to serious consequences.” (Emphasis added.) The federal Director of Security was removed, and Wackenhut retained their contract….

In 1997, unauthorized taped phone calls with DOE Headquarters Director of Security Col. Edward McCallum by Wackenhut whistleblower Jeff Peters revealed McCallum’s concern that terrorists could gain access to large quantities of plutonium and cause a sizable nuclear detonation. McCallum stated, “I’ve said in front of the Deputy Secretary and people at that level, I think the citizens, the employees at the plant, and the citizens of Colorado are at extremely high risk for no reason.” These concerns were first raised in 1995 — two years earlier — yet they had remained unresolved….

Several whistleblowers attended a summer 1998 briefing of all DOE Security Directors at Savannah River Site near Aiken, SC, by a Navy Captain regarding force-on-force drills conducted by the Navy SEALs at Rocky Flats. During the tests, the SEALs successfully entered the site through the perimeter fence, getting into a nearby building, and “stealing” a significant quantity of plutonium, exiting the building, getting out through the fence and escaping without being caught. After this embarrassment, for the next two force-on-force tests, Rocky Flats management “over controlled” and demanded that the SEALs could not go through the same hole from which they came in — they had to take the plutonium and climb a guard tower and rope it over the fence. (Of course, real terrorists could have just thrown it over the fence.) In these two contrived tests, the protective force successfully defended the facility. According to the whistleblowers, the SEAL Captain announced he would never waste the time of the SEALs coming back to a DOE site, because the tests were unrealistic.

In July 1999, then-Energy Secretary Bill Richardson sent a security team to Rocky Flats. Two glaring vulnerabilities were found, strikingly similar to those found in 1995 and again in 1997. Rocky Flats management vehemently denied the team’s accusation that plutonium was kept out of the vault without additional protective forces in place, as is required. Several hours later in the meeting, they finally admitted they had plutonium out of the vault in a high-risk situation eight hours a day, five days a week. The significance of this dangerous practice was highlighted when, according to security team members, only a few weeks earlier an employee had walked out of a key security door setting off the alarm — yet the protective force could never find the employee. Because the PU was inadequately protected, the employee could have taken some of it, walked out and thrown it over the fence — never to be discovered.

Also according to sources, the security team found the vehicle barrier on the wrong fence. A vehicle barrier is a heavy steel cable — strong enough to stop a speeding truck loaded with thousands of pounds of explosives — that should be attached to the inside fence of a two-fence perimeter. The Rocky Flats cable was on the outside fence, which does not have alarms. Therefore a terrorist could, undetected, cut the cable and drive through the outside fence, easily crash through the inside chain link fence in a truck loaded with explosives, park alongside a nearby vault, and detonate a bomb. This vulnerability had been identified in 1996, and had never been fixed. In late 1999, under pressure from Richardson’s team, this problem was addressed within hours at minimal cost by placing large boulders around the fence.

In October 1999, the DOE security czar sent DOE and DOD [Department of Defense] experts to Rocky Flats to resolve the outstanding problems found by Richardson’s team. At first, Rocky Flats DOE management refused to allow the team on the site. Once they were permitted inside, the experts still found the same problems Rocky Flats had agreed to fix two years earlier.

When the experts returned in March 2000 to validate the protective force changes, they found a different but alarming trend. Repeatedly during force-on-force drills, the protective forces were “shooting” everyone in sight – mock terrorists, scientists, “controllers wearing orange safety vests, and each other” – in a simulated test. The rules of deadly force were completely abandoned to pass the tests and prove “low risk,” the same problem noted in 1998 and again in 1999.

Los Alamos Technical Area-18

Technical Area-18 (TA-18), run by the University of California, is one of a number of technical areas at Los Alamos. It houses several nuclear burst reactors and tons of weapons-grade HEU and PU. The facility was built on the floor of a canyon in the 1940’s so that the walls of the canyon would absorb the radiation from the reactors. However, today the lack of control of the high ground around the canyon makes the site extremely difficult to defend.

Special Nuclear Materials (SNM) are stored in vaults at several locations on the site. The security infrastructure has been in a state of disrepair. As recently as a few years ago it was found that someone could get inside the fence without being detected because of the poor quality of the closed-circuit TV cameras. Until recently one of the vaults storing SNM even had a window.

The House Subcommittee on Oversight and Investigations was concerned about the security of this site as early as the early 1980’s. According to former Chairman John Dingell, “The Subcommittee’s work on this matter began in 1981 in response to efforts to undermine independent review of security threats…. [T]he safeguards at the most critical facilities — which included Los Alamos — were in shambles while, at the same time, DOE’s Office of Safeguards and Security was giving the facilities a clean bill of health.”

In 1997, a special unit of the U.S. Army Special Forces was the adversary during a force-on-force exercise. The normal theft scenario is to “steal” enough SNM for a crude nuclear weapon that would fit in rucksacks. But, according to the Wall Street Journal, this exercise required that they “steal” more HEU than a person can carry. Not to be outmaneuvered, the Army Special Forces commandos went to Home Depot and bought a garden cart. They attacked TA-18, loaded the garden cart with nuclear materials, and left the facility. “[T]he invaders reached the simulated objective of the game: enough nuclear material to make an atom bomb.” And they did so with relative ease.

As the Wall Street Journal reported:

“The Garden Cart attackers … used snipers hidden in the hills to “kill” the first guards [protective forces] who arrived. Because they happened to be the commanders of the guard force, the rest of the force was thrown into disarray. Many of them also were “killed” as they arrived in small groups down a narrow road leading to TA-18. ‘[The Special Forces] took them out piecemeal as they came in,’ says one participant in the game, whose account wasn’t challenged by DOE or lab officials.”

As the Wall Sreet Journal further noted, “The 1997 mock invasion succeeded despite months of guard [protective forces] training and dozens of computerized battle simulations showing that newly beefed-up defenders of the facility would win.”

In 1998, while completing their required annual survey, the Albuquerque Operations Office found the security at TA-18 and other Los Alamos sites unsatisfactory. By the time the report made its way through top management, the unsatisfactory became satisfactory, with no change in actual security. A force-on-force exercise was performed by the 1998 survey team, but they reported that the Los Alamos protective force had compromised the exercise. The DOE Inspector General found that DOE supervisors in Albuquerque refused to investigate the matter….

In the Summer of 1999, Secretary Richardson’s security team inspected Los Alamos and recommended that TA-18 be shut down and immediately de-inventoried because it could not be defended. However, DOE management persuaded Secretary Richardson not to shut down the site immediately, but instead to further study the matter. In the Fall of 1999, Secretary Richardson created a relocation team to recommend alternative sites for the TA-18 missions.

In January 2000, while on a site visit to TA-18, members of the relocation team raised questions about an obvious vulnerability at this site. In a semi-hardened building, one of the burst reactors with large plates of HEU fuel was properly stored in an upgraded vault. Another almost identical reactor was sitting in the middle of an open area. The obvious security issue was to either put the reactor in a vault, or take the fuel out and store it in a vault. Los Alamos management refused to do either….

In October 2000, the Headquarters Independent Oversight group ran a force-on-force attack — gaining access to the reactor fuel and potentially causing a sizable nuclear detonation that would have taken out part of New Mexico and caused havoc downwind.

On November 22, 2000, shortly after a meeting with Secretary Richardson, NNSA Director General John Gordon sent an angry letter to Los Alamos Lab Director Dr. John Browne threatening to shut down TA-18 after the debacle in October. Gordon wrote:

“The failure of the University of California to submit a suitable corrective action plan and to correct in a timely manner the deficiencies cited in an October 2000 assessment of TA-18 security capabilities is unacceptable. As you know, the assessment identified a number of improvements but also several significant weaknesses — most notably in the security strategy, the level of response training, and in the security forces’ understanding of appropriate response procedures. The problems that were noted can be fixed by changes in strategy without the need for the site to incur significant additional costs (emphasis added) . . . If any of these actions do not occur, all activities at TA-18 will be immediately suspended until the actions have been taken and verified.”

A DOE Headquarters security team went to Los Alamos in December of 2000 to verify that Los Alamos had made adequate upgrades. While they had made upgrades, the changes had not been performance tested to ascertain their effectiveness. An internal DOE memorandum raised basic questions about the adequacy of the “new and improved” protection of this site.

Transportation Security Division

The Department of Energy Transportation Security Division (TSD) moves nuclear weapons, as well as weapons-grade uranium and plutonium, from site to site across the nation on public highways. The protective forces in the Transportation Division are civilian federal employees. In late 1998, TSD submitted a Site Safeguards and Security Plan (SSSP) to Headquarters for approval. Preliminary examination of the testing scenarios revealed that the SSSP used simplistic attacks and “dumbed down” use of weapons.

During planning phases the TSD team of specialists and commanders were aghast at the proposed use of sniper rifles with armor-piercing incendiary rounds by the adversaries. The DOE Inspector General determined that DOE management considered the use of a sniper rifle unreasonable and that only “super adversaries” would use them. In fact, these weapons have been available since World War I. The GAO found in an undercover investigation that more than 100,000 rounds of Pentagon-surplus, armor-piercing incendiary rounds have been sold on the civilian market.

At the DOE Pantex nuclear weapons-assembly facility [in Texas], security officials believed that armored Humvees were death traps, because of the availability of armor-piercing incendiary rounds. The Pantex Security Director lamented that he would never allow his protective forces to fight from them, and that it would have been just as effective to buy Yugo’s. Incredibly, the next day, Secretary Richardson’s security team was at Sandia [in New Mexico], and found officials in the process of buying armored Humvees. Using these readily-available armor-piercing incendiary rounds, terrorists could shoot through the armored truck cabs, killing the driver and protective forces, making the transported nuclear materials ready for the taking.

In the simulation phase only four tests were run. According to sources familiar with the test, the TSD protective forces were literally annihilated in tens of seconds after an attack was started. In after-action briefings the convoy commander admitted that they had experienced similar results in force-on-force testing many months earlier. Part of the problem was that the guards’ weapons were of inadequate range to reach the adversary.

A December 12, 1998 internal DOE memorandum reported on the computerized Joint Tactical Simulations (JTS) evaluations of the Transportation Division’s SSSP conducted at Sandia: “JTS results on the first worst case scenario … were 3 losses and no wins. JTS results on the second worst case scenario … were 3 losses and 1 win. The high TSD JTS loss rate for the first two worst case scenarios caused TSD to request termination of JTS activity. TSD requested DOE Headquarters’ assistance to analyze the poor results and begin to determine possible corrective actions.”

In early 1999, a special force-on-force test was run at Fort Hood for the luminaries from Washington — Deputy Secretary, Undersecretary and top security and program officials — to show that the TSD could handle the threat. The U.S. Army Special Forces provided the adversaries. The protective force won. However, according to a Special Forces representative, he noticed a piece of paper held by a protective force member that he had just “shot” — it was a complete outline of the mock terrorists’ attack plan. The protective force was cheating. Secretary Richardson’s Special Assistant, Peter Stockton, proved the cheating to the Albuquerque manager and the TSD manager. No action was taken.

In November 1999, an Army Special Forces representative found that the new sniper rifles used by TSD were target range variety, not for combat in rugged terrain. In fact, the sights on the rifles were very sensitive and would not survive the rigors of combat. More than half of the unclassified recommendations made by the DOE Inspector General regarding the SSSP process were focused on improving the security of the TSD program.

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Toronto power bills may shock residents

Posted on January 10, 2002 by energyprbe

Wallace Immen
Globe and Mail
January 10, 2002

Electricity costs could soar by 20 per cent as hydro companies focus on profits

Consumers in Toronto are being warned to expect a shock in their electricity bills this year.

Residents will pay as much as 20 per cent more for their power when new bills start arriving this spring, the environmental think tank Energy Probe warned yesterday.

And those who signed contracts with private suppliers that promised savings to those who “lock in” the price they pay for power, may actually see their bills rise by between 35 and 40 per cent, said the group’s executive director Tom Adams.

Toronto Hydro, the local power distributor, will not make its new charges public until it submits them for regulatory review later this month, said Blair Peberdy, the company’s vice-president.

“We are trying to minimize the impact on consumers,” he said. He added that 20 per cent sounds high, but he would not estimate the increase because the company is still working out its request to the Ontario Energy Board.

However, based on preliminary information, the city of Toronto’s chief administrative officer Shirley Hoy said in her budget presentation yesterday that the city should expect to see its hydro costs rise 15 per cent.

The changes are part of a provincial restructuring to privatize power distribution that was approved in 1999. Hydro companies have to increase their prices because they now must act as profit-making businesses rather than public services.

Mr. Peberdy said the biggest single increase on the bills this year will be to cover corporate taxes that the power companies must make to the province. However, along with other changes that Mr. Adams calls “institutionally created confusion,” all hydro customers are destined to be stunned when they see the new bills that will begin arriving after the new rates go into effect in March.

Customers who signed contracts with independent suppliers to lock in their rates will find that they are actually locked into higher electricity costs that will substantially raise their bills.

“The Ontario Energy Board approved misleading wording on the current bill,” Mr. Adams said, because it doesn’t separate the actual hydro rate from the other costs of delivering the power.

Hydro bills now indicate that Toronto Hydro customers pay an energy rate of 6.5 cents per kilowatt hour.

That was the price the four companies who contract for bulk supplies of power highlighted to get homeowners to sign long-term contracts to buy power from them at between 5.6 and 5.95 cents per kilowatt hour.

But the actual charges for electricity are 4.2 to 4.5 cents an hour — costs that have been frozen by the province, Mr. Adams said.

The remainder of the energy rate on existing bills covers other expenses that in the spring will be broken out as separate items, Mr. Adams said.

Some of those items will increase in price, in addition to the new payments covering corporate taxes, when the changes take effect in March. However, Toronto Hydro customers will pay the increases on the 4.2 to 4.5 cents while those who locked in will have them added to the higher contract rate.

“These consumers are soon to realize they were misled,” Mr. Adams said.

Starting this spring in Toronto, the bills will be broken out into a number of separate charges reflecting the costs of privatizing the former provincial utility Ontario Hydro. The prices on some of these items will go up at the same time.

Along with the actual price of the electricity, customers will see how much they will pay as a distribution cost, which includes a fixed price for being hooked up to the system and variable fee reflecting the volume of electricity used.

Also itemized will be a transmission fee, which reflects the cost of getting the power from the generating station to the power grids.

This fee is paid to the privatized firm Hydro One that controls the high-voltage power lines that feed local distribution utilities.

Many of the local distribution companies, including Toronto Hydro, are still owned by municipalities, while others have been bought by Hydro One.

The new bills will also include a debt-reduction fee designed to pay off more than $20-billion in debts on the books of the former Ontario Hydro. Most of the debts are related to nuclear power plants, Mr. Adams said.

A final item on the bills will be something called dispatch fees, a charge for covering costs of keeping the system secure.

The local distribution companies in Ontario are on different schedules for restructuring, so the price increases and the date they will appear on bills in municipalities other than Toronto will vary.

Posted in Reforming Ontario's Local Electrical Distribution Sector | Leave a comment

Tight security rings U.S. nuclear power plants

Posted on January 10, 2002 by Other News Sources

James Jelter
Planet Ark
January 10, 2002

SAN FRANCISCO (Reuters) – A day after a dismissed California nuclear power plant worker was arrested for allegedly threatening colleagues, U.S. power industry officials said he stood few chances of ever delivering those threats on the job. The nuclear power industry, already on high alert following the deadly Sept. 11 attacks, runs its employees through a tough gauntlet of checks aimed at weeding out anyone who might jeopardize plant safety.

The arrest Tuesday of a maintenance mechanic, who last month lost his job at the San Onofre nuclear power plant in Southern California, drove home the need for that vigilance.

Acting on allegations that the unidentified 43-year-old had threatened former supervisors and coworkers, Orange County sheriff’s deputies found some 200 rifles and ammunition stashed at his Laguna Niguel home and in a nearby rented storage shed.

Plant officials said the man had not threatened the San Onofre plant itself, which lies near the Camp Pendleton Marine Corps base just north of San Diego.

San Onofre, which houses two of the nation’s 103 reactors, is operated by Southern California Edison, a subsidiary of Edison International.

Nuclear industry officials said internal security breaches were extremely rare, and any charges brought against the man would likely focus on threats to employees, not the plant. The nation’s nuclear power plants, because they use potentially deadly radioactive fuel, operate under some of the strictest security measures of any industry in the world.

FORMIDABLE DETERRENTS

“Someone is not going to break into a work place at a nuclear power plant without armed resistance,” said Jeff Lewis, a spokesman for Pacific Gas and Electric Co.’s Diablo Canyon nuclear plant on California’s central coast. “It’s not an easy target whether they are a terrorist or a former employee.”

At Diablo Canyon, security is enforced by guards in black, commando-style uniforms armed with automatic rifles and semi-automatic handguns – common throughout the industry.

“These are not rent-a-cops,” said Paul Gaukler, an attorney with Shaw Pittman, a Washington law firm that represents utilities operating nuclear power plants. “The security forces go through very detailed training. Two-thirds of all security personnel are former military or law enforcement officers,” Gaulker said.

Many of the 5,000 guards protecting the nation’s nuclear power stations can point to display cases at the plants stuffed with marksmanship awards, a skill several plant operators help them keep polished by providing on-site target ranges.

To ensure the guards don’t lose their edge, their rigorous training regime requires that they be able to repel an assault on the plant and assumes that any attack is being aided by someone on the inside. Managing to work under this constant air of suspicion requires strict discipline at the plants and constant surveillance by cameras mounted throughout the plants.

STRICT SCREENING

To gain clearance, the nation’s 100,000 nuclear power plant workers must undergo the same background checks used to screen FBI agents. Screeners check their previous employment records and ensure they have never been in trouble with the law. They are also given an extensive psychological evaluation aimed at gauging their emotional stability.

Once past these barriers, they are subjected to random drug and alcohol tests, which the federal Nuclear Regulatory Commission requires be administered to at least 50 percent of plant employees each year. On top of all that, plant supervisors are enrolled in what is called a Continuous Behavior Observation Program designed to help them quickly identify quirky or suspicious behavior among any of their subordinates.

When potential employees clear all of the above, they then face a battery of security checks just to get into the plant. Each day they troop through extremely sensitive metal detectors, show a badge holding a small computer chip full of personal data, and run their hands through a palm scanner.

Security has been further beefed up since the Sept. 11 attacks on the World Trade Center and the Pentagon, with a ban on plant visits by nonessential personnel, more guards on duty, and new barriers in place to keep cars and trucks a safe distance away in case they are carrying bombs.

Several states have also deployed National Guard troops to keep an extra eye on local reactors, while “nautical exclusion zones” have been extended to protect lake or seaside plants.

So far the extra efforts have paid off. The last serious effort to penetrate a plant’s security zone was in 1993, when a person with a history of mental illness harmlessly crashed a car into the outer gates of the Three Mile Island power plant in Pennsylvania.

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Against the Bomb

Posted on January 6, 2002 by energyprbe

The Hindu
January 6, 2002

Literary Review: Out of the Nuclear Shadow

In the midst of war-like postures emanating out of New Delhi and Islamabad, Out of the Nuclear Shadow is a must-read. It brings some of best writings of the intellectuals and activists of the subcontinent and is a contribution to the anti-nuclear struggle, says KANTI BAJPAI.

AS war clouds gather in South Asia after the December 13 attacks on the Parliament, and as the prospects of a nuclear confrontation grow larger, this volume on the Indian and Pakistani decisions to test and deploy nuclear weapons is a timely “intervention”. Smitu Kothari and Zia Mian, two well-known South Asian academics/activists, have produced a wonderful anti-nuclear handbook — and something much more than that. This handsome, portable volume is essential reading for anyone who wants to understand what happened in May 1998 when India and Pakistan tested a series of nuclear weapons and what the consequences of those fateful decisions may be. Indeed, as the two countries joust in public and threaten retaliation and counter-retaliation, it seems clear enough that we are living one of the consequences of those momentous, flawed decisions. For all the talk of peace and stability attendant on going nuclear, this is the third crisis since 1998 (the Kargil war and the hijacking of IC 814 being the earlier ones).

Out of the Nuclear Shadow is not just the best collection of anti-nuclear writings ever assembled anywhere, it is also a rare political handbook. The many distinguished contributors, some of whom are household names in the region if not internationally, don’t stop at a critique of the Indian and Pakistani tests and the two nuclear weapons programmes. Their nets are cast wider, on the larger question of what the tests tell us about contemporary State and society in South Asia and the larger structure of international relations.

Whether you agree with the anti-nuclear positions held by the authors or not, Out of the Nuclear Shadow is a book that you should have on your shelf for a third, not trivial reason and that is the pleasure of engaging, passionate, intelligent, critical writing by some of the best known “public intellectuals” of the Subcontinent. Where else can you get, in one place, Mahatma Gandhi, Eqbal Ahmed, Rajni Kothari, Beena Sarwar, I.A. Rahman, Praful Bidwai, Amartya Sen, Tanika Sarkar, Surendra Gadekar, Anand Patwardhan, Kumkum Sangari, Shiv Vishwanathan, Ashis Nandy, Aijaz Ahmad, Zafarullah Khan, T. Jayaraman, Pervez Hoodbhoy, Achin Vanaik, Lalita Ramdas, A.H. Nayar, Bittu Sehgal, and Amulya Reddy, amongst others?

As a concerned citizen, there is a fourth reason to invest in this fine volume. A full 150 pages are devoted to anti-nuclear statements by groups right across the region (from the smaller countries in South Asia as well), six thoughtful, evocative poems, an excellent, largely “non-partisan” bibliography (where you will get references to pro-nuclear writings too), and a list of films, peace organisations, and websites.

Anyone who wants more information, alternative perspectives, and a way of getting involved in anti-nuclear and other peace initiatives will find no better source — and will have run out of excuses for his or her apathy and indifference.

The volume consists, in the main, of 30 or so essays — some short and some long, some spectacularly well known such as “The End of Imagination” by Arundhati Roy, some much less well-known but no less important; some written in the immediate shocking aftermath of the tests (Eqbal Ahmed, Aijaz Ahmad), some written up to two years later, such as Amartya Sen’s “India and the Bomb”. Virtually all of the pieces published here are reprints or revisions of earlier articles: putting them all together is a contribution to the anti-nuclear struggle in and of itself. Those who are anti-nuclear but faint of heart, or who falter now and then, should draw sustenance from the fact that the best minds and spirits of the region are unequivocally and forthrightly against these terrible weapons. Those who are published here may themselves be surprised by the quantity and quality of what was written in the wake of the tests. Many probably did not know each until the publication of Out of the Nuclear Shadow. In that sense, the book performs yet another function, namely, to bring into being a new, virtual community of novelists, poets, social and natural scientists, journalist, and activists.

What is the message of the book? Clearly, it is ranged against the testing, development, deployment, and use or threat of use of nuclear weapons. Virtually everyone, either explicitly or implicitly, is for complete nuclear disarmament by both India and Pakistan but also by the other nuclear powers. No one sees any merit in the arguments of nuclear deterrence. Even Amartya Sen’s essay, easily the least polemical in the volume, in the end must be read as anti-deterrence. There are no Polyannas here. No one thinks that the Indian and Pakistani programmes can be easily stopped and dismantled and that the addiction to nuclear weapons can be overcome in the near future. Nor does anyone think that global nuclear disarmament is around the corner. No one is predicting immediate nuclear war either: there are no irresponsible alarmists here. As for building an anti-nuclear movement, there is a goodly sense that this will be arduous and will encounter great resistance. There is a passionate, critical intensity in many of the essays and a cool, analytical sensibility in others; some essays crackle and pop, others are matter-of-fact and descriptive (such as the essays on the media’s reactions to the tests). There are no fanciful, wide-eyed agitators here. No one is trivial or innocent.

What will readers learn from these various essays? They will learn that there is a whole range of military, economic, political, moral, and existential reasons for opposing nuclear weapons. Militarily, it can be shown that nuclear weapons produce more insecurity than security, as indeed they are producing today in the standoff between India and Pakistan after December 13, and that deterrence is an edifice that must eventually fail. Economically, they will learn of the toll that nuclear weapons can take on economic growth and development even if they do not beggar us completely. Politically, they will learn that atomic decisions affect internal institutions and the cut and thrust of ideological contests, that they threaten democracy and accountability in public life, that they militarise societies and debase science, and that they impoverish our notions of nationalism — in sum, that these decisions are not merely “security” choices in the “the national interest”. Morally, this book shows that nuclear weapons are an abomination as no other weapons have been historically and that even deterrence, which is the threat to use nuclear weapons, is objectionable. Lastly, they will learn that nuclear weapons are an existential nightmare, for any use of nuclear weapons will be a physical catastrophe, one that will kill and maim millions of human beings, destroy their societies, and burn and poison the lifeworld of all living things.

Could the anthology have been better than it is? At 500 pages, it is a big book already. Nevertheless, I think that there are gaps here that could have been filled. For instance, it might have been useful to include at least a couple of pieces by non-South Asians — an independent-minded Chinese scholar or activist, someone from Japan, and a Westerner. So also a former general or admiral who made the case for the uselessness of nuclear weapons would have been a “tactical” gain for the collection — Admiral L. Ramdas from India could have written just such a piece, or the American, Lee Butler (the volume does have a statement by retired South Asian generals, but it is too hortatory to be very useful). Third, the collection lacks a really good, exclusive essay on the prospects of global disarmament. Fourth, it would have been strengthened by an essay that would have struggled with the difficulties and contradictions that exist and that will have to be faced within the anti-nuclear movement in both India and Pakistan (and the two movements are unlikely to face the same hurdles). Comparisons with the United States and European cases, or Japan, would have enlivened such an essay. Fifth, there are some personal favourites missing from the volume, especially the pieces by Sumit Sarkar, Partha Chatterjee, and Rustom Bharucha in Economic and Political Weekly. Also, why not an extract from Amitav Ghosh’s New Yorker article (and later book, Countdown)? And if memory serves, Ram Guha had some rather interesting commentary on the tests as well. Finally, a question: was there nothing in Hindi or the other vernacular languages worth reprinting?

These minor reservations notwithstanding, Out of the Nuclear Shadow is a terrific addition to the growing archive of sophisticated and critical-minded works on South Asian nuclearisation. Smitu Kothari and Zia Mian have done Indians and Pakistanis a service by publishing this fine selection of writings. Anyone who cares about war and peace and democracy and the welfare of a billion and a half people should buy this anthology. Read it, cherish it, and, if you can, act on it.

Out of the Nuclear Shadow, edited by Smitu Kothari and Zia Mian, Delhi: Lokayan and Rainbow, 2001 and London: Zed Books, 2001.

The writer teaches at Jawaharlal Nehru University, New Delhi.

Posted in Nuclear Proliferation | Leave a comment

Contracting for natural gas and electricity in Ontario: Energy Probe’s advice to household consumers

Posted on January 6, 2002 by energyprbe

Tom Adams, Executive Director

January 6, 2002

(The information and forecasts contained here are current only as of the date of publication. Energy Probe in no way guarantees any decisions that might be made after consideration of any of the following statements. Our purpose is only to assist consumers with information that might be useful in considering options.)

Please also see Electricity ‘deals’ deceiving,
‘Direct Energy’ misleading Ontario’s electricity consumers

Many household consumers are receiving solicitations from energy marketers encouraging them to sign up for natural gas (“gas”) and electricity supply contracts of one to five years duration.

Energy Probe supports the right of consumers to choose among suppliers through individual contracts. The value of contracting was demonstrated by customers who contracted for gas on three to five year contracts in the late 1990s, thereby insulating themselves from the all-time high gas prices North America experienced in December 2000 and January 2001. Energy contracting can also assist customers in planning their energy cost.

Notwithstanding Energy Probe’s support in principle for energy supply contracting and the benefits to consumers of some previous contracts, we recommend that consumers able to withstand fluctuations in their energy bills may be best off by buying their gas and electricity without a contract.

Over the long-term, the acquisition strategy likely to minimize your cost of energy commodities may be to buy them from the spot market. Virtually all retail gasoline is purchased this way. Price certainty is a financial insurance service with the insurance premium built into the contract price. Most of the time, spot energy prices are below future prices. This situation currently prevails in the North American gas market, although during the price spike of December 2000 and January 2001 the opposite prevailed. The market for other commodities, such as mortgages, demonstrates the same tendency. See for example, Jonathan Chevreau, “Homeowners’ best bet is to go short – study,” Financial Post (National Post) April 3, 2001.

Gas contracting

Only about 40% to 60% of an average household’s “natural gas” bill reflects the actual cost of natural gas. The rest of the bill recovers the cost of long distance transmission (including the fluctuating cost of gas used by the transmission pipelines), gas storage, and distribution. Rates for these services are determined by regulatory hearings and are charged to you through a “delivery charge” and a “customer charge” whether or not you sign with a gas marketer. The contract you sign will only deal with the cost of natural gas, not the rates for those regulated services.

Gas customers without a contract with a marketer receive gas from their local gas distributor. The distributor – for most Ontario customers it is either Enbridge Consumers Gas or Union Gas – buys gas on the seasonal market, short term market, and the spot market. The utilities then resells it to consumers at cost. (The distributor makes its profit on its distribution and storage rates and in some cases on a portion of the transmission rate.) Your utility’s buying strategy is regulated by the Ontario Energy Board but the costs incurred are not. The purpose of the buying strategy is to utilize gas storage located near consumers as a means of reducing the cost of pipeline services to meet consumer needs and reduce short term fluctuations in acquisition costs. When summer prices are below winter prices and also when the market price is rising, the buying strategy gets gas for consumers cheaper than a buying strategy based purely on the spot price. When winter prices are lower than in summer (which has happened several times in recent years, although not in the winter of 2000-2001) and also when the market price is falling, the reverse is true. The actual price customers are billed for utility-supplied gas is calculated from a forecast of the acquisition price. Forecasts are never perfect, so the billed price is normally either higher or lower than the actual spot price. The difference is tracked in a regulated “purchase gas variance account” and is cleared to customers (with a credit or a charge) when the account reaches some threshold level or at the end of the year. Energy Probe has studied the accounting behind purchase gas variance accounts in the past. We have not uncovered any unfairness to customers, although the accounting is not transparent to ordinary customers.

Unfortunately, if you are an uncontracted gas customer, the price your distributor uses to calculate your regular bill can be a very inaccurate reflection of the spot prices you ultimately pay both because the forecast may be wrong and because clearing the purchase gas variance account can confuse the apparent cost. Neither Enbridge Consumers Gas nor Union Gas even notes the volumetric gas commodity rate on bills to uncontracted customers. The rate used to calculate Enbridge Consumers Gas bills is currently 36 cents per cubic metre whereas the market price is about 18 cents per cubic metre. Again, this overcharge will be refunded in future bills, or used to offset undercharges from earlier or later bills.

As of May 30, the range of gas prices offered by brokers selling to Ontario homeowners is 28.2 cents per cubic metre for three years (Enbridge Home Services) to 32.9 cents per cubic metre for five years (Direct Energy). Signing bonuses apply in each case. One source of information on contract offerings is www.energyshop.com. (Energy Probe recommends caution in using the advice posted to this site. The long-term gas price forecast posted on the Energy Shop web site as of June 6, 2001 expected prices much higher than current prices and higher than the futures market.)

Current commodity prices can be found many places including the financial section of the Globe and Mail, the National Post, and at www.ngx.com. Where prices are reported in Canadian dollars per gigajoule (GJ), you can convert the price to cents per cubic metre by using the ratio $1 per GJ = 3.763 cents per cubic metre. Where prices are reported in millions of British Thermal Units (mmBTU), you can convert the energy amount to GJ using the ratio 1.054 GJ = 1 mmBTU.

In natural gas, as in most commodities, traders can buy and sell today for delivery in the future in a “futures market.” You can get information on the prices in the futures market for gas from financial newspapers and at www.futuresource.com.

The futures market reflects a market-based forecast of where prices are going. Consumers can use the futures market to directly lock in or “hedge” their future costs without the services of a gas marketer. Customers who think a futures market price is attractive and have large enough gas bills to make the effort worthwhile can buy the amount of gas they expect to require for specific periods on the futures market. At the same time, customers would buy their physical gas from their distribution utility, effectively paying the spot price. When the contracts mature, customers can sell their financial contract for gas at the spot market price. The loss or gain on the futures market sale will equal the difference between the physical gas purchase and price at the time the futures contract was entered into. With this buying approach, the futures market can be used not as an instrument of financial speculation but rather as an instrument of financial insurance.

The futures market indicates that the price of gas over the next three years is now expected to range between 21 and 24 cents per cubic metre. The May 31 spot price was 18 cents per cubic metre. Customers who lock in at the long-term contract rates offered today – 28.2 cents per cubic metre for three years or 32.9 cents per cubic metre for five years – may end up ahead, but investors on the futures market are betting (heavily) against it. And even if prices stay at today’s value, the extra premium on a contract might still be good value for an individual who wouldn’t get any sleep without being 100% sure about future gas prices.

Electricity contracting

This commentary follows up on other Energy Probe assessments of trends in Ontario’s electricity restructuring including publications in October 2000 and April 2001.

We have studied the contracts that three marketers – Direct Energy (owned by Centrica), Toronto Hydro Energy Services Inc. (an unregulated corporate affiliate Toronto Hydro Electric System Limited), and Ontario Hydro Energy (owned by Hydro One) – have recently offered to consumers. We are suggesting that consumers not accept any of these offerings.

All the contracts offered that we have studied contain financial risks for consumers that ordinary consumers have no reasonable chance of understanding. The contracts assign all future rebates that would normally be paid from Ontario Power Generation (OPG) to each electricity customer (under a program outlined in the Market Power Mitigation Agreement) to be received instead by the marketer.

OPG’s rebate program, which extends for the first four years after market opening, requires the company to rebate customers if the annual weighted average commodity spot market price of electricity exceeds 3.8 cents/kilowatt-hour. The current commodity price, which is buried in consumer bills, is about 4.5 cents/kilowatt-hour. The volume of purchases covered by the rebate declines as OPG’s market share declines, but appears to be about 60% at market opening based on OPG’s actual and planned “decontrol” of generating assets. The net cost of commodity electricity now would be 4.2 cents/kilowatt-hour if the rebate applied but market prices remained at 4.5 cents/kilowatt-hour.

Factors that might cause electricity prices to exceed 3.8 cents/kilowatt-hour include production shortfalls from Ontario’s nuclear plants, a drought in the Northeast region of North America that could cut hydro-electric production, high electricity prices in neighbouring jurisdictions such as New York or Michigan, tougher environmental controls on Ontario’s coal-fired power stations, or little investment in new electric generation capacity due to perceived investment uncertainty. Energy Probe expects that the market price is likely to exceed 3.8 cents/kilowatt-hour and that therefore OPG rebates are likely to be issued in the first couple of years of the market’s operation.

Although Energy Probe expects the market price for power to exceed 3.8 cents/kilowatt-hour, we are guessing that the final price for consumers, at least in the first year or two, is unlikely to exceed 5 cents/kilowatt-hour after taking into account the Market Power Mitigation Rebate. The Ontario Energy Board’s current estimate of the price of power after market opening is 4.2 cents per kilowatt-hour. This estimate may be revised prior to market opening. Toronto Hydro Energy Services Inc. has been offering contracts at 5.79 cent/kilowatt-hour. Direct Energy is offering 5.36 cent/kilowatt-hour for the first year and 5.95 cent/kilowatt-hour after that.

Energy Probe is not aware of any electricity distributor, like Toronto Hydro Electrical System Limited, that has broken out the commodity price from the other regulated charges on the bills it sends to consumers. As a result, consumers have very confusing information in front of them about what they pay for electricity. In Toronto, until June 1, 2001, consumers were charged 6.46 for the “energy charge.” Many customers have been comparing the current “energy charge” with the contract prices offered, and concluded that their cost will decrease. Energy Probe estimates that transmission, dispatch, and debt reduction charges currently billed to consumers but buried in the “energy charge” add up to approximately 2 cents per kilowatt-hour. These charges will be recovered in future from ordinary consumers irrespective of any contracts. The 0.7 cent increase in electricity prices effective June 1, 2001 announced by OPG in March is also not avoidable by contracting. Province-wide, the average cost of electricity directly comparable with the contract offerings is approximately 4.5 cents per kilowatt-hour.

Depending on the price of the fixed term supply, it may be beneficial for consumers to assign away their rebates. And the future has inherent uncertainties which none of us can forecast accurately. It appears to us, however, that the insurance premium embedded in the contract prices is very high relative to current prices.

Some other contractual terms in Direct Energy’s offer may severely disadvantage consumers. Direct Energy has contracted with Bruce Power as a supplier of power. If a failure by Bruce Power to deliver nuclear-generated kilowatt-hours results in extra costs for Direct Energy (Toronto Hydro Energy Services Inc. also buys from Bruce Power), contracted customers will have to cover Direct Energy’s losses. The contract does not set out how consumers will be billed for these losses. The Toronto Hydro Energy Services Inc. contract contains a similar clause. With the opening of Ontario’s electricity market delayed, Direct Energy will have the option to extend the contract but the customer won’t have any choice about whether to continue until the five-year term expires or Direct Energy releases the customer.

Official bodies with a responsibility for customer protection – the Ministry of Energy and the Ontario Energy Board – have done a very poor job of explaining to consumers the implications of the Market Power Mitigation Agreement rebate when contracting for power. Energy Probe has corresponded with the Ontario Energy Board starting in November 2000 asking the regulator to update the information posted on its web site for electricity consumers, with an explanation of the rebate, its administration, and its implications in contracting. In early June 2001, reference to the rebates has been added to the OEB site, although the information provided on the volume of purchases covered under the rebate is inaccurate.

Unfortunately, there is no liquid futures market for electricity yet in Ontario so it is very difficult to predict prices. Without a liquid futures market, consumers have limited hedging options.

In contracting for energy supplies, consumers should be careful to ensure that the marketer is financially capable of meeting its side of the contract commitments. In the past, some gas marketers in Ontario and elsewhere have sold energy to consumers on long-term, fixed-price contracts, but bought the gas to satisfy those contracts on the spot market. When prices rose, the marketers failed to deliver and the customers returned to the distribution utility as a source of supply at higher prices. Energy Probe is not aware of any current energy marketers in Ontario that we believe may be unable to meet their commitments.

Under Toronto Hydro Energy Services Inc.’s first residential electricity sales contract, which has a one year term, the participating customer can get out of the contract with 30 days notice. This provision is potentially valuable and customers with such contracts might be best off to wait and see what happens once the electricity market opens. Unfortunately, the issue of what to do with Market Power Mitigation Rebate in the event that the customer is served for a portion of the year is not clarified in the contract. The current Toronto Hydro Energy Services Inc. does not include any exit provision.

Fixed price, fixed term gas and electricity contracts are purchasing options available to ordinary Ontario consumers that allow consumers to plan their energy costs more accurately than remaining on floating, spot market-based services available to uncontracted consumers from distribution utilities. When shopping for energy contracts, consumers should ensure that they are aware of those components of their energy bills that are regulated and therefore not included in the contract prices. Energy Probe anticipates that in the long run, relying on the spot market for gas and electricity appears likely to yield the lowest costs, although uncontracted consumers must be prepared to accommodate some volatility in the price of energy. Natural gas prices have recently dropped very substantially from the prices seen during December 2000 and January 2001. The gas contracts reviewed here are priced substantially above current spot market and futures market prices. The electricity contracts reviewed here would all have the effect of increasing customer electricity costs significantly above the electricity commodity prices currently embedded in bills. Before contracting, Ontario electricity consumers should also consider the protection from commodity price increases afforded to uncontracted customers by the Market Power Mitigation Rebate program.

Posted in Natural Gas Utility Regulation and Commodity Deregulation | Leave a comment

Very High Background Radiation Areas of Rasmar, Iran: Preliminary Biological Studies

Posted on January 1, 2002 by energyprbe

M. Ghiassi-nejad, S. M. J. Mortazavi, J. R. Cameron, A. Niroomand-rad, and P. A. Karam
Health Physics Society 2002
January 1, 2002

People in some areas of Ramsar, a city in northern Iran, receive an annual radiation absorbed dose from background radiation that is up to 260 mSv y_1, substantially higher than the 20 mSv y_1 that is permitted for radiation workers. Inhabitants of Ramsar have lived for many generations in these high background areas. Cytogenetic studies show no significant differences between people in the high background compared to people in normal background areas. An in vitro challenge dose of 1.5 Gy of gamma rays was administered to the lymphocytes, which showed significantly reduced frequency for chromosome aberrations of people living in high background compared to those in normal background areas in and near Ramsar. Specifically, inhabitants of high background radiation areas had about 56% the average number of induced chromosomal abnormalities of normal background radiation area inhabitants following this exposure. This suggests that adaptive response might be induced by chronic exposure to natural background radiation as opposed to acute exposure to higher (tens of mGy) levels of radiation in the laboratory. There were no differences in laboratory tests of the immune systems, and no noted differences in hematological alterations between these two groups of people.

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Very high background radiation areas of Rasmar, Iran: Preliminary biological studies

Posted on January 1, 2002 by energyprbe

(Jan. 1, 2002) People in some areas of Ramsar, a city in northern Iran, receive an annual radiation absorbed dose from background radiation that is up to 260 mSv y_1, substantially higher than the 20 mSv y_1 that is permitted for radiation workers. Inhabitants of Ramsar have lived for many generations in these high background areas. Cytogenetic studies show no significant differences between people in the high background compared to people in normal background areas.

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The struggle for power

Posted on December 22, 2001 by energyprbe

Rob Ferguson
Toronto Star
December 22, 2001

There’s a knock at the door. Someone with a clipboard.

To your surprise, it’s not someone looking for a charity donation, promising a lower rate on long-distance phone service, or hoping to sign you to a long-term natural gas contract.

This time, they’re selling electricity. You’re going to see a lot more of them now.

That’s because Premier Mike Harris announced this week that Ontario’s hydro market will be open to competition starting May 1. It’s the kind of thing that has happened in the last few years with long-distance phone service and natural gas.

It means Ontario residents will be able to make their morning toast and coffee using power from any one of a number of electricity retailers, not just the local utility, such as Toronto Hydro – although people will still have that option if they don’t sign a contract.

The change was announced by the provincial government in 1998. It was first slated to take effect Nov. 1, 2000, but was pushed back because the industry wasn’t ready.

In the meantime, electricity retailers including Direct Energy and Toronto Hydro Energy Services have been going door-to-door, buying newspaper ads and doing mail-outs to build customer lists.

More than 100 retailers have been licensed by the Ontario Energy Board to sell electricity, says chairman Floyd Laughren, a former NDP finance minister who urges consumers to learn as much as they can about the hydro business before they even think about signing an electricity contract.

“The best consumer protection is an informed consumer.”

Things to watch for include:

Penalties for cancelling a contract, a move you may want to consider if prices fall below the rate you’ve agreed to pay.

What happens if you move to a new home.

Whether the contract entitles the retailer to rebates distributed by Ontario Power Generation, which took over Ontario Hydro’s generating plants and now controls 85 per cent of the power supply. To make sure OPG won’t overcharge customers, the government has capped the company’s revenue at 3.8 cents per kilowatt hour and required it to rebate what it earns beyond that level. OPG is to reduce its share of the market to 35 per cent within 10 years.

Although only a handful of retailers are scouting customers on a large scale, so many sales reps are going door-to-door that there have been instances of husbands, wives and even older teenaged children signing different contracts.

That’s a problem the industry is now trying to resolve, probably by treating the first contract signed as the enforceable one, Laughren says. Will cancellation penalties be levied for the others? “I wouldn’t think so.”

There have already been almost 700 complaints about electricity retailers, including some who make bogus comparisons between the rates they’re offering and the rates consumers are currently paying.

That’s one reason why consumer advocate Tom Adams, executive director of Energy Probe, has this advice for Ontarians wondering what to do when they get an offer at the door or in the mail: Don’t sign anything on the spot.

“There’s real reason to be concerned,” Adams warns.

He also advises against showing your current hydro bill to anyone. Some unscrupulous sales reps copy down account numbers and claim to have signed the customers.

“Some of these marketers are snakes,” Adams says.

On the tactic of price comparisons, he says one sales trick is to point out that the current Toronto Hydro charge of 6.5 cents per kilowatt hour (the standard unit in which electricity is measured) is higher than the new offering price of some retailers below six cents.

“The customer says, “Hey, man! It’s a no brainer, sign me up!”

Wrong.

The current charge of 6.5 cents includes items such as transmission charges to get the power to your house – charges not included in the new offering price for electricity alone. Those charges will appear separately on bills after May 1 along with a charge to help pay Ontario Hydro’s debt of $21 billion, a distribution charge and a dispatch charge for maintaining the power system.

“There are thousands of customers who will sign up today. They’ll think their prices are going down,” Adams says.

He and Laughren say the actual cost of the electricity alone will be about 4.3 cents per kilowatt hour on what is known as the spot market, where prices will fluctuate with supply and demand.

Customers should also know that they have a 10-day cooling off period. After signing an electricity contract they can cancel it within 10 days by contacting the retailer in writing.

The energy board issued a code of conduct for hydro and natural gas retailers last month.

“It requires them not to misrepresent the price,” Laughren says, acknowledging that the code hasn’t short-circuited questionable tactics from some sales reps. “They’re out there, they’re entrepreneurial and they’ll be as aggressive.”

The code also requires sales reps not to “unduly pressure” consumers and to give them sufficient time to read contracts before deciding.

Executives from some retailers have already been scolded at the energy board for the actions of their sales reps.

“They refer to them as rogue agents,” Laughren says. “They either dismiss them or give them what for.”

Adams of Energy Probe suggests consumers who are interested in signing a long-term deal compare contracts from several retailers, making sure they understand all the hydro jargon. Much of it is explained at http://www.energyprobe.org by clicking on “protect consumers.”

“There is all sorts of special lingo. You need a translator.”

It is estimated that thousands of Ontarians – perhaps as many as one in five households – have already signed.

“The take-up rate has been very high,” says Blair Peberdy, vice-president at Toronto Hydro. “It looks as though it’s going to be a vibrant market.”

By the time May 1 rolls around, he estimates from talks with colleagues at other utilities across Ontario that as many as one in three households will have signed long-term electricity supply contracts, usually for three or five years at a set price.

Think of it as similar to locking in a mortgage to avoid ups and downs in interest rates.

None of this would be as confusing if authorities had done a better job of teaching Ontarians what to expect – or started to tutor them earlier, contends Adams of Energy Probe.

“The education of the ordinary consumer has just been awful.”

Laughren acknowledges a better job could have been done.

“There is no question the public is not well informed about the changes to the price of electricity,” he says, noting that the Ontario Ministry of Energy is launching an advertising campaign in the new year.

Details have been available on the Ontario Energy Board Web site at http://www.oeb.gov.on.ca, some of it in language Laughren is planning to simplify.

“We want to make it easier to comprehend.”

The site points out that there is no rush for consumers to sign a contract. They will continue to get electricity from their local utility on what is known as the spot market.

That means the rate won’t be fixed for several years. It will fluctuate with supply and demand in much the same way gasoline prices move up and down.

Opinions are mixed on where prices could go. Some watchers are warning that they could go higher. Others say there’s plenty of supply, helping to keep prices fairly stable.

As with mortgages, some people are willing to pay more to have a guaranteed rate. Others are willing to take chances. Last winter, for example, natural gas prices soared and socked it to homeowners who hadn’t settled long-term deals in advance. But natural gas prices have since fallen dramatically.

Industry observers agree on one thing.

“People need to start paying attention,” says Peberdy of Toronto Hydro.

Ontarians confused about the coming changes would do well to take a minute to think about how they came about and how the new system will work, he adds.

For decades, Ontario Hydro made electricity. Your local electric utility sold it. Rates were regulated by the Ontario Energy Board. There was really no choice for consumers to concern themselves with.

But over the years, Ontario Hydro ran up a huge debt – at one point approaching $40 billion – largely by building expensive nuclear power plants that ran into maintenance problems and cost overruns.

Politicians began to question whether taxpayers would be on the hook for expensive power plants. The alternative they chose was to privatize the province’s electrical system, splitting Ontario Hydro into two parts: a power producer called Ontario Power Generation and a company that owns the transmission lines, Hydro One.

The government also decided to restructure the hydro system, allowing private companies to build power plants, in order to sell power to retailers, who would in turn sell it to homeowners.

How will the power get to your house? The same way it does now – through wires already in place. Local utilities that take care of that are also setting up metering and billing systems to keep track of who’s buying power from whom and at what price.

Peberdy said Toronto Hydro, which is selling electricity through its Toronto Hydro Energy Services subsidiary, has already spent $40 million on its system.

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