Energy Probe position paper

Posted on December 2, 1999 by Other News Sources

Norman Rubin
Energy Probe
December 2, 1999

Dear Sirs:

Following are Energy Probe’s comments on AECB’s draft “Scope of Assessment” for the Pickering NGS-A return to service Environmental Assessment. As always, we would appreciate receiving reasons for AECB’s decisions to accept or reject these recommendations. And we await the opportunity to be involved in the substantive issues of this Assessment. We divide our comments into two general categories: Process Concerns and Substantive Concerns.

A. Process Concerns:

1. Construction Work in Progress: The applicant, Ontario Power Generation (“OPG”), is currently spending considerable sums on activities that will not be needed unless the application succeeds. These activities prejudge and prejudice the outcome of the present Assessment and must properly wait for the conclusion of the Assessment. We urge the AECB to ensure that OPG’s activities during the Assessment are restricted to those that are required for the conduct of the Assessment and the licensing application. Failure to do so runs the risk that the Assessment will be perceived as “window dressing” or a “rubber stamp”, rather than a review of potential Environmental Impacts that might lead to fundamental changes in (or rejection of) the application.

2. The absence of a full Environmental Assessment Panel Review:We believe that the seriousness and magnitude of the Pickering-A Restart decision and its potential impacts justify a review by an independent panel under the Canadian Environmental Assessment Act.

3. The perceived (and real) independence of AECB as judge: In many important subject areas of this decision and therefore this Assessment, the AECB has already established policies which favour the interests of the applicant (OPG) and conflict with the wishes and values of large segments of the public. Among these we would include the following areas: (1) AECB’s acceptance of unacceptable “financial guarantees” for the ongoing creation of toxic and eco-toxic wastes, decommissioning liabilities, and accident contamination cleanup costs that will burden future Ontarians (and perhaps other Canadians) for cleanup costs that are caused by the activities of today’s Ontario customers of nuclear-generated electricity. Indeed, we note that some of the people properly responsible for bearing these environmental liabilities have already left the Province of Ontario, or died, without bearing their share of these liabilities. (2) AECB’s acceptance of, administration of, and spirited defense of, the Nuclear Liability Act, a legal scheme that currently limits the legal responsibility of OPG for a potentially catastrophic release of toxic and eco-toxic substances, to an absurd $75 million. Such a scheme naturally and logically increases the eagerness of OPG to operate inherently unsafe technology like the Pickering-A Nuclear Generating Station, and decreases their incentives to take all possible care to avoid catastrophic releases, and to implement or insist on all possible emergency measures to protect their neighbours from the consequences of such releases, should they occur. (3) AECB’s ongoing acceptance and administration of a regulatory scheme for so-called “radiation protection” which permits neighbours of (e.g.) Pickering-A to be exposed to much greater risks of serious health effects like cancer than would be tolerated by the regulators of non-radioactive carcinogens. The Advisory Committees to AECB’s President recently participated in a multi-year exercise which was charged with examining the dichotomies and discrepancies between the definitions of “acceptable risk” in the regulation of radioactive and non-radioactive carcinogens, but defiantly refused to follow those terms of reference. (4) AECB’s unjustifiable compromise decision in the matter of Pickering-A’s inadequate shutdown system, i.e., requiring only an upgrade to “SDSE” rather than to the minimum capability required for a shutdown system in a new nuclear generating station. It is especially disturbing that AECB’s decision explicitly considered the possibility that requiring a more elaborate and expensive upgrade could result in the early shutdown of the station.

We respectfully submit that good decision-making, regulatory legitimacy, and even the enlightened self-interest of the AECB (and its successor the Canadian Nuclear Safety Agency) would all be well served by a review of these important matters and others by a panel that is independent of the AECB, rather than by AECB itself.

4. Assessment of need and alternatives: We are concerned that AECB’s application of regulatory standards in general, and its assessment of potential environmental impacts under this Assessment, proceed under the unexamined assumption that there are significant social benefits from nuclear activities, like the restart and operation of Pickering-A. We urge the Board to examine that assumption expressly, and encourage submissions on that topic. Specifically, we believe we can demonstrate that the operation of OPG’s reactors to date, including Pickering-A, has diminished the socio-economic well-being of the people of Ontario and Canada, and that further investment in, and operation of, Pickering-A is quite likely to further diminish that well-being. We further note that this matter concerns the physical environment directly (as well as the socio-economic impacts that an environmental assessment must consider) since much of this diminution of well-being has been accomplished by the creation of large quantities of toxic and eco-toxic substances. Disposing of these substances, according to a recent study by OPG’s predecessor company (Ontario Hydro), was estimated to cost a staggering $18.7 billion in 1998 dollars, a sum that has not been paid by electricity customers, and which exceeds the Ontario Government’s current estimate of the value of all of OPG’s assets, including its nuclear plants, its fossil-fuelled plants, and its hydroelectric plants like the Sir Adam Beck plants at Niagara Falls!

Rationally, the benefits from restarting Pickering-A can only be assessed in the context of available alternatives, a subject on which we believe AECB has little information or expertise. We urge AECB to broaden this discussion to include need and alternatives, in an attempt to avoid further insults to the public well-being.

B. Substantive Concerns:

1. Timeframe and treatment of radioactive wastes and decommissioning: AECB’s Draft Scope of Assessment for an Environmental Assessment (EA) … states on p. 9:

“The time frame for the assessment will be the duration of operation of the Pickering NGS-A facility following the return to service. This time frame should be clearly defined and the rationale for it provided by OPG. Within this time frame, the focus will be on identifying those direct and cumulative environmental effects which have a reasonable probability of occurrence. In addition, OPG will be expected to discuss the status of decommissioning planning for the facility; any future application for decommissioning approval would be subject to a separate environmental assessment.”

We do not understand how the environmental impacts of the restart of a nuclear station, with its attendant and unavoidable creation of million-year radioactive waste, can be rationally and adequately assessed over a 20-year time frame! As you are aware, an independent federally appointed environmental assessment panel, after nine years of hearings and deliberation, recently found Canada’s concept for the ultimate disposal of those wastes unacceptable, and could not reach consensus on its safety. In both cases, the independent panel did not endorse the stated position of AECB, which recommended that the panel approve the concept and allow Atomic Energy of Canada Ltd. (AECL) to proceed to siting a waste repository.

Any decision about the acceptability of the environmental impacts of returning Pickering-A to service must surely consider the environmental impacts of the wastes that Pickering-A is expected to create. And the time frame of that consideration must surely be the time frame of the impacts of the wastes, not the time frame of their creation! Yet the time frame would seem to preclude meaningful assessment, and the serious issue of radioactive waste creation is apparently not addressed in the document. (The AECB’s draft Scope of Assessment apparently contains the character-string “waste” only twice: on p. 7, section 6.2, Scope of the Factors, subsection Description of the project, and on p. 18, where a “household hazardous waste facility” appears on a list of Planned Physical Works / Activities.)

Furthermore, as discussed briefly above, discussion of the mitigation of the possible environmental effects of those highly toxic and eco-toxic wastes — and of their indirect socio-economic impacts — must include the provision of funding from those responsible for their creation to those far in the future who will likely be required to mitigate, or manage, or dispose, or even dispose again. Leaving this “environmental impact waiting to happen” to the next generation of Canadians without leaving the wherewithal to address the problem is unsustainable and irresponsible; doing so after holding an environmental impacts assessment process that fails to assess it is absurd.

We assume that the above-quoted passage’s last sentence (“In addition, OPG will be expected to discuss the status of decommissioning planning for the facility; any future application for decommissioning approval would be subject to a separate environmental assessment.”) must be understood in the context of AECB’s somewhat unusual use of the word “decommissioning”.I.e ., to AECB (but not, we submit, to the rest of us), decommissioning refers more to the end of a licensee’s responsibility for a facility, than to the physical cleanup, dismantlement, or restoration that may be necessary to relieve the licensee of further responsibility. Looking at decommissioning in its more common, and more physical sense, it is an act of environmental mitigation and remediation which must logically be committed to as part of the decision to start, or restart, a facility like Pickering-A. The threat to withhold “approval” for this activity is primarily a threat to the environment and human health. In this context, we would urge AECB to require much more than a general discussion of the status of decommissioning planning for the facility; AECB must require, before restart, that clear and concrete plans exist, and that secure, reliable, and equitable funding to carry out those plans — and not merely the commitment from a current government to bind some future government to tax future Canadians — is in place.

2.Liability limition for nuclear accidents: As alluded to briefly above, we believe that we human beings are far too prone to cause catastrophes when we are held fully accountable for the consequences of our actions, especially when dealing with huge quantities of toxic materials in inherently hazardous facilities. A rational response would be to require artificially elevated levels of accountability from those who deal with such materials and such facilities. Instead, the Parliament of Canada in 1970, under heavy lobbying from the nuclear industry and the newly formed Canadian Nuclear Association, passed a law that artificially decreases the level of accountability or responsibility of the designers, builders, owners, and operators of nuclear reactors. In the case of the designers and builders of nuclear reactors, responsibility for the off-site consequences of a catastrophic accident has been completely eliminated. In the case of the owners and operators of nuclear reactors, responsibility for the off-site consequences of a catastrophic accident has been legally capped at $75 million — a tiny fraction of the consequences of several postulated, analyzed, and completely possible CANDU reactor accidents.

Reasonable people certainly may, and do, disagree on the magnitude of the impact of this legislated irresponsibility on the risks of catastrophic accidents. But reasonable people cannot disagree on the direction or mathematical “sign” of that impact.

We also note that the legislation also, in plain English, fails to guarantee full compensation to the victims of such a hypothetical but completely possible accident. Such compensation, if clearly guarantee, would arguable constitute mitigation for the socioeconomic impacts flowing from the environmental impacts of an accident that will unfortunately be completely possible in Pickering-A, if and only if it is returned to service.

Fully aware of AECB’s historic and ongoing role in justifying and defending the Nuclear Liability Act (and AECB’s lack of authority to overturn a federal law), we urge AECB to ensure that Pickering-A does not return to service with this unfortunately perverse incentive in place, and this unreasonable lack of mitigation of possible impacts.

3. Impacts must be quantified and judged acceptable, and not just legal: We note that AECB’s draft Scope of Assessment repeatedly refers to comparisons between various impacts and regulatory criteria, dose limits, etc. While we appreciate that such comparisons are one way to characterize the significance of environmental impacts, we urge the AECB to require OPG to assess and present the estimated impacts themselves in the clearest and most meaningful terms before comparing them to regulatory criteria and limits. E.g., lifetime risk of a serious health effect from a public radiation dose must be presented along with the comparison to (AECB’s) dose limits, and total risk of a serious accident over the remaining life of the Pickering complex must be presented along with the comparison to (AECB’s) safety criteria. Only this form of presentation will allow interested citizens at risk the chance to judge for themselves whether or not AECB’s regulatory criteria represent risk levels that are actually acceptable to those at risk.

4. Public health anomalies in the community must be discussed: Epidemiological studies funded by AECB have uncovered (1) a 40% excess of childhood (age 0-14) leukemia mortality in the areas around Pickering and Bruce (p=0.03 one-tailed) and (2) a statistically significant excess of Down’s Syndrome births in Pickering (p<0.05 one-tailed) and a nearly significant excess in Ajax. These excesses may or may not be chance occurrences or artifacts. If they are not random occurrences, they may or may not be related to the past operation of the Pickering-A station. But these findings and these questions must be discussed and assessed in this Environmental Assessment. (We note for the record that AECB has repeatedly downplayed the significance of these findings, and that Energy Probe has long called for follow-up studies, on both childhood leukemia mortality and Down’s Syndrome births.)

5. Generic and long-standing safety issues must be systematically assessed and resolved prior to restart: Without duplicating the excellent list of safety issues that has been presented in the September 8, 1999, memo to AECB from Irene Kock of Durham Nuclear Awareness (DNA) and David Steele of Pickering Ajax Citizens Together (PACT), we would urge AECB to produce a comprehensive list of safety issues that must be systematically assessed and resolved prior to restart. We note that “Post-accident filter effectiveness” is a generic CANDU safety issue that has special significance to Pickering-A. We also note that another generic CANDU safety issue — “Reactor operation with a flux tilt” — was inadvertently exacerbated at Pickering-A in a past enhancement to Pickering’s chronically under-designed shutdown system. Each of OPG’s planned and ongoing “upgrades” must be thoroughly enough analyzed to ensure that it, too, does not create new hazards in these inherently hazardous reactors.

6. The combined effects of aging and obsolescence have still not been adequately addressed: In 1987, Energy Probe presented a study entitled The Hazards of Old Reactors to the Ontario Nuclear Safety Review, in the presence of numerous representatives of the AECB. Although our findings and recommendations were strongly resisted at the time by Ontario Hydro, AECL, and AECB, we believe that time has been kind to that report. We observe that only some of our recommendations have been implemented 12 years later, and we urge the AECB to take this opportunity to revisit them, in the light of subsequent developments and discoveries. (We would be pleased to supply AECB with copies, on request.)

Sincerely yours,

Norman Rubin
Director, Nuclear Research and Senior Policy Analyst

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Port Hope – Energy Probe’s Written Submission to the Atomic Energy Control Board

Posted on November 25, 1999 by Other News Sources

Norman Rubin
Energy Probe
November 25, 1999

 

 

Introduction and summary:

 

Energy Probe is the oldest project of Energy Probe Research Foundation, one of Canada’s largest environmental organizations, with over 20,000 supporters. Energy Probe has long been involved in nuclear matters and in the affairs of the Atomic Energy Control Board, including numerous written submissions and several appearances before the Board.

Energy Probe shares many, if not all, of the concerns that have been expressed to the Board by concerned citizens of Port Hope. We will restrict our comments in this submission to the following basic and simple point:

 

The operation of Cameco’s facility subjects people in Port Hope to radiation exposures, and health risks, that are unacceptable.

 

Since it is AECB’s job to protect these residents from unacceptable exposures and risks, Energy Probe urges the AECB to do so, by significantly reducing these exposures and risks. In addition, the long-term existence of these unacceptable exposures and risks, in our view, strengthens a number of the claims of Port Hope residents — e.g., to a community health study of their choosing, and to proper remediation of the town’s “historic” or “orphaned” radioactive wastes.

 

The radiation exposures:

 

According to AECB staff, in BMD 99-123, 1999-09-21, “Cameco Corporation – Port Hope – Renewal of Fuel Facility Operating Licence AECB-FFOL-225-4”, section 3.1.1:

It is estimated that effects of external radiation and uranium emissions from Site 1 contributed a maximum calculated dose of 0.19 mSv/y to the most exposed member of the public during 1998 (This is equivalent to 38 % of the licensed dose limit; 0.5 mSv/y).

At Site 2, the external gamma measurements taken at the fenceline locations opposite the critical receptors averaged 21.5 µR/h. This value may be compared with the limit prescribed in the licence of 40 µR/h.

Of course, if public exposures were being kept below levels that are “safe”, it would makes sense to renew the license and continue with the status quo. But these licensed dose limits should not be mistaken for “safe” exposure levels. Nor, in our opinion, are they acceptable.

 

The health risks posed by radiation exposures:

 

According to the latest report from the International Commission on Radiological Protection (ICRP, the international agency which guides AECB’s radiation-protection regulations), known as “ICRP-60”, the nominal risk coefficient of low-level radiation exposure for one health end-point (fatal cancer) to a general population of mixed ages and gender is 5 excess fatal cancers to a population of 100 exposed to 1 Sv — a risk often abbreviated as “5% per Sv” or “5% per person-Sv”. When the ICRP adds in highly discounted estimates of the risk of non-fatal cancer and hereditable effect, it arrives at an estimate of “health detriment” of approximately 7.2% per person-Sv.

There are excellent reasons to believe that the actual health risks of radiation exposure are greater than ICRP’s risk coefficients, including the following:

ICRP’s historical record of underestimating cancer risks: The ICRP’s estimate of the risk of fatal cancer from exposing a population to low-level radiation has increased roughly 50-fold since 1934, prompting the ICRP to drop its exposure limits almost as far. It would seem imprudent to assume that this robust historical trend has stopped, or reversed.

As ICRP itself acknowledges, the human data, largely at higher exposures, actually display a risk coefficient twice as high — 10% fatal cancer per person-Sievert, not 5% — but the ICRP has assumed the existence of a Dose Rate Effectiveness Factor (DREF) of 2, which supposedly halves the effectiveness of radiation at lower doses. That “fudge-factor” is not supported by the human cancer tumour mortality data, which in ICRP-60’s words, “fit a linear response with dose quite well over a broad dose range”. Indeed, ICRP-60 (1991) concedes that their preferred value of 2 is about as high as the data can possibly justify! If DREF is wrong and true linearity is correct (i.e., DREF = 1), then the actual risks of low-level radiation exposure are twice as high as ICRP’s coefficients suggest.

 

Nine years has passed since the ICRP reached a consensus that low-level exposures to radiation are approximately five times more cancer-causing than previously estimated — and that maximum dose limits should accordingly be lowered by a factor of five. As the millennium closes, Canada — led by AECB — is apparently unique among advanced countries in still not having tightened radiation exposure standards! But a glacially slow pace of modernizing standards does not make unacceptable exposures and risks acceptable; it just makes them legal, more is the pity.

 

Furthermore, the license limits, “control equation” and actual exposures in Port Hope have not been lowered five-fold, despite the widespread acceptance of the new scientific consensus. In other words, we now estimate that the AECB-licensed operation of Cameco is today causing greater health risks in Port Hope than the estimates that were given to the public and civic officials in the past by both the licensee and the regulator.

We note with concern that AECB’s BMDs still generally make reference only to the old, obsolete regulatory limits. We believe that neither the people of Port Hope nor the AECB’s Board Members should have exposures “put into perspective” by comparison with radiation exposure standards that bear no relationship to “safe” or “acceptable” levels of exposure. During the remaining months before the new standards come into legal force, we urge AECB Board and staff to behave as if ICRP-60 was published nine years ago.

 

The health risk calculations for Port Hope:

 

Applying ICRP’s risk coefficients to the estimated exposures reported by AECB staff in BMD 99-123 yields the following calculations of lifetime health risks:

1. For the public exposed to a total Cameco-source radiation dose of 0.19 mSv/y from Site 1:

Fatal cancer risk only: 0.19 mSv/y x 76 y/avg. life x 0.05 fatal cancers/Sv = 7.22 x 10-4 or 722 excess fatal cancers per million people so exposed.

“Serious health effects” or what ICRP calls “total health detriment”: 0.19 mSv/y x 76 y/avg. life x 0.072 “serious health effects”/Sv = 1.04 x 10-3 or 1040 excess “serious health effects” per million people so exposed.

2. For the public exposed to an external gamma dose from Cameco’s Site 2 that averaged 21.5 µR/h, we must make assumptions about (1) the fraction of the measured gamma radiation that penetrates their house to the inhabitants, and (2) the fraction of time that they are in their house. In the absence of quantitative evidence, I will assume prudently (“conservatively”) that both fractions are 100%, aware that the results may consequently be overstated by some factor. (The equivalency of 1 R to 0.01Sv is a reasonable approximation, varying slightly, we understand, with the nature of the gamma radiation.)

Fatal cancer risk only:

21.5 µR/h x 0.01Sv/R x 8760h/y x 76 y/avg. life x 0.05 fatal cancers/Sv = 7.16 x 10-3 or 7160 excess fatal cancers per million people so exposed.

“Serious health effects” or what ICRP calls “total health detriment”

21.5 µR/h x 0.01Sv/R x 8760h/y x 76 y/avg. lifex 0.072 “serious health effects”/Sv = 1.03 x 10-2 or 10,300 excess “serious health effects” per million people so exposed.

 

Are these risks “acceptable”? To whom?

 

In the regulation of exposures to non-radioactive carcinogens — cancer-causing agents that don’t make a geiger counter click — these high risk levels to innocent members of the public would never be tolerated. Put in different words, we do not believe there is another public-health regulator in Canada except the AECB that would tolerate these public risk levels. Indeed, significant cleanup efforts and expenditures (public and private) have already been made in Canada to lower much more modest public risks (some of them to small or rural populations), down to lifetime risk levels close to (and sometimes lower than) one “serious health effect” per million people!

In fact, it was precisely this enormous “double standard” that led the Ministers of Health and Natural Resources to convene a review group to examine the “dichotomies and discrepancies” between the various definitions of acceptable risk. As Board Members may or may not know, after eighteen drafts of their report had circulated among the guardians of the status quo, the members of that review group (“JWG-6”) made a conscious decision to ignore their terms of reference completely. As a result, those “dichotomies and discrepancies” persist in full force, and the people of Port Hope are exposed to health risks from Cameco’s activities that would not be tolerated by other regulators, or if they came from non-radioactive substances.

Indeed, these risks would not even be tolerated by AECB if they came from a nuclear generating station! “Action levels”, “target levels” and “ALARA levels” around Canada’s nuclear generating stations — as well as actual estimated public radiation exposure levels — are all significantly lower than these actual estimated exposure levels from Port Hope. In other words, even AECB’s own alarm bells would ring if the neighbours near one of Canada’s nuclear generating stations were exposed to the radiation doses now being received by the equally innocent and deserving neighbours of Cameco.

We would urge AECB to re-examine these exposures and these estimated risks. Perhaps some regulatory staff should be seconded between AECB’s branches, or between AECB and other regulators. Whatever the mechanism, AECB must ensure that these risks in Port Hope are reduced to levels that AECB Board members might accept for their own families. Surely the residents at risk in Port Hope — AECB’s “clients” — deserve no less from their regulator

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Ontario’s municipal electric utilities raising rates

Posted on October 22, 1999 by energyprbe

Tom Adams and Michael Hilson
Financial Post
October 22, 1999

Ontario’s municipal electric utilities – Toronto Hydro, Ottawa Hydro and other local distribution companies that deliver power to city consumers – will be allowed to raise their rates to the average customer by about one-third next year under a proposed Ontario Energy Board staff plan. This massive increase would let municipalities, who under Ontario’s new energy legislation now own Ontario’s 250 municipal utilities, pocket a stream of profits in excess of $5-billion. That’s in addition to the windfall they received from being given ownership of the utilities, which before the legislation were effectively owned by no one.

In the case of Toronto Hydro, with assets of approximately $1.8-billion on the books, the city has three ways to capture the windfall. It could sell the utility immediately for a market value of perhaps $2.8-billion (its full book value plus another $1-billion for unregulated opportunities) and then spend the proceeds any way it wished. It could follow Energy Board rules and borrow $1.2-billion against its utility’s book value, pocket that entire amount, have electricity customers pay all interest charges, and earn $60-million per year – a 10% return on the remaining $600-million in equity. Or it could receive no cash now, and take a dividend from Toronto Hydro of about $140-million per year.

Most of the windfall the cities stand to gain – perhaps two-thirds – would be a direct result of the cash flow stemming from the rate increases. The only complaint from many of these municipalities is that their share of the windfall isn’t rich enough. Lawyers and consultants for the municipal utilities, now for-profit corporations, are campaigning to add another $1.3-billion or so to their equity – or the amount some municipal utilities have received from previous development fees charged to new customers. If the municipal utilities get their way, ratepayers would see a further 15% rise to their distribution rates, taking the total increase to about 50%. Since distribution rates represent about 17% of city customers’ total electricity bills, their final bills will rise by as much as 6% or 7%.

Residential customers and small businesses will be hit with larger increases than big customers, because the distributor’s markup is a greater portion of small customers’ bills.

Until now, Ontario Hydro supervised the municipal utilities, and allowed them to follow many high-cost business practices. While utilities in the U.S. and other provinces minimize their costs and rates by financing their investments over a period of years, Ontario’s municipal utilities charged rates high enough to allow them to pay up front and in cash for all their long-term investments – everything from buildings and poles to wires and transformers. Overcharging consumers didn’t stop there: Together, the utilities have charged consumers enough to accumulate about $1-billion in cash and marketable securities. Energy Probe estimates that these utilities required no more than one-seventh of this amount to operate their activities.

Some municipal owners are already benefiting from their new booty. The City of Toronto has transferred to itself $100-million in cash, and $30-million in property, from Toronto Hydro. This is just for openers. The Ontario Energy Board staff approach could ultimately transfer well over $2-billion from electricity consumers to the city’s coffers. Owen Sound has taken over some of its utility’s buildings, properties and other marketable assets. The proposed one-third rate increase is unnecessary. The provincial legislation that restructured the Ontario electricity sector requires the utilities to adopt more efficient commercial capital structures and accountability rules, and allows the Ontario Energy Board to eliminate the need for the proposed rate shock. Rather than letting the distribution utilities earn a profit on their entire existing assets – all of which have been paid for – the Energy Board should allow profit only on newly invested capital, such as new equipment required to service growing customer needs. Excess cash should be rebated to the customers.

The board should also eliminate the inefficient and unfair “pay up front” method of paying for investments, which leaves current customers to bear the entire costs of investments that will benefit future customers. Failure to make this last change would overstate the utility’s capital costs – and so boost rates – by double-counting some investments.

Under Energy Probe’s alternative, customers who have previously paid up front for utility assets would continue to enjoy the benefits of those assets without having to pay twice. Customers would also see a benefit by eliminating “pay up front” in favour of “user pays.” Municipalities would still have received billions of dollars in unencumbered electricity assets – assets worth even more if the Ontario Energy Board adopts a system of incentives to encourage utility managers to cut fat from their operations. Next November, when the electricity market opens for competition, rates may increase. Consumers will have a tough time deciphering the cause – a confusion that may absolve rate-setters from fully accepting responsibility for their actions. When asked what would be an acceptable distribution rate increase, a consultant advising the board staff testified last month: “It may very well be that consumers will object to the price increase, but at the same time one must also recognize that there is likely to be mass confusion in the market in any case as folks try to understand what has been done to the electric sector, and are in some senses unable to sort it out.” Consumers can be excused for feeling confused. The regulator doesn’t know how actual customer rates will be affected. Nor does the Ontario government. While it continues to face criticism from municipalities who feel short-changed by provincial downloading, it has never pointed to the multibillion-dollar windfall coming to local governments. The Consumer Association of Canada and the Vulnerable Energy Consumers Coalition (affiliated with the Ontario Coalition Against Poverty) – groups that normally defend the interests of residential and vulnerable energy consumers before the Ontario Energy Board – have so far been strangely quiet, instead bringing in experts supporting the double-payment and double-counting proposal.

Under competition next year, consumers will be hit with several special charges imposed by the provincial government – some less obvious than others. Their proceeds will help pay down leftover Ontario Hydro liabilities. These charges, on their own, risk increasing overall customer bills. However, they are more legitimate than the proposed bonanza for municipalities, since Ontario Hydro’s historic liabilities – which are mostly due to its nuclear program – must be covered.

Raising distribution rates to hand $5-billion of customer-created equity to municipalities is unjust and unreasonable. Municipalities have not invested a dime in their utilities. Our municipal utilities are debt-free and flush with cash. Municipal politicians are unlikely to be prudent when playing with this record jackpot.

At the same time customers face rate increases for distribution services, they face provincial surcharges for Ontario Hydro’s past excesses, including a stranded debt of $21-billion. A fair resolution to this quagmire would see the entire proceeds of any rate increase used to pay down the old Ontario Hydro debt. This would avoid the need for one or more of the provincial charges, and perhaps lower overall rates. It would also lead to a more market-based pricing system in electricity, and bring us closer to the day consumers can enjoy the full cost-saving and environmental benefits to come from electricity deregulation.

 

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

Utilities may take energy board to court

Posted on October 20, 1999 by energyprbe

Stuart Laidlaw
The Toronto Star
October 20, 1999

Municipal utilities are expected to take the Ontario Energy Board to court over a decision they say cuts them out of the best parts of deregulation in the electricity market.

“We got into this, supposedly, to push competition in the whole market,” said Robert Kanduth, director of the Municipal Electric Association, a lobby group for the utilities.

“This cuts the utilities out of the market.”

In a decision Monday, the board restricts utilities to being basic power distributors selling electricity at cost, and forbids them to compete in other areas of the market such as long-term contracts, bulk rates for industry and water-heater rentals.

Many utilities, including Toronto Hydro, had planned to enter the market when it is opened to competition in another year, offering homeowners a variety of pricing options and extra services, such as power-use audits.

Such services are now expected to be limited to private-sector entrants to the market, Kanduth said.

But before the utilities launch any court challenge, a couple of hurdles must be overcome, he cautioned.

First, a group of utilities from across the province will meet today, some in person and some by conference call, to pour over the decision, he said.

Toronto Hydro and Hydro Mississauga will be among those present.

If the utilities decide they can’t live with the energy board’s decision, they will likely approach the board as a group to ask it to reconsider.

If the board refuses, the utilities will then look at other options, including taking the board to court, Kanduth said.

“They will look to see what’s available to them in terms of making the changes that they are looking for,” he said.

Several industry sources have said they expect the utilities to take the matter to court, since it set the rules under which they will operate for the foreseeable future.

Tom Adams, of Energy Probe, said utilities are usually willing to live with rate-setting decisions they don’t like, hoping to do better the following year, but can be expected to put up a fight on policy matters.

But they may have a tough time even getting to court, he said.

He said the decision, written by the three members of the 10-person board, contains an “unusual” clause saying the three board members will work with the rest of the board to write a final report on how the system will operate.

`They’ve left themselves a lot of wiggle room and the lobbyists will be out in full force’

“Our lawyers think this is a way to keep it out of judicial review,” Adams said, since the board could argue that the decision can’t be challenged until it’s finalized.

“They’ve left themselves a lot of wiggle room and the lobbyists will be out in full force” trying to influence the final report, he said.

But Brian Hewson, manager of energy licencing at the Ontario Energy Board, said the utilties will not be able to lobby the board to change its policy restricting what role they can play in the market.

“That decision is final.”

He said utilities would have an advantage over new entrants to the market because of their size and because they know the power-usage patterns of their customers.

Hewson did not want to comment on the possibility of a judicial review.

One source who did not want to be named said some municipalities are also concerned that the decision could hurt the value of the utilities, since it restricts the businesses in which they can take part. Under deregulation, cities must register their utilities as corporations by next year, and can sell them to the private sector.

Monday’s decision accepted the position of the utilities that homeowners prefer to pay a fixed rate for power.

Originally, the board had favoured requiring utilties to charge a floating price for power, one that rises and falls with demand. It has now decided that homeowners will pay a fixed rate, based on the estimated average wholesale price of electricity for the year.

At the end of the year, bills will be adjusted up or down for the actual wholesale cost in what the board had called a “true-up.”

But Kanduth said many aspects of how the decision will be implemented still need to be worked out, such as how true-ups will be handled for people who move before their bills are adjusted.

Adams said renters, who tend to move more often and have tighter budgets, could be hard hit if they miss out on their own true-ups and get saddled with someone else’s.

 

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

Flat rates for homeowners get OEB okay

Posted on October 19, 1999 by energyprbe

Stuart Laidlaw
The Toronto Star
October 19, 1999

Homeowners will keep paying a flat rate for electricity under an Ontario Energy Board decision yesterday, but could face once-a-year price shocks as utilities adjust their bills to reflect changes in electricity prices.

In the decision, which is a compromise and a partial reversal of the regulator’s original stand on the issue, the board agreed with municipal utilities that customers don’t want to be exposed to the volatile electricity market.

“Residential consumers may not adapt well to a variable price and there is evidence that many small volume consumers prefer a fixed price for standard supply service,” the board said in its decision.

Under a proposal written by board staff, customers were to be charged a floating price for electricity that would rise and fall with demand. On peak demand days, such as when temperatures rise and air conditioners are running, the price would spike.

The board held hearings on that plan over the summer, getting comments from from municipal utilities, consumer groups, industry, independent power generators, environmentalists and retailers hoping to enter the market.

Utilities argued that they should be allowed to charge a flat rate for electricity, just as they have all along.

Consumer organizations and the watchdog group Energy Probe fought that suggestion, saying the floating price would give customers the lowest price over-all.

Retailers, hoping to compete with the utilities by offering flat rates to those who want to avoid price fluctuations, argued that letting utilities offer flat rates would freeze new entrants out of the market.

The energy board’s compromise decision yesterday calls on the Independent Market Operator, a successor company to the old Ontario Hydro, to predict the average wholesale price for electricity for the following year.

The flat rate charged by utilities would then be based on that estimate, with adjustments made at the end of the year. If the Market Operator guessed too low, the difference would be added to your bill. If the company guessed too high, you’d get a rebate.

Robert Power, a lawyer for the law firm Power Budd, which specializes in hydro deregulation, said the annual adjustment, or “true up,” could be a shock for a lot of people.

“Customers are going to go a whole year without knowing the true cost of electricity.”

The plan is based on a system put in place when the natural gas industry was deregulated a few years ago. Tom Adams of Energy Probe said the system did not work well then, and he is not optimistic about it this time around.

“When the true-ups showed on people’s bills, they screamed.”

While the gas industry began with annual true-ups, it has since moved to quarterly adjustments to lessen the shock on its customers and to make predicting future prices easier.

Adams expects the same thing will happen in electricity.

He acknowledged that yesterday’s decision will mean that customers buying power from local utilities will pay the lowest possible price, but said retailers will lose their biggest chance to gain customers by offering flat rates.

“Retail competition is going to be hurt by this,” he said.

But Nino Silvestri, head of marketing at Direct Energy Marketing Inc., said the market still has plenty of room for retailers who may charge a little more in exchange for a stable price, with no true-ups, and longer contracts.

Silvestri’s company already sells natural gas to about 100,000 customers in Ontario and is anxious to move into electricity.

“We want to get competition going in this market,” he said.

Blair Peberdy, vice-president of corporate communications at Toronto Hydro, applauded the board’s move to flat rates for all customers.

But he did not like another part of the decision that restricts utilities to being no more than electricity distributors, unable to offer customers long-term contracts. That may also mean utilities can no longer rent water heaters, he said.

Toronto Hydro had hoped to compete directly with retailers under deregulation, but now may not be able to, he said.

“We’re going into this with our hands tied.”

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

Brightening New Brunswick’s electricity future

Posted on September 6, 1999 by Other News Sources

Tom Adams
Energy Analects 6
September 6, 1999

After years of political avoidance, New Brunswick’s fresh new provincial government, now less than three months old, has the best opportunity ever to fundamentally correct the problems that afflict its crown- owned utility, NB Power. The appointment of NB Power’s leading critic, UNB professor of business Norman Betts, as Premier Bernard Lord’s new Finance Minister signals that major new thinking will be brought to bear. For years prior to his first electoral success in Lord’s sweep, Betts has been publishing trenchant critiques of NB Power’s accounting deficiencies, declining export revenues, and airy business plans. NB Power’s deficiencies in the areas of accountability, economic inefficiency, problems at the Point Lepreau nuclear station, and rising electricity rates are well documented (EA, Oct. 28, 1996 & June 8, 1998). With a debt relative to the size of the provincial economy that is twice that of the old Ontario Hydro’s debt, NB Power’s financial condition is unsustainable. Failure to undertake bold reform soon will probably result in power prices continuing to rise (while they are generally falling elsewhere), the utility’s capital being iaminedls rather than renewed, and the utility becoming a continuing drain on the provincial government. To maximize the trading opportunities in the United States, New Brunswick-based electricity marketers will need a FERC power marketer certificate. But FERC, pursuing a policy of iofair tradeln, requires Canadian utilities to open their markets to American competitors before it will open its own markets. Trading opportunities will be lost without restructuring. A careful analysis published in July last year by a government inquiry co-chaired by David Hay, a corporate financial services expert, and Moncton University professor Donald Savoie, concluded that ihit will be increasingly difficult, if not impossible, for New Brunwickers to maintain the status quo in the electricity sector.le It is long past time for New Brunswick’s electricity future to be recast in a way that puts the interests of consumers and economic efficiency in front. The Case for Privatization and Competition What New Brunswick really needs is an efficient electricity system, consumer empowerment and ultimately the separation of politics from energy. To get efficiency, you need competition. To get competition you need to privatize. New Brunswick’s transmission system is strategically located for trading, and its electricity future lies in trading, both internally and externally. The value of New Brunswick’s generating assets cannot be optimized without trade, but for trade to flourish, responsible and motivated decision- making entities must be able to engage in transactions (that are not risk free) in a legal environment with clear rules. Electricity sector reform is a massive international trend, comparable in scale to the sea change we have seen in the acceptability of government deficit financing or the movement toward free trade. The Australian State of Victoria’s electricity reform makes an excellent real world case for privatization and competition. The results there have proven beneficial for consumers and government. New Brunswick Tories will have to learn from the mistakes of Newfoundland Liberals where former Premier Clyde Wells was incapable gaining the public’s support to privatize Newfoundland Hydro. To succeed, electricity restructuring must be, and be seen to be, beneficial to the citizens of the province. Economic efficiency is an abstract concept that is hard to explain. Firm leadership is necessary to sustain this effort, the beneficial results of which are unlikely to be easily recognized for at least three or four years from the initiation of the project. Ingredients that will contribute to public support include rigorously clean processes, actions to ensure that legitimate environmental protection concerns are advanced in the process, and measures to fairly discharge responsibilities to workers. When this project is undertaken, there will be many opportunities to artificially inflate value by hiding cost Œ selling only the good assets, holding back from irrealizingls the liabilities, and locking in higher than necessary charges to customers. These temptations lead only to a diminished result. A primary policy question, once the decision is taken to break with past practice and embrace competition, is whether to design the rules for the competitive market before privatizing or the reverse? The market rules provide the foundation for the business activities once the market is opened to competition. Informal, ad hoc rules favour incumbents and insiders while creating risks of corruption. On the other hand, strict public rules, independently administered, foster long-term development and are the best protection for diffuse consumer interests. The benefits of designing the rules first before privatization include:
Ø Protecting reliability: Alberta introduced competition without getting the rules figured out properly first and as a result reliability has been significantly diminished, including a not insignificant threat of cuts to firm load this coming winter.
Ø Maximizing proceeds: Additional certainty over the market rules should help wring maximum value for assets. The current decline in value of British power generation stocks, caused by an unstable condition in the state of the market rules, demonstrates this point. To get best value, particularly from the generating assets, New Brunswick needs a long term plan and the rules to go with it that people have confidence in.
Ø Procedural continuity: The ihrules firstls approach is consistent with the recent Select Committee report issued in May just before the provincial Liberal dynasty fell apart, fits with NB Power’s approach to internal restructuring, and is arguably easier for the public to understand.
The benefits of doing privatization first include:
Ø Privatization will demonstrate the government’s leadership and firm resolve.
Ø Privatization should be designed to broaden the interests in the electricity sector and that should help strengthen the rule development process when it comes. Putting rules before privatization means that the interests developing the rules will be primarily existing, vested producer interests. Because of how long it takes to develop a clear, consistent and complete set of market rules and the sensitivity of the value of generation assets to the market rules, the rules development process should come before generation asset sale. On the other hand, regulated monopoly transmission and distribution assets could be sold even before there is certainty on the rules. A clear statement of good regulatory principles and the establishment of an arms-length regulator prepares the ground for sales of transmission and distribution assets. Finding Value: Form and Sell LDCs Privatization experience elsewhere suggests that substantial market value exists in local distribution companies. Often the market value exceeds the value that conventional, electricity- only cash flow analysis would suggest. The optimal number and composition of LDCs depends in part on cost factors. LDCs should be large enough to capture most economies of scale and scope that cannot be captured by smaller ones through, for example, contracting out some services. Economies of scale for system planning and operations are exhausted relatively quickly because distribution networks tend to be naturally segmented, relying on the transmission grid to transport energy long distances. Likewise, economies of scale in construction and maintenance are relatively small because crews must be distributed around a large service territory. Large economies of scale arise in information technology systems, customer call centres and billing systems, although these may be captured by contracting out such activities to specialized entities who provide their services to several LDCs or retailers. A relatively large number of small LDCs can be workable and efficient. This approach could be used initially to allow commercial decisions to reassemble LDC assets in innovative and more efficient ways. There are regulatory factors that might limit how much consolidation to allow. If there are multiple LDCs, regulators can compare or irbenchmarkln their performance relative to one another, facilitating regulation of their monopoly activities. The greater the number of LDCs, the easier it will be to find companies with similar characteristics or to develop statistical models for benchmarking. To facilitate effective regulatory benchmarking, at least initially, the design and composition of the LDCs should to be similar. Although transmission and distribution are both regulated businesses, there are good policy reasons to separate them. Without separation, LDCs without transmission affiliation might suffer. Electricity Competition as an Intergovernmental Affairs Challenge Successful reform of New Brunswick’s electricity sector will benefit from successful management of relationships with the federal government and other provincial governments. While provincial taxation should not be considered an impediment to privatization (because the taxes can be used to off-set residual liabilities resting with the province, as Ontario has done), federal taxes on newly-private business activities are an impediment. Federal taxes Œ effectively a free windfall to the federal government Œ would, without policy innovation, represent a new cost to be borne by New Brunswick consumers. Federal tax exposure created by privatization is a key impediment to privatization of provincially-owned and municipally-owned power assets in Ontario. The federal government has an interest in seeing electricity sector reform in New Brunswick succeed, both for the economic development benefits such a reform represents and as a measure to enhance interprovincial and international trade. Because of New Brunswick’s strategically located transmission capability, connecting Hydro-Québec to attractive Maritime and U.S. markets, there may be potential national unity benefits as well. On the other hand, the federal government should be responsible for some portion of the nuclear waste disposal and decommissioning liabilities resulting from its Candu promotional policies. The special hazards inherent to nuclear wastes make the issue national in scope. The federal government seized constitutional authority over the nuclear area in1946. It has already applied federal environmental review law to nuclear wastes. It has a large stockpile of nuclear wastes itself resulting primarily from the activities of AECL. Some federal responsibility is therefore unavoidable. A mechanism for managing federal tax exposure created by future power privatization is for Ontario and New Brunswick to work together to negotiate an arrangement with the federal government to accept nuclear liabilities equal to the tax gain it receives. Since consumers and/or taxpayers in New Brunswick would otherwise be ultimately responsible for these liabilities, this proposal would save New Brunswick consumers harmless from the imposition of federal tax. New Brunswick’s Natural Ally There are many reasons why New Brunswick should co-ordinate with Ontario and learn from developments in Ontario. Ontario is a natural ally with New Brunswick. Areas where the two should work together include working toward a responsible federal role in nuclear waste disposal and decommissioning, rationalizing the federal tax hit, and co-ordination on nuclear operational matters. Point Lepreau has no market value except for the owner of some or all of Ontario reactors. Ontario, whose power system is in many respects closely comparable to New Brunswick’s, has invested many millions of dollars developing a solid set of market rules. Ontario’s market design experience provides a wonderful foundation upon which New Brunswick can build. New Brunswick might even teach Ontario a thing or two about doing the job right by building privatization right into the program.
(Tom Adams is the executive director of Energy Probe, a consumer and environmental advocacy organization based in Toronto.)

Posted in New Brunswick Power | Leave a comment

Completing the Cernavoda-2 Reactor: A Bad Risk for Canada

Posted on March 1, 1999 by energyprbe

David Martin
Campaign for Nuclear Phaseout
March 1, 1999

Summary

Twenty-five years ago, the former Ceaucescu regime had plans for 15 to 20 CANDU reactors. However, forced labour was used on the Cernavoda nuclear station, and faulty construction and manufacturing were widespread. After Ceaucescu was deposed in 1989, much of the nuclear infrastructure in Romania was dissolved, and only one reactor was completed. The first CANDU reactor at Cernavoda went into operation in December 1996 — about 20 years after the first agreement between Canada and Romania was signed.

Although about 25% of the basic work on the second reactor was done, it is estimated that completion of the reactor will cost $750 million US (over $1.1 billion Canadian). It has been reported that Canada has already lent Romania a staggering $1.35 billion (and possibly much more… see below) which has not yet been paid back in full. In April 1998, Atomic Energy of Canada Limited (AECL) and its partners committed to provide another $200 million in order to keep the project alive. AECL leads a consortium with the Italian company Ansaldo. In May, Romanian President Emil Constantinescu visited Canada asking for over $1 billion more financing, with special concessionary terms, in order to complete the reactor. Because of its weak financial position and slow movement on market reforms, the International Monetary Fund (IMF) has put a constraint on Romania against taking large foreign loans, such as would be required to complete Cernavoda-2. Concessions demanded by Constantinescu include: release from the requirement to provide a 100% guarantee for Canadian loans; longer payback periods for loans; and a four-year holiday before loan payments start. Moreover, under the terms of the Consensus Agreement of the Organization for Economic Cooperation and Development (OECD) Canada is forbidden from offering concessionary loans in order to promote the sale of nuclear power plants.

It has been reported that Romania now has four times more electrical capacity than it needs. So it is clear that electricity from the Cernavoda-2 reactor is NOT needed in Romania. Prime Minister Chrétien has suggested that Italy may buy electricity from Cernavoda-2, but there is no contract and the terms of such a deal have yet to be negotiated. Needless to say, this is a risky and ill conceived project.

Once again Canadian taxpayers are being asked to foot the bill for a nuclear reactor that is not needed, and is being opposed by environmental groups in Romania. CANDU reactors entail unacceptable economic and environmental costs, and like other reactors designs, there is the risk of catastrophic accidents. There are cheaper, cleaner, and safer ways to generate electricity. Renewable energy and efficiency are the real solutions to global warming, and natural gas is a relatively clean transitional fuel. If Canada wants to help Romania, aid should be provided for efficiency measures and renewable energy.

The Economic Costs of Giving CANDUs to Romania

Despite repeated requests from Nuclear Awareness Project, Atomic Energy of Canada Limited (AECL) and the Export Development Corporation (EDC) have refused to confirm that total amount of loans made by Canada to Romania for the Cernavoda nuclear plant and how much of those loans are still outstanding. We only know for certain that these loans have not been paid off. We do not know the terms of these loans — to what extent they have been concessionary, and what, if any, guarantees have been provided by the Romanian government. Disclosure of this basic information should be a pre-requisite before the Cabinet approves any more high-risk loans to Romania for completion of the Cernavoda-2 reactor.

It has been reported in the media that Canadian loans to Romania for Cernavoda have totalled $1.35 billion [1], however the actual amount of financial support may have been much higher. The loans to Romania began in 1979, when a financing agreement for $1 billion was announced by Canada’s Export Development Corporation (EDC). The EDC loaned $680 million (US) and a consortium of banks loaned US $320 million. [2] It was the largest long-term loan of all time for EDC in a single export sale. The financing agreement was for four 600 MW reactors, but detailed agreements had only been signed for one reactor, and only one reactor was ever completed.

In 1980, former Romanian dictator Nicolae Ceaucescu asked for a ‘countertrade’ agreement whereby Romania could export goods instead of paying cash. The simple reason for this is that Romania simply could not afford nuclear power. Apparently in an attempt to promote the countertrade arrangement, the Romanians agreed to a second reactor [3], and higher Canadian content in both of them. However, in March 1982, the deal collapsed when Romania, which had been borrowing heavily, found itself unable to meet its debt payments. Canada refused to enter into a barter agreement, and in June 1982 the EDC, along with the US Export-Import Bank, stopped payment on all goods and services. The suspension lasted over a year. However, the $320 million from the bank consortium had already been disbursed.

In August 1983 AECL made another attempt to salvage the CANDU deal, when it convinced the Canadian government to offer a $2 billion line of credit for two reactors — half from EDC to finance countertrade for CANDU suppliers. It has never been made clear what arrangements were finally made, but it has been reported that AECL and a small number of companies received cash for their contributions, but a larger number of suppliers, about 50, were left to make barter deals with the Romanians Ð reportedly involving goods such as steel, textiles, and tractors. The import of Romanian steel plate apparently led to charges of dumping from Canadian producers. The value of the deal has never been made public, although it has been reported in the media to be worth about $700 million. [4]

The New York-based Hungarian Human Rights Foundation has charged that countertrade for CANDUs led to food and energy shortages in Romania. [5] In an effort to pay off Romania’s $12 billion debt, food rationing and restrictions on energy consumption were implemented after 1983. [6] By 1988, Romania’s national debt had been cut in half, but popular unrest had mounted, eventually leading to a revolt and the execution of Ceaucescu in 1989. It has since become clear that Romania’s commitment to nuclear power played huge role in the impoverishment the country which led directly to the overthrow of the communist regime. It has been estimated that about $10 billion (US) was spent on the nuclear program in the 1980s. [7] This massive investment has resulted in only one operating reactor that represents less than 4% of the country’s total installed electrical capacity. Adding to the scandal, throughout the 1980s and even into the 1990s after the revolt, forced labour (the so-called “black battalions” of conscripted labour) was used in construction at Cernavoda with the knowledge of AECL.

In September 1991, the Canadian government announced a new agreement to form the AECL/Ansaldo Consortium (AAC) to salvage the initial reactor. The salvage package included: a loan of $315 million through the EDC; takeover of project management by AECL and Nuclear Construction Managers; and provision of services and components from other Canadian companies. [8] The other partners in the consortium included Ansaldo of Italy (balance of plant), and the Romanian utility RENEL. The Italians apparently came up with $150 million in funding (through the Medio Credito Centrale) [9], and the Romanians had only confirmed funding five years later in an undisclosed amount of “something less than $100 million”. [10] By April 1995, $222 million (US) of the 1991 Export Development Corporation loan was still outstanding on the Cernavoda reactor, and costs had mounted to $2.2 billion — on a reactor that could have been bought as a turnkey project in 1995 for about $1.4 billion. [11]

On April 27, 1998, AECL made the most recent announcement of Canadian financial support for the Romanian nuclear program

– – this time for completion of a second reactor at Cernavoda (Cernavoda-2). AECL announced a $142 million (US) (about $200 million CDN), 9 month program, with the EDC providing an unconfirmed percentage. The AECL news release stated that the “Canadian scope of the project [is] worth $80 million…”. [12] It has also been reported that Romania will only be able to provide $40 million (US) of the financing. [13] It can be assumed that once again, Canadian taxpayers will provide the bulk of financial support, by special order of Prime Minister Chrétien and the Cabinet.

During his visit to Canada, Romanian President Emil Constantinescu took the opportunity to rail against western countries that demand “crippling loan guarantees”. [14] EDC President Ian Gillespie has said that the Romania does not want to provide a 100% guarantee for any Canadian loan. In addition, Romania wants a longer payback period and a four-year holiday before loan payments start. [15]

Romania’s financial demands are not only for the current $200 million in financing currently being negotiated to keep alive the Cernavoda-2 project. They are also demanding these sweetheart terms for the total completion package for Cernavoda-2, which will cost (according to AECL) an additional $750 million (US) or over $1.1 billion Canadian. It has been estimated that the Cernavoda-2 reactor is 25% complete (about 63% of the civil work and 4% of the electromechanical work has been done). [16] On May 25, during his visit to Canada , Romanian President Emil Constantinescu asked Prime Minister Chrétien for another $1 billion loan. [17]

Because of its weak financial position and slow movement on market reforms, the International Monetary Fund (IMF) has put a constraint on Romania against taking large foreign loans, such as would be required to complete Cernavoda-2. [18] Moreover, under the terms of the Consensus Agreement of the Organization for Economic Cooperation and Development (OECD) Canada is forbidden from offering concessionary loans in order to promote the sale of nuclear power plants.

Report written by David Martin, Nuclear Awareness Project, nucaware@web.net

Endnotes

1. Ray Silver, “Romanians Seek Funds to Finish Cernavoda; Eye Exporting Power”, Nucleonics Week, May 28, 1998, p. 3. See also: Allan Thompson, “Romanian Reactor needs Canadian cash”, Toronto Star, May 26, 1998, p. A6.

2. Export Development Corporation, News Release, NR 79-21, April 30, 1979.

3. Since this time, AECL, the Canadian Government and other nuclear industry sources have claimed that five CANDUs have been under construction in Romania. The outer shells of five reactors were constructed in a propaganda move by Ceaucescu, however, there has only ever been firm agreement with Canada to construct one reactor.

4. Ian Austen, “CANDU deal for food, goods, hurt Romanians, critics charge”, Ottawa Citizen, January 5, 1990.

5. Ibid..

6. “Turning back the clock in Romania”, Utne Reader, July/August 1988, pp. 28-29.

7. Mark Hibbs, “Romania hopes to save remains of $10 billion know-how investment”, Nucleonics Week, July 18, 1996, pp. 6-8.

8. Government of Canada News Release No. 199, “Canada approves loan for completion of Romanian nuclear power station”, September 17, 1991.

9. “Datafile: Romania”, Nuclear Engineering International, August 1993, p. 53. NEI reported that between them, the Canadian EDC and the Italian MCC financed the project in the amount of US $419 million. Funding from Romania was claimed, but not specified.

10. Ray Silver, “With funding found, RENEL readies for criticality of Cernavoda-1”, Nucleonics Week, February 1, 1996, p. 5.

11. Jennifer Wells, “Going Critical: Canada’s Nuclear Misadventure in Romania”, The Globe & Mail Report on Business Magazine, June 1995, p. 38.

12. Atomic Energy of Canada Limited (AECL) News Release, “Romania awards $200 million contract for work on Cernavoda Unit 2”, April 27, 1998.

13. Jennifer Wells, “Hold the Extras”, Report on Business Magazine, October 1998, p. 14.

14. Jeff Sallot, “Romanian leader rails against west”, Globe and Mail, May 27, 1998, p. A12.

15. Randall Palmer, “Italy offers to take Romanian nuclear power”, Reuters, May 25, 1998. See also: Geoffrey York, “Romania seeks reactor loan”, Globe and Mail, August 6, 1998, p. A12.

16. Ann MacLachlan, “Romanian government change puts Cernavoda-2 completion on hold”, Nucleonics Week, November 28, 1996, pp. 3-4. See also: Ann MacLachlan, “AECL offers Romania financing to begin Cernavoda-2 completion”, Nucleonics Week, March 5, 1998, p. 3.

17. Ray Silver, “Romanians seek funds to finish Cernavoda; eye exporting power”, Nucleonics Week, May 28, 1998, p. 3.

18. Ann MacLachlan, “AECL offers Romania financing to begin Cernavoda-2 completion”, Nucleonics Week, March 5, 1998, p. 3.

 

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Premier says NB Power not for sale

Posted on February 25, 1999 by Other News Sources

CNEWS
February 25, 1999

FREDERICTON (CP) — Premier Camille Theriault says New Brunswick will hang on to its debt-ridden power utility despite the fact its future is still under study and a growing body of opinion that at least part should be sold.

Theriault said Thursday that NB Power, Atlantic Canada’s largest utility, will remain a public utility and will not be chopped up and sold to private bidders to satisfy the demands of deregulation and an increasingly competitive marketplace.

He reiterated in the legislature an announcement he made during his annual state of the province address that “our power company will remain our power company.”

His comments infuriated opposition members of the legislature’s energy committee who feel the novice premier — he has been on the job less than a year — has undermined their job of considering the future of NB Power.

“You have scuttled the work of this committee,” Tory member Peter Mesheau angrily told the premier.

Mesheau is considering quitting the energy committee in protest.

Theriault’s comments also caused concern for some of NB Power’s critics who are hoping the premier isn’t suggesting things will continue as usual at the troubled utility, which is saddled with a $3.5-billion debt.

“The debt situation is a severe, permanent problem,” said Tom Adams, executive director of Energy Probe, a citizen-based consumer group that has studied NB Power.

“Leaving the status quo alone and continuing the mismanagement is just not responsible to the people of New Brunswick. It simply cannot be true that the premier is just going to allow NB Power to continue without adjustments.”

Theriault made his controversial comments during a spirited defence of the often-maligned power corporation. The provincial Crown agency has long enjoyed a monopoly situation in New Brunswick, yet it has still managed to sink deeply into debt.

Theriault said NB Power is an important corporate citizen in the province, adding that whatever unfolds in coming months, it will stay in public hands.

However, he said the government will consider the final report of the legislature energy committee, which has been holding public hearings.

Several presenters at those hearings have recommended that NB Power be broken up and sold. Others have suggested the transmission, distribution and at least some generating assets remain in the public domain.

NDP Leader Elizabeth Weir told the premier the committee should be disbanded in light of his comments.

Adams said he was stunned by Theriault’s attitude.

“There’s an issue of contempt for the legislature,” Adams said.

“The committee is entitled to undertake its inquiries. There’s a history of legislative committees doing good work on the subject of NB Power … they’re an important source of accountability for the utility. I’m concerned to see any weakening of the legislature’s process.”

Energy Minister Doug Tyler said the committee will not be disbanded.

 

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Costly cleanup could sink industry

Posted on February 20, 1999 by energyprbe

Tom Spears
The Kingston Whig-Standard
February 20, 1999

Canada’s nuclear industry risks running short of cash for the $11-billion job of disposing of its nuclear waste, a federal cabinet memo says.

The memo warns the federal government not to set up its own agency to manage the waste, because the government itself could then get stuck with the bill, or with the waste itself.

Instead, the memo written in October warns, the federal government should leave industry to deal with the radioactive waste problem itself, under government rules.

That’s what happened in December: The cabinet announced it wouldn’t set up a Crown agency.

Instead, it said a new body made up of nuclear industry members, including Ontario Hydro and Atomic Energy of Canada Ltd., would manage the waste.

The waste in question is used uranium fuel from Canada’s 22 commercial power reactors – 20 of them in Ontario, and one each in Quebec and New Brunswick.

Used fuel, which is highly radioactive, is stored for now at each nuclear plant. But there’s nowhere in Canada to dispose of it in the long term.

Last year a federal panel examining one possible solution – to bury old fuel deep in the Canadian Shield – said the federal government should create an agency to be in charge of radioactive waste in the long term.

But the memo to cabinet, written by officials at Natural Resources Canada, warns this “would significantly raise the risk of federal financial liability” if Ontario Hydro and other nuclear station owners run out of cash.

Ontario Hydro, which owns some 90 per cent of Canada’s nuclear waste, is $30 billion in debt.

“The government thinks it’s a real enough risk that they need to protect themselves,” said Norm Rubin of Energy Probe, an anti-nuclear group.

Ontario Hydro says it’s confident it can handle the job.

“It is something that forms part of our business plan, which is under review right now,” said Hydro spokesman Terry Young. “There’s talk about setting money aside, but I can’t give you a figure right now.”

In the meantime, the waste keeps building up as temporary storage sites are filling up.

 

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No consensus on nuclear waste

Posted on December 4, 1998 by energyprbe

Norman Rubin
National Post – Letter to the Editor
December 4, 1998

Neville Nankivell’s “Nuclear waste becoming hot issue” (November 26) brings much-needed attention to the important issue of nuclear waste, and the crucial decision now facing the federal government. Most vividly and sympathetically, he presents the “disgruntlement” of Canada’s nuclear industry over recent setbacks.

And who wouldn’t be disgruntled?

The nuclear industry spent 20 years and $700 million to make their case before an independent blue-ribbon review panel, and came up empty! Specifically, they failed to get the two things they wanted: validation of their plan – to put million-year wastes irretrievably down an unmonitored disposal shaft – and permission to choose a site for the shaft.

But Nankivell doesn’t seem to consider the possibility that the independent review panel made its decisions based on evidence, facts, intelligence, and common sense. Rather, he seems to accept without question the world-view of the hearing’s losers – the industry whose case was found wanting on safety, credibility, feasibility, and public acceptance.

It is one thing to share the nuclear industry’s frustration with the independent panel’s findings; it is another thing to misrepresent those findings. AECL and Nankivell persist in claiming the panel was convinced of the plan’s safety; it was not. The panel was divided into two factions, each of which wrote a chapter on safety. One group – the one the industry quotes – found the safety case acceptable “for a concept”; the other did not. The entire panel agreed that acceptability demands agreement on the plan’s safety.

The panel was also unanimous on the larger questions – questions like “Is AECL a credible proponent?” and “Is the AECB a trustworthy regulator?” and “Does the plan have broad public support?” On all those questions and more, the panel unanimously rejected AECL’s case.

But then, how credible a waste plan would you expect from the same institutions who swore that Canada’s nuclear plants would generate cheap, reliable electricity? These are, after all, the same well-educated geniuses whose false promises convinced our governments to sink over ten billion dollars into nuclear research, and tens of billions of dollars more into nuclear reactors. That successful investment pitch was based on forecasts, as are AECL’s claims of safety for its disposal plans.

The difference is, we already know how the investments turned out. Ontario Hydro’s reactors (20 of Canada’s 22) are now considered worthless by the Ontario government and its expert consultants, while the cost of cleaning up after them was recently estimated at over $18 billion, in today’s money. Ontario Hydro has set aside NO money to clean up that radioactive mess.

That is why Nankivell’s last sentence is so vitally important: “It’s now up to the politicians to take policy action that ensures radioactive waste is managed in a way that won’t leave the financial burden to future generations.” Unfortunately, neither Nankivell nor the review panel explained how this bankrupt, sunset industry is going to produce that much cash.

As to AECL’s (and Nankivell’s) claim that “all countries that have looked at safe ways of managing nuclear waste have found the best approach is sealing it in deep underground vaults,” the panel discovered that no alternatives were seriously considered before AECL and its international counterparts declared this one “best”. Furthermore, the old international consensus on irretrievable, unmonitored disposal isn’t what it used to be, as several countries have realized that our children will want – and deserve – early warning of leakage from the underground repository.

Several countries have realized that our children will want – and deserve – early warning of leakage from the underground repository. They also deserve to have this generation set aside the money to clean up the mess.

 

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