Exporting disaster: The cost of selling CANDU reactors

David H. martin

November 1, 1996

Executive Summary

Canadian CANDU exports have entailed extraordinarily high costs for Canadians, both in financial and in human terms.

  • Canada’s nuclear program has cost the Canadian treasury over $13 billion to date. Yet domestic sales have dried up, and export sales are scarce. Any sales that occur cannot possibly recoup the value of the nuclear subsidies already received from Canadian taxpayers. 
  • The dark underside of nuclear power has always been its potential to aid in the production of nuclear weapons, through the production of plutonium — an inevitable byproduct of reactor operation. Of all commercial reactors, the CANDU design produces the most plutonium per unit of energy, and is the most difficult to safeguard. 
  • The ethical cost of CANDU exports has also been high, as CANDU sales have repeatedly involved bribery, and have contributed to Canada’s abandonment of an effective human rights policy.

Economics

In a February 1996 publication by the Campaign for Nuclear Phaseout entitled Nuclear Sunset: The Economic Costs of the Canadian Nuclear Industry, it was demonstrated that Atomic Energy of Canada Ltd. (AECL)1 received federal taxpayer subsidies totalling $13 billion up to the end of March 1995.

Reactor sales cannot hope to recoup that massive subsidy. Indeed, the proceeds from reactor sales may not even keep pace with ongoing annual federal subsidies „ AECL will receive a subsidy of $174 million for 1996-97 (up from $172 million in 1995-96). The amount of the annual subsidy is supposed to drop to $132 million in 1997-98, and to $100 million in 1998-99 „ presumably it will then remain at that level.

Since Canadian utilities are clearly not interested in building more reactors, AECL maintains that prospects for reactor exports justify ongoing subsidies from Canadian taxpayers. However, nuclear prospects are not numerous. The number of nuclear power reactors under construction around the world is at its lowest level in 25 years. Installed nuclear capacity worldwide has remained relatively flat throughout the 1990s. 2Given the intense competition for reactor sales, the scarcity of sales opportunities, and the domination of the existing world market by other reactor types, AECL cannot realistically expect to achieve a large number of sales, or even to capture a significant market share.

The likelihood of market success is further reduced by the CANDU’s worsening international performance. Contrary to the myth of CANDU superiority, in 1995, the load factor for CANDU reactors worldwide was 61. 4% „ the worst of all the major reactor types. 3 The growing trend towards more competitive electricity markets worldwide will also discourage CANDU sales, because nuclear power is a high cost, high risk option. Early CANDU sales involved concessionary financing, which entailed some combination of low prices, outright grants, low or no interest, and long repayment periods. Occasionally other perquisites were made available, including outright bribes or trade concessions. The full extent of hidden incentives and subsidies for these past sales, as with current CANDU deals, may never be known.

In the case of CANDU sales to China, Natural Resources Minister Anne McLellan claims that financing for the CANDU sale to China will be on a ~commercial~ basis. However, the loan, thought to be about $1.5 billion, will go through a crown corporation (the Export Development Corporation) on its “Canada Account”, which is carried on the books of the Department of Foreign Affairs and International Trade. The reason for this is that the loan is too big and too risky for the EDC alone, or for the private sector financial community. The EDC typically provides cheaper loans (i.e. at lower interest rates), for longer periods than commercial banks. There is some doubt as to whether the rules of the OECD4 Consensus Agreement will be observed by AECL and its partners in the sale of CANDUs to China. Indeed, in the recent past, the OECD Consensus Agreement has been violated by one of AECL’s partners.

In addition, there are serious questions about:

  • the absence of political risk insurance on the loans;
  • the degree to which AECL will “give away the store” through technology transfer;
  • the consequences of serious cost overruns; and
  • the cost of possible performance guarantees or warranties.

On the other hand, CANDU deals with other financial structures, such as Build-Own-Operate-Transfer (BOOT) potentially carry even greater risks, as AECL would become the owner and operator, relying on electricity sales to recoup its investment.

The minimum political requirement for CANDU deals should be transparency and disclosure. AECL traditionally keeps its nuclear financing deals secret, but if the China deal is strictly commercial as the government claims, then the details should be made public. AECL is after all a crown corporation, and CANDU sales to China have the economic and political support of the federal government.

CANDU and the Bomb

The explosion of an atomic bomb by India in 1974, using plutonium from a Canadian-supplied reactor, demonstrated the very real contribution that Canadian reactors can make to nuclear weapons proliferation. Canada promptly discontinued nuclear cooperation with India. Within a few years, Canada also broke off nuclear cooperation with Pakistan because of that country’s determination to pursue a nuclear weapons program in response to India’s demonstrated capability.

Despite Canadian and international non-proliferation agreements, CANDU sales carry an inherent risk of proliferation ~ purchasers can simply ignore their commitments, as India did. All of our past CANDU customers (India, Pakistan, Taiwan, Romania, Argentina, and South Korea) have at one time or another pursued a nuclear weapons program.

In recent years, without any public discussion or parliamentary debate, Canada has allowed its non-proliferation policy to be eroded. Since 1989, Canada’s nuclear boycott of India and Pakistan has been abrogated by quietly allowing AECL and other Canadian companies to provide nuclear assistance to both countries.

Because China has given aid to “threshold” nuclear weapons states like Pakistan, the United States government will not allow its privately owned nuclear companies to sell reactors to China. The Canadian government has no ethical compunctions about selling reactors to China ~ it is eager and willing to take advantage of the absence of American competition.

Human Rights

Human rights violations are particularly severe in countries which AECL has targeted as its highest priorities for CANDU sales. China, Indonesia, Turkey and South Korea, among other AECL customers, have consistently been identified as among the world’s worst human rights violators. The Canadian government has argued that through a policy of “constructive engagement”, i. e. by establishing even stronger commercial relations, Canada can encourage improvements in human rights. However, such a policy of appeasement is self-serving and hypocritical. If Canada is serious about improving human rights (or discouraging proliferation), it should impose trade sanctions, rather than expanding trade.

Corruption

Corruption is particularly entrenched in countries such as China, Indonesia, South Korea, and Turkey, all of which are CANDU marketing targets. AECL already has a history of using bribes to secure CANDU sales. Over $22 million in bribes — disguised as agent fees — was paid by AECL to secure sales to Argentina and South Korea. As recently as 1994, AECL’s agent in South Korea was arrested and jailed for paying bribes to the head of South Korea’s nuclear utility. Since AECL was first compelled to disclose “Agent Fees” in 1977, about $60 million has been paid out for dubious purposes. If bribery and corruption are the price of CANDU sales, Canada should get out of the business.

Conclusion

AECL’s most promising customers are all located in countries that exhibit serious human rights problems, and suffer from extensive corruption. Some are developing countries with oppressive and dictatorial governments (e.g. China, Indonesia). Some are governments that have recently shifted to more democratic systems, but still suffer from the heritage of a dictatorial past (e.g. South Korea, Romania, and Turkey). The absence of democracy, or the existence of a fragile democracy replete with human rights violations, invariably means that public debate and consultation on nuclear programs are non-existent or severely limited. Even in developed countries such as Canada the nuclear industry is secretive, democratic processes are rare, and information is often inaccessible. In developing countries these problems are far worse.

Given the fact that the prospects for foreign sales of CANDUs are minimal, the ongoing subsidization of the Canadian nuclear industry cannot be justified. In particular, the financing of CANDU sales should not be supported by the federal government. Canadian taxpayers should not be expected to assume the risks of reactor sales.

End Notes

1 A federal crown corporation that designs and markets the CANDU reactor as well as other nuclear technology and services.

2 Safe Energy Communication Council, “International Nuclear Power”, Myth Busters # 10, Spring 1996.

3 1995 average load factors were as follows: PWR = 75. 2%; BWR = 76. 6%; PWHR (CANDU) = 61. 4%; Magnox = 65.6%; and AGR = 69. 5%. See: Laurie Howles, “Load Factors: 1995 annual review”, Nuclear Engineering International, May 1996, p. 30.

4 Organization for Economic Co-operation and Development

Posted in Nuclear Proliferation | Leave a comment

Update on Consumers Gas meter reading costs

November 1, 1996

After filing Energy Probe’s meter reading evidence in the Consumers Gas 1997 rates case before the Ontario Energy Board, Consumers Gas agreed, during the Alternative Dispute Resolution (ADR) process prior to the hearing, to reduce its 1997 meter reading budget by $500,000 or about 7%. This reduction in cost corresponds to an annual saving of about $0.38 per customer. The Board accepted the ADR agreement on this issue.

Since the conclusion of the rates case, Consumers Gas has committed to fully contracting out meter reading by ‘97 and to pursue joint meter reading with electric distribution and water utilities where possible. The utility has a program to redeploy meter reading employees within the company to the extent possible. One difficulty in implementing joint meter reading is the large number of distinct water and electric distribution utilities within Consumers Gas’ franchise territory, many of whom are concerned about their institutional future in light of expected changes in Ontario’s electricity industry. Some electric distribution utilities have data security concerns, however Consumers Gas will enter into signed agreements not to use electric utility data for competitive purposes.

Energy Probe will be working to ensure declining meter reading costs beyond 1997.

 

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

Why NB Power must be privatized

Thomas Adams
New Brunswick Telegraph Journal
October 9, 1996

HE NEW BRUNSWICK Power Corp. (NB Power) is in a state of operational and financial crisis, the dimensions of which can only be understood by looking at the utility’s rates, costs, and accounts together. The utility is bearing excess debt, excess generating capacity, and unduly high operating costs. The utility’s accounts do not accurately reflect its actual financial condition. Major risks to the utility include a shortfall in future sales and a shortfall in nuclear production.

‘On a per capita basis. New Brunswickers have a third as much electricity debt on their shoulders, relative to Ontario. In Ontario it’s $3,100 or $3,200 per person. In New Brunswick, it corresponds to about $4,200 per person – man, woman and child. It’s almost as much as provincial debt – about $3.2-billion of long-term electricity debt.’

The study outlines and recommends options to respond to these problems. The principal themes of the proposals are competition and customer empowerment. The report advocates creating a market structure to facilitate open competition. Privatization of parts of NB Power is proposed as a mechanism to promote the conditions that will allow competition to flourish.

Electricity is not efficiently priced in New Brunswick. NB Power’s costs are inflated and at the same time the utility is subsidized, neither of which is in the public interest. The prices NB Power charges its municipal utility customers in Saint John and Edmundston appear to be above the price an open market would require. NB Power charges utility customers inside New Brunswick 42 per cent more than it charges those outside.

‘The problems in New Brunswick extend well beyond the nuclear program. The two most recently completed mega-projects – the Dalhousie refit and the constuction of ‘Belledoom’- just stunning mistakes. They led to a 70-per-cent increase in the utility’s debt during the nineties. The utility spent almost $2-billion in the nineties on capital programs. The report describes that expenditure as almost entirely wasted.’

DURING THE SUMMER of 1995, the municipal utility serving Saint John, Civic Hydro, initiated a competitive bidding process to seek supply options. For reasons that have not been publicly revealed, Civic Hydro’s process to price power in the competitive market was not completed. Instead, Civic Hydro signed a sole-supplier contract with NB Power for a period of 10 years. The provisions of the deal provide for a very small reduction in rates to Civic Hydro relative to the rate increases imposed by NB Power on the rest of the province. Civic Hydro’s failure to obtain the results of its bidding process before signing a long-term contract with NB Power was a failure to exercise due diligence and was a major mistake. Customers in Saint John lost the opportunity to potentially receive lower rates. All of New Brunswick lost an opportunity to establish a competitive benchmark against which to judge NB Power’s rates.

Edmundston’s municipal utility does not have a long-term contract with NB Power. Edmundston’s utility should purchase power on terms most attractive for its customers – whether the supplier is NB Power or not. NB Power should refrain from anti-competitive interference in Edmundston’s choice of supplier.

Any rate advantage industry in New Brunswick may once have enjoyed is slipping away. While industrial rates in New Brunswick are increasing, rates in the U.S. are dropping, and industrial rates in most of the rest of Canada are stable. Although the discounts are uncertain, it is certain that actual industrial electricity prices in competing U.S. jurisdictions are often below posted prices.

Because of aggressive accounting practices, NB Power’s reported net income figures exaggerate and distort the utility’s actual profitability. The utility is doing much worse financially than its accounts suggest. More objective accounting standards are required regarding the treatment of capital costs. Nuclear waste disposal and decommissioning costs should also be subject to more strict accounting measures.

Correcting the weakness in NB Power’s accounts without restructuring the corporation would reveal that either rates must go up or the utility must recognize significant losses. The financial weakness of the utility may negatively influence the credit rating of the province. NB Power’s accounts should be subject to ongoing, independent, and public review by the Public Utilities Board.
‘If the same report had been done in the late 1980s, the outlook would not have been nearly so bad. Since the late eighties the management of the utility has just done an appalling job, not to put too fine a point on it. Just terrible.’

NB POWER’S WEAK financial condition leaves the corporation exposed to a number of significant risks – key among them is the risk of domestic and export sales failing to meet the forecast. The introduction of natural gas poses a competitive threat to the utility. The utility’s high reliance on industrial sales and on residential space and water heating make the utility very vulnerable to load loss in the event that gas becomes available.

NB Power’s export market prospects are also subject to significant uncertainty over the longer term. Market conditions in New England are rapidly changing, and bulk power costs are dropping – primarily due to the utility reform process underway there. These competitive challenges could reduce NB Power’s revenue due both to dropping volumes and prices. NB Power’s business plans should include an assessment of the options available to meet the contingency of a declining volume of sales.

NB Power’s capital spending during the 1990s – in excess of $2-billion so far – has been almost entirely wasted. This spending has increased the utility’s debt by 70 per cent while providing little corresponding benefit, thereby undermining its long-term financial viability. There is an urgent need for NB Power to immediately discontinue all debt-financed spending related to generation.

The utility’s two most recent major generating investments were brought into service during a time of excess capacity. Even if they had been needed, the costs of these projects were far above their market value. The utility now has more than twice the amount of reserve generating capacity it requires. This excess capacity should be rationalized.

NB Power has the highest variable and semi-variable cost structure of the major Canadian utilities. One reason is excess coal costs. Domestic New Brunswick coal is more than 120 per cent more costly than imported coal. There appears to be no economic justification for NB Coal to continue to operate since its operating costs exceed the market value of its output. NB Coal should be institutionally separated from NB Power. Except for the satisfaction of the terms of any existing contracts, NB Power should be relieved of any future commitment to buy NB Coal’s product at any price above market price. NB Coal should be privatized. NB Power has the lowest labour efficiency of the four major comparable utilities in Canada. Payroll costs should be reduced by at least 10 per cent.
‘The supply of power rose, demand flattened out, prices plunged, utilities started to restructure. Meanwhile, NB Power continued to be NB Power. Their costs rose, and their product became less attractive.’

THE POINT LEPREAU nuclear station is demonstrating significant financial and operational problems. Key longer term issues that could negatively affect Point Lepreau’s future are ongoing reactor aging and NB Power’s reliance on AECL. Unlike many of NB Power’s other business activities where considerable cost savings appear possible, cost control in the utility’s nuclear operation may be relatively difficult to achieve. NB Power lost approximately $40-million at Point Lepreau in 1995, counting only incremental costs and leaving aside historic capital costs including interest and depreciation. Reactor aging has already cut the station’s production and, in light of Ontario Hydro’s experience, is likely to continue to be a major problem.

Based on Ontario Hydro’s experience, the performance of Lepreau by the 20th year of operation should be expected to be approximately 60 per cent capacity factor, dropping at a rate of 2 percentage points per year. NB Power should analyze and report on the risks and implications of nuclear production shortfalls. NB Power is highly dependent on AECL to provide technical assistance for the operation of Point Lepreau. This reliance exposes NB Power to the uncertainties over the future of AECL. Just as NB Power depends on AECL, AECL is reliant on generous funding from the federal government, but this funding is in jeopardy over the long term. NB Power, an indirect beneficiary of subsidies to AECL, may have to perform more work without the aid of AECL or pay more for AECL’s services.

Utilities in other jurisdictions are pursuing a number of alternative routes to respond to problems similar to those NB Power faces. There is a world-side trend toward electric-sector competition and utility privatization. Models that New Brunswick can learn from include the new and evolving systems in U.K. and Alberta. The recently released Macdonald report in Ontario provides another useful input.

THE CONDITION OF NB Power is comparable in many respects with that of Ontario Hydro and in some cases worse. NB Power’s interest coverage ratio is less than one – indicating that interest costs cannot be fully covered by cash flow but must be partly covered by new debt. Ontario Hydro has not suffered from the same shortfall in its interest coverage ratio. In some cases, Ontario Hydro is in much the same condition as NB Power. Both have expensive surpluses of generating capacity and major operational inefficiencies. Both utilities have high exposures to liability-ridden coal and nuclear investments, with nuclear operations proving to be increasingly difficult. Both enjoy significant government protection through franchises, tax-exempt status, and loan guarantees. Both have engaged in cost-cutting programs. In some respects, Ontario Hydro’s condition is somewhat weaker than NB Power’s. Ontario Hydro is facing a widespread revolt with customers actively seeking alternatives to Ontario Hydro’s uncompetitive rates. Ontario Hydro is attempting to respond to this competitive pressure with an extensive program of discriminatory rates. New Brunswick should embrace a competitive future and adopt a series of much more sweeping transition measures than those so far set out by the utility. Competition, not monopoly, is a proven way to successfully organize economic activity and make society flourish. Only through true competition can New Brunswick’s power market gain the flexibility to respond to new technologies and new service opportunities, such as converging power services with information services.
‘The biggest thing is a description of the extent of the crisis at NB Power. I don’t think it’s been recognized how severe the problem is. The utility is in a profound crisis. One thing that characterizes the crisis: I don’t think they understand how bad it is.’

TO THE GREATEST EXTENT possible, generation, transmission, or local distribution should be rationalized in processes that maximize the use of market forces to identify efficient structures rather than relying on central planning solutions, NB Power should be structurally separated into separate corporate entities. Power generation and marketing, which are naturally competitive, should take place in an open, competitive market. Transmission, distribution and system dispatch should be separated structurally from competitive functions and subject to regulation. The purposes of privatization are to create the conditions to support competition, reduce conflicts of interest where government is both the regulator and the regulated, realize fair value for the public from publicly owned assets, and eliminate or contain liabilities against the public purse. Designing appropriate rate-regulation instruments is a key task for the restructuring effort. The regulatory process in New Brunswick should be empowered to review all natural monopoly activities.

During the transition, stakeholder interests must be dealt with fairly. The technical function of system control, called “dispatch”, should be separated from NB Power’s control and reconstituted as an independent, regulated entity with a mandate to promote open access to the system.

A variety of options are available to deal with stranded costs. Privatization should proceed incrementally with a view to maximizing long-term value for the public of New Brunswick.

Posted in New Brunswick Power | Leave a comment

Environmental assessment review agency nuclear fuel waste management and disposal concept

Dr. N. Rubin
Public Hearing
June 20, 1996

DR. RUBIN: My name is Norman Rubin, I am representing Energy Probe. I will not be going through my written submissions, which are still the written submissions made in earlier phases which covered both technical and generic issues.

My first question is, on what basis do we now believe it might be sensible to stop the regulatory modelling assessment at ten to the fourth, or 10,000 years as AECB designed some nine years ago in the R-104 Regulatory document, and as we have been reminded so often by, among others, AECL.

I have on the overhead slide what I believe are the relevant quotes from R-104 justifying the cut-off of quantitative modelling assessment at ten to the fourth years.

My reading of these passages are that they are dominated by an understanding that uncertainties will increase as the period of prediction increases. I can paraphrase this by saying that there was a general concern at the time of R-104, and I believe in C-104 before it, that any attempt to predict what will happen between 10,000 years in the future and a million years in the future would be so mathematically flaky, that no serious weight should be given to it.

R-104, as you may have noticed on the first slide, does refer to justification of the cut-off also from two other factors; the characteristics of radioactive waste, and the options for their disposal.

The quote is:
“Taking into account the characteristics of radioactive wastes, the options for their disposal, and the uncertainties in long-term predictions, it is considered — (by which of course they mean AECB considers in its wisdom) — that 10,000 years is a reasonable maximum period for assessments of individual risk.”

I might comment in passing, I can certainly understand why it’s appropriate for a regulatory authority to designate and stipulate a minimum assessment period, it is less clear to me, even in principle, why a regulator might want to specify a maximum assessment period.

But that said, in my view R-104 does not explain how either the characteristics of radioactive wastes, which of course include materials that will be around for tens of millions of years, or the options for their disposal, which are somewhat open and under discussion, contribute to the choice of 10,000 years or support it.

They do indicate, as the quotes indicate, some justification for thinking that increasing uncertainties in long-term predictions would justify such a cut-off.

In this hearing I believe we have evidence that AECL’s model, at least of the post-closure assessment of the reference case in the EIS, finds no such increasing uncertainties in long-term predictions. In fact, my understanding of an exchange I had with Dr. Goodwin and what he said before our exchange is, from his graph from their model runs, the uncertainty generated by the model actually decreases, the upper 95 percent and the lower 95 percent converge as one approaches a million years.

Well, this we are told is a flexible and iterative process. It seems that AECB may have limited the regulatory scrutiny of model output to 10,000 years for reasons that are not valid.

Further, I have indicated here that the AECB’s decision was made at a time when public input was not considered as essential as it now, when the public was seen as a vessel for wisdom that came from experts. We’ve learned a lot since then, the AECB has learned something since then, and the panel, in brief, which is having a far more broad based and participatory and wisdom-seeking process than the AECB had, should not hesitate for a moment to impose its wisdom, that is your wisdom — hopefully our wisdom — on the AECB and recommend very clearly what the limits, if any, of regulatory scrutiny should be into the future. And I would suggest, and have suggested here, that the concept and any future planned repository should be shown to meet the panel’s criteria for safety and acceptability, not necessarily AECB’s, for either as long as the wastes remain hazardous, or at least for as long as we expect the hazardous releases to increase.

I want to deal next briefly with an issue that has troubled me throughout this process, and that is the issue of flexibility and responsiveness.

AECL assures us that they plan to be both flexible and responsive, and a number of reviewers have indicated what a good thing it is for an implementing organization, and indeed a research organization, to be both flexible and responsive.

Ironically, a number of other reviewers, and perhaps even some of the same reviewers, have complained bitterly about the May 10th submission from AECL suggesting that it was neither flexible nor responsive, and I would support a number of those comments.

And I would suggest that one of several issues that perhaps can show this problem is the issue of exclusion criteria. And AECL, I believe ironically, has justified its general refusal to set exclusion criteria on the basis that it would be good for everybody for the implementing organization to maintain flexibility, and I say that that’s ironic because I believe the refusal to do so after so many parties from so many parts of this process, including the panel and its guidelines, have urged AECL to specify exclusion criteria, shows a lack of flexibility.

And of course we can discuss whether it is in the public interest for somebody in a great position of authority to be flexible or not, and that is in the eyes of the beholder, and it certainly depends on whether you think that flexibility is going to lead to responsiveness. If that flexibility is the flexibility of a despot, to put it bluntly, since despots usually have great flexibility, they just don’t use it in responsiveness, that is bad flexibility, and we are hoping for some other kind of flexibility.

So I have done a job here of taking a page out of the SRG’s book and I have concluded that, in principle — underlined “in principle” — giving an implementing organization flexibility to respond to future circumstances as it deems appropriate could lead — “could” underlined — to a better handling of waste and increased empowerment of a potential host community. It could also easily do the opposite, by making it easier for an implementing organization to maintain its original plans, site, models, or ideas despite indications that they are inadequate or second-best.

In the circumstances, we doubt that unfettered flexibility will be in the public interest. Please, restrict the implementing organization’s flexibility.

I have also been troubled by many comments that have been made in this process, both in writing and orally, suggesting that people know where the burden of proof lies in the process. And I believe we have heard a range of statements that cover the gambit from A to Z, and I have described A to Z as “A” being; the concept is innocent until proved guilty, safe until proved unsafe; or, on the other hand, the concept must be clearly proved to be safe and acceptable beyond some reasonable level of doubt.

And I would suggest that many reviewers, in separating their criticisms of the reference case study, and after telling us that they don’t believe that that reference case study has been proved safe, then make a distinction and say, “Aha, the concept, on the other hand, seems hunky-dory,” have applied an extremely weak burden of proof on the proponent of the concept, innocent until prove guilty, and I believe I can paraphrase that — or perhaps this is unfair — but in my view the burden of proof could be characterized as saying that a safe and acceptable repository might be built using this concept, it’s conceivable that something good could come out of this.

Another way of saying it is, that the EIS doesn’t rule out the possibility of success. I would maintain that that is clearly an inadequate test of acceptability or safety for this panel; we must demand some level of proof that what has been done will lead to success and not failure.

A concept we talked about a great deal in Phase I and that has sometimes vanished in Phase II is prudence, and I would like to give my view of what it is that brings me here and what I believe must motivate us all. There is enough nasty stuff that we’re planning some day maybe to put down a hole, that it could be very bad if it doesn’t stay more or less where it’s put for quite a long time. In other words, what we are after here is disaster avoidance, or prudence.

I compare that exercise to the exercise of buying insurance or making an emergency response plan. The object is not to forecast the most likely outcomes, or to maximum society’s mathematical expectation, or to satisfy linear cost benefit analysis. Indeed, good insurance policies and good emergency response plans typically fail those tests. Those that pass those tests are generally not as useful as those that fail, that fail the job of insurance or the job of emergency response; in other words, the job of avoiding nasty outcomes. It’s the consequences. “Stupid” as an earlier speaker said.

There are key research gaps which must be filled if we are going to do a good job at disaster avoidance. One is, we must study failures. And I have noted a number of times in questions there has been a systematic lack of study of failures; that includes geological containment failures. We must know where the ore bodies have leached out, not just where the successes have been. This isn’t a job of pointing to somewhere where God succeeded and then claiming success. I don’t want to be anywhere near a repository that was designed by an optimist.

We must understand failed engineered systems; most of which were proved safe before they failed. I need not the list the numbers of them.

And finally, we must understand institutional failures that created the failed engineered systems.

I have made these slides available. Uncertainty in this field is always bad, never neutral. You have heard it being described as “neutral” a few times. And irreversibility and lack of monitoring are generally scary in disaster avoidance.

Finally the issue of timing, which I believe is one of the cruxes here, because those of us who want to see storage for a while — we’re not totally sure how long, whether we mean forever or whether we mean a hundred years or just for now — and those who want to throw it in the ground as fast as possible can be said to differ really only in timing, and that therefore turns out to be an extremely crucial decision.

Nonetheless, we haven’t seen any attempt to optimize that decision. Here are some inputs to that optimization:

The risks of monitored retrieval storage are not zero. We are probably all glad those who first made the wastes did not feel the responsibility to dispose of them as fast as possible.

We have brought some important information in the last seventeen years for half a billion dollars; some of that information has come at the last minute, some of it still hasn’t come in. And we’ve heard reference to a number of “emerging fields.” I list a number that have been acknowledged in the emerging fields.

And then I bring myself to two final points still under this optimization. One is, in the real world, institutions building multi-billion dollar facilities don’t change their mind. Focusing on whether it’s physically possible to dig the stuff out of the vault after you have been putting it in for fifty years, as far as I’m concerned, shows a misunderstanding of how things work. That’s why we have Darlington.

Even the choice of repository site, once made, must be viewed as at least semi-irreversible; in principle reversible, in reality heroically impossible to reverse.

And finally I just point out that AECL itself, another branch of AECL at Chalk River now has designed and is seeking regulatory approval from the AECB for what they call “IRUS”, the Intrusion Resistant Underground Structure which AECB describes in a two-week old document as “a near-surface disposal facility for radioactive wastes with hazardous lifetimes of 500 years or less.” I am not suggesting that we are dealing with wastes that are hazardous for 500 years or less, but I am suggesting that if there is a feasible technology that could solve some of the surface storage problems for up to 500 years while we make sure we’ve done first things first, it should be on the table and this panel should have those documents before it to see how attractive it is, and whether that technology can be used near reactor sites for example.

Thank you.

THE CHAIRMAN: Thank you, Mr. Rubin.

Questions first from the panel for Mr. Rubin? Dougal McCreath.

DR. McCREATH: Thank you, Mr. Rubin. You notice I did not say “Dr. Rubin.” I may be slow to learn, but I get there.

I just wanted to touch on one point to be sure that you and I have read the same thing from previous presentations by the proponent. You noted that their model shows decreasing uncertainty at long enough time periods, a million years or beyond, curves converge.

I thought that what I heard from that presentation is that that was driven by the fact that in long enough time periods all the canisters fail so there is a release of inventory, so there is no longer uncertainty about how much inventory is released, all of it is released in long enough time frames.

I did not hear that there was increasing certainty about all the other elements of the model; how many people live there, what are the pathways, what happens to glaciation, climate, et cetera. Is that a fair observation?

DR. RUBIN: The regulatory criteria which AECL has followed, of course, paid no attention to how many people live there in terms of that has … I mean, the difference between three and four people sucking out of the well matters, but the number of people who live in the general area basically does not affect them because they are calculating only doses to the critical group.

But what I was talking about was the final output of the model in terms of dose to the average member of the critical group, and that was the context in which the discussion happened. So I believe that while there is certainty about the release from the first barrier or two, and you’re right about that, it is through the entire multi-barrier system and out to the critical group that that line appeared, that Dr. Goodwin and I described, where the uncertainties converge, so it incorporates both the certainty that the zirconium and the titanium will have failed, but also, as I believe I pointed out then, something like 99.98 percent of the waste still hasn’t reached the critical group, or still hasn’t reached the biosphere.

DR. McCREATH: Well, help me with this. If we currently have a lot of uncertainty about many of the processes and connections in that model today, why would running that model for a million or a billion years increase our certainly in those processes and connections?

DR. RUBIN: Well, perhaps I’m being disingenuous here. I still have trouble believing the answer that AECL gave me. All I’m saying is, they can’t have it both ways; either we’re in cloud cuckoo land in claiming to know anything about the future, 50,000 or 100,000 or 500,000 years from now, as AECB feared we would be, and as a result told licensees not to analyze this, or not to think of it as a regulatory criterion, or we do know what’s going to happen in the far future and therefore might as well optimize it, might as well try to do as little harm as possible. I haven’t totally reconciled those two opposing views.

I mean, I would have intuitively expected a realistic model to have diverging uncertainties as we get farther in the future. Wherever I’ve seen models before that have converging uncertainties in the future, and I think specifically of Ontario Hydro Load Forecast models, those models have not done well in predicting reality.

DR. McCREATH: Thank you.

THE CHAIRMAN: Any other questions from the panel? Louise Roy?

Sorry. Louis La Pierre first.

DR. LA PIERRE: Mr. Rubin, thank you for the presentation.

How confident are you that wastes could be stored on site for some time?

DR. RUBIN: Well, I must say, every time one of my friends from another NGO says “We just have to leave it at the reactors forever,” I say “Do you want to sign off for responsibility for that?” Because I don’t; I don’t want to sign off for responsibility under any of the branches of this tree, and unfortunately we all have to make a decision, including those of us who cautioned against creating these materials in the first place. We are still not absolved of responsibility to try to find the least bad out.

I can relatively easily construct scenarios, as AECL has attempted to do, in which we’ll be sorry that we’ve left it in canisters at the surface near nuclear generating stations. Serious warfare would be one; sabotage is easy; total collapse of society.

I believe, and I think we’re back into Phase I where many of the important decisions are really going to be made, I believe that the progress that has been going on has been fast enough, and that the cloud of doubt and uncertainty and ignorance that still surrounds the performance of this repository over the next million years is so great, that the gains that we are sure to get in the next hundred years or thereabouts, in my mind, outweigh the acknowledged risks of putting this where we can keep our eyes on it, and I’m open to compromise solutions, for example, following the lines of shallow geological burial so that perhaps aerial bombardment, or casual intrusion, or stick-em-up, give me your spent fuel, you know, certain scenarios become incredible that might have to be considered credible if they just sit in the same kinds of storage canisters that some of the wastes are already in.

THE CHAIRMAN: Louise Roy.

MS. ROY: Let my try to see if I understand your reasoning, Mr. Rubin. Am I correct in saying that you are assuming that we will someday to go to disposal … let me just continue. Then what you’re saying is that we should now, in the meantime, try to optimize the decision of the best timing to go to disposal, and then at least compare the risk of keeping the waste at the surface in or near underground close to the surface facility that could be quite safe for a certain number of years while we are pursuing research to make sure that when we will go to disposal, or — well, this I’m not sure — if we go to disposal, we will maximize our chance of having a real safe facility that will be able to keep the waste there for many, many, many, many, many years? Am I right?

DR. RUBIN: I think you are exactly right in summarizing the presentation I made today. It makes me nervous that … I mean, your first statement makes me realize that I gave a rather incomplete presentation.

One of the things we might learn over the next hundred years is something better than deep geological disposal. Transmutation .. I mean, the whole category of imponderables … I mean, there are imponderables on both sides of the technological question. We may discover bad things about deep geological disposal. Fleischman and Ponds(phoen) may come up with a magic disposal method that works; the inventors of cold fusion, that is.

I don’t know what information we will have available a hundred years from now. If I did, I would probably be a much better investor than I am. But I believe that it is counter-intuitive … the burden of proof is on anybody who says that the historical trends are suddenly going to reverse and we are going to know less, and I think also the burden of proof is on anybody who says that we can, in the near term, find a site and poise the drill bit over the mark on the ground and still maintain complete flexibility to change our mind. We can drill the hole, excavate, put the … I mean, there have been a number of suggestions from intelligent people here suggesting that we should do all of the characterization of the repository, excavate it, fill it, perhaps even buffer it and backfill it, and then wait and be flexible.

I don’t consider that realistic, because I don’t think anybody will take advantage of that flexibility in the real world.

MS. ROY: Okay. Then could you summarize what, in your views, are the best steps or the best way to go in the next future?

DR. RUBIN: Avoid irreversible steps, and those include steps that are institutionally irreversible; I think that is the heart of prudence. And I believe that means that we focus on increasing our knowledge, while not taking any steps … I don’t believe it makes sense … I’m not persuaded that it makes sense to move the wastes from the general places where they are now until we know where they’re going, and until we have confidence we know where they’re going.

I would suggest a siting moratorium, in effect, of something on the order of a handful of decades, fifty years before we start talking to communities and say “Do you want it?”

Let me hasten to add; during that time we have to find the bag with the money in it, and we have to make sure it’s full. Those criteria have not been met. That is extremely important.

But in terms of committing ourselves to a plan … I mean, I think I’m coming out exactly opposite to what the Gang of Five said earlier. As frustrated as they are that we still don’t have a site and a hole in the ground, I am relieved and fearful that we will soon have a site and a hole in the ground that will commit the thought processes, the institutions, the research, the decide and defend process, the institutional atherosclerosis, hardening of the arteries, so that no further re-examination will be possible.

Heck, what Ken Hare did, and Archie Aiken, and the other gentlemen in 1977 has, as far as I’m concerned, prevented an open look, a real look at this. I mean, that was a three-month quickie. We are now talking about starting to spend the $13 billion while staying flexible. Again I don’t think that’s in the cards.

MS. ROY: Okay. So you would pursue the generic research, if I can call it like this, while trying to, I would say, consolidate, if it’s possible, or render safer the installation that we already have on site to keep the waste there?

DR. RUBIN: Yes. I’m not sure that optimizing the monitored retrievable storage necessarily means moving it from the kinds of concrete canisters they are in at the reactor sites. I think some consideration has to be given to what you do after Bruce A shuts down, which is going to be the twinkling of an eye compared to the life of these wastes, and the other reactors will … presumably all those stations will be shut down before fifty years is up, so some thought has to be given to that. It might still be the best of those monitored options is concrete canisters. If not, shallow burial is a friendly amendment.

I leave that to you. You haven’t heard much evidence on any of that. That’s too bad. But I think that’s where wisdom and prudence lie in my mind. Thank you.

MS. ROY: Mr. Chairman, can I ask AECL if it could be possible for them to table this document Mr. Rubin referred to, the Chalk River … what’s the title?

DR. RUBIN: Well, it would be AECL’s documentation on the IRUS. I was just citing an AECB quick reference to it.

DR. DORMUTH: I think it is a very large document. I could check on its availability —

THE CHAIRMAN: Would you see if at least there is an executive summary of it, and that might be for starters to give us some idea of what was in that and what were the considerations put forward?

DR. DORMUTH: Yes, I will check on that, and I will check on the availability.

THE CHAIRMAN: Thank you. Pieter Van Vliet.

MR. Van VLIET: Thank you, Mr. Chairman.

I would like to pursue the issue of flexibility. You sort of implored the panel not to give unfettered flexibility to the implementing organization.

DR. RUBIN: Yes.

MR. Van VLIET: I might not exactly have put it that way. But is it not so that flexibility given to an implementing organization would result in better engineering, better examination of options?

For instance, the results from the Hare Report gave out a specific direction and recommendation as to where this process should go, and this was followed by AECL; the end result was that a rather limited number of choices were examined.

Doesn’t that boil down to an issue of trust of the implementing organization, or is this, on the other hand a strong desire to impose our views on the organization, how they should go in the future? I see the two opposing views in there, and if I can pursue that with you.

DR. RUBIN: Yes. I have no qualms in saying that giving me flexibility is in the public interest, and I have great qualms in saying giving the nice folks from Atomic Energy of Canada Limited great flexibility may not be in the public interest.

And yes, that is related to trust, and we could give them great flexibility in making presentation

s, in trying to import mixed oxide fuel for CANDU reactors, or fabricating the fuel in the United States, or which countries they sell reactors to. Our society has limited their flexibility in some of those areas, not so much in others. I would suggest, wherever we have limited it, their flexibility has been in the public interest, and in many of the areas where we haven’t limited their flexibility, they have not demonstrated that they have used that flexibility to be responsive to public values, needs and desires.

If there were another implementing organization in the wings that had a totally different history, not at all was Rip Van Winkle that has just woken up after forty years of sleep, perhaps that would be a solution. In Phase II, despite Ken Dormuth’s frequent protestations that AECL is not — I forget exactly how he phrases it, maybe he can help me — but is not … he didn’t say “in the running”, but, you know, hasn’t put itself forward, I believe he said, as the implementing organization, I haven’t seen much discussion about alternative implementing organizations, and I’ve heard lots of people say what a wonderful thing it is we have assembled this team, and this knowledge base, and these computers, and this facility, and what a crying shame it would be if we lost it. So the Phase II momentum, as I stick my finger up in the wind, would suggest that you’re not going to have much documentation or much thought given to anybody other than AECL, and yes, their flexibility worries me just because I don’t see a track record that suggests that they used their flexibility to answer my questions.

MR. Van VLIET: So your conclusions are based entirely on your assumption that AECL may or may not … may be the implementing organization?

DR. RUBIN: Not entirely, in the sense that whatever happens at a siting and a site selection negotiation phase, I fear is going to be a negotiation between an elephant and a mouse. And I have already cautioned the panel on the kinds of things that I think have to assured in order for that negotiation to be a negotiation and not a one-way information flow before we give you the wastes.

But if there is going to an imbalance, the implementing organization is going to have a mandate to implement. Whoever it is, if they don’t drill the hole, if their mandate is to drill the hole, they will have failed. So the pressures on that organization are going to be to get to “yes”, and under those circumstances … and a number of technical reviewers have commented as well, including the previous speaker, saying that “We can do whatever we want. We’ll find a good site. Okay, we got a bad site; we’ll compensate. Okay, the container isn’t going to last; we can adjust.” You know, “We can move people away from the discharge area.” I mean, there is always ways of justifying the status quo in a probabilistic kind of argument; we’ve seen this in reactor safety. Those usually show up as alternatives to actually making the thing safer, or actually fixing the weakest link. And I think whoever the implementing organization is going to be, you have to be afraid of that kind of technical approach that we see in safety licensing. It’s a natural response.

It’s cheaper to argue that what you’ve already done is safe enough than it is to improve its safety; that’s an economic fact of life.

THE CHAIRMAN: A final question, I believe, from the panel. Denis Brown.

DR. D. BROWN: Mr. Rubin, you compared the whole exercise, including building the repository, to taking out a good insurance policy, I believe.

Well, I would just suggest to you that if you have a need for a good insurance policy, it is not a good idea to delay taking it out for a hundred years, or even several tens of decades just in case a better insurance company is available at the end of the road.

DR. RUBIN: Yes, I appreciate that. As I re-read the slides, had I still been at my keyboard, I would have struck the parenthesis; it jumped off the page at me, but it was already printed, and I won’t tell you what hour of last night it was.

And, I mean, ultimately the choice of a repository, if we choose to site a repository, must be done on these prudence, insurance-buying, contingency plan bases. Whether moving from monitored retrievable storage to a repository is comparable to buying an insurance policy or not, depends on whether it decreases the worst outcome or decreases our risk, and that’s precisely where this timing and the potential for alternatives and more alternatives fifty years from now comes into play, and that’s where I would have the optimization.

DR. D. BROWN: Thank you.

THE CHAIRMAN: Before I open to any further questions from any quarter, I would like to remind all present of two facts.

One, there are still on the schedule for this afternoon two AECL responses, and we have been urging AECL to make responses to things which we have raised earlier and could not get earlier responses to. I am told that each of those is fairly detailed, a fifteen to twenty-minute response, something of that sort. That, therefore, will take time.

I also, if I may, would remind you that a lot of people have been urging this panel to give serious consideration to how it should proceed in the immediate future.

The panel would be delighted to do that if it were given any time in which to do it. And, quite frankly, I’m afraid, given our age and the attention which we are all giving to the hearings as they go on, our chances of starting to have serious discussion on that after five-thirty or six o’clock in the evening on a day which has started at nine o’clock are not very promising.

We had been hoping to be starting an initial discussion of that question, as to where we go from here, this afternoon at four o’clock, which seemed quite reasonable given the timetable we had. I see that possibility slipping away. I am not asking for sympathy, I am merely reminding you that you want us to be doing some work of our own and that requires time and energy.

Are there further questions to be put to Mr. Rubin from the panel? (Laughter)

THE CHAIRMAN: Oh, I have not found that those sort of pleas have had any importance at all; it hasn’t in the least deterred AECL or SRG or the public from putting questions, and I don’t think they will now, but I guess I wanted to get it on the record.

Yes, microphone number 2?

MS. KEIFFER: Susan Keiffer from the Canadian Geoscience Council. I think I can compromise with you by saying I would just like to make two statements, not two questions.

I would just to clarify that when we were talking about long-term monitoring yesterday, we believe that it’s necessary because of the nature of the geological systems at those time scales, and that whether or not we postpone the start of this by fifty or a hundred years, and go through this sequence where Mr. Rubin said to put it all together and sit and wait, we believe you probably have to do that anyhow, even if you gather another century’s worth of data.

And secondly, I did make some comments yesterday on institutional memories, and I would like to clarify that that had nothing to do with the issue of trust, that to date that’s how our society deals with very rare and non-intuitive events. And I think we are getting better at it in geological hazards, for example, but it really was a different issue when I was talking about institutions than these issues of trust. So I just wanted to clarify that.

THE CHAIRMAN: Now, I really must turn the questioning over to AECL in spite of those rather sad remarks which I made a few moments ago.

DR. DORMUTH: No, thank you, Mr. Chairman.

THE CHAIRMAN: Oh, dear. Now I feel guilty.

DR. RUBIN: Mr. Chairman, if I could just comment briefly on Ms. Keiffer’s … I believe the issue of long-term memory in which continuity of institutions is posited points generally in the opposite direction as this institutional inertia or hardening of the arteries that I was talking about; which is especially important the more has been invested in a specific way of looking at things or a specific plan where it just becomes difficult for an institution to change its mind.

THE CHAIRMAN: Thank you.

I don’t dare ask the question, but I don’t see anyone leaping to the microphones.

DR. RUBIN: If I could make one brief announcement?

THE CHAIRMAN: Yes.

DR. RUBIN: This really is brief. I threatened a few days ago to bring with me, for the panel, Draft 6 of the Federal Review of the dichotomies and discrepancies between the chemical cancer-prevention paradigm and approach and the regulation of radionuclides. I have brought it with me. I will give it to the Secretariat for copying. It is my copy. And again I regret that we don’t have Draft 12, but perhaps you will have the final report, perhaps not.

THE CHAIRMAN: Thank you. I would suggest that we really now break for various reasons, including a cup of tea. Would you mind very much, Mr. Shemilt, if we did that?

Have you an extremely … a one-minute question or comment, and a one-minute answer?

DR. SHEMILT: Les Shemilt, McMaster University. As Professor of Engineering and one-time Dean of Engineering, I just wanted to assure Mr. Rubin that his point with regard to the gap in research knowledge with regard to failed engineering systems and materials is not a gap in research knowledge, this is a tremendously active research area, the library shelves are filled with work in this field; certainly nothing need be held up for that. That is the essence of current engineering education.

THE CHAIRMAN: Thank you.

DR. RUBIN: I think my comment was for this panel to review. I have raised the issue several times.

THE CHAIRMAN: Thank you. A fifteen-minute break. I would like you to be back promptly at four o’clock to hear the two responses from AECL.

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Submission to US Dept. of Energy, regarding use of nuclear weapons Plutonium in Canadian reactors

Norman Rubin
Energy Probe
June 7, 1996

U.S. Department of Energy Office of Fissile Materials Disposition P.O. Box 23786 Washington D.C. 20026-3786 U.S.A. BY FAX: 202-586-2710 (Original following by mail)

Re: Storage and Disposition of Weapons-Usable Fissile Materials Draft Programmatic Environmental Impact Statement (PEIS).

To whom it may concern,

Attached please find a submission from Energy Probe on the topic of the proposed use of mixed-oxide (MOX) fuel, containing plutonium from dismantled U.S. nuclear warheads, at the Bruce “A” Nuclear Generating Station. The MOX-CANDU reactor proposal is noted in the Department of Energy (DoE) document Storage and Disposition of Weapons-Usable Fissile Materials Draft Programmatic Environmental Impact Statement (PEIS) as one of the options under consideration by the DoE for plutonium disposition.

Energy Probe is a project of Energy Probe Research Foundation, a non-profit environmental organization founded in 1980, dedicated to raising public awareness about energy and environmental issues. Energy Probe Research Foundation has approximately 50,000 supporters, roughly half of them in the province of Ontario.

We have reviewed the relevant sections of the DoE PEIS. We have also reviewed the submission sent to you by Nuclear Awareness Project (Box 104, Uxbridge, Ontario L9P 1M6), and we generally endorse its arguments and conclusions, with some relatively minor exceptions and some additions noted below.

In brief, Energy Probe urges the DoE to rule out the option of using CANDU reactors located in Canada for plutonium disposition purposes unless and until the following conditions are met:

The undertaking must not impose uncompensated costs — financial, environmental, or social — on people in Ontario or elsewhere in Canada; The undertaking must not retard Ontario’s progress in achieving an open, competitive, and diversified electricity system, characterized by open access for electricity suppliers, and free choice for electricity consumers; The undertaking must not proceed without the full, public application of Ontario’s Environmental Assessment Act, or an equivalent testing of its environmental acceptability; The undertaking must not proceed without a clear indication that it has the informed consent of the people of Ontario, especially those who will be most directly affected by it. If the U.S. government chooses to dispose of its nuclear-weapons plutonium in Canada, rather than within the United States, it must be clearly demonstrated that its decision is in no way motivated by Canada’s relative lack of citizen safeguards and rights — both legislated and common-law — that might make implementation easier in Canada than within the U.S..

For reasons outlined below and in the submission of Nuclear Awareness Project, we believe that these conditions are unlikely to be met. We therefore urge the U.S. government to focus its attention on plutonium-disposition options that can be carried out within the United States.

Sincerely yours,

Norman Rubin Director, Nuclear Research and Senior Policy Analyst

attachment

Energy Probe’s Notes Regarding the Storage and Disposition of Weapons-Usable Fissile Materials Draft Programmatic Environmental Impact Statement

by Norman Rubin Director, Nuclear Research and Senior Policy Analyst

June 6, 1996

Canadian impacts “do not apply”!

In the Draft Programmatic Environmental Impact Statement (henceforth, “the PEIS”), the “environmental impacts” of the Canadian CANDU option are almost universally described with a single phrase: “Does not apply”. The specific areas in which impacts “do not apply” include the following: Land Resources, Site Infrastructure, Air Quality and Noise, Water Resources, Geology and Soils, Biological Resources, Cultural and Paleontological Resources, Socioeconomics, Public and Occupational Health and Safety — itself subdivided into Normal Radiological Impacts, Hazardous Chemical Impacts, and Facility Accidents — and Waste Management.1

In the two areas where impacts are acknowledged to apply — Intersite Transportation of Fissile Materials and Environmental Justice — those impacts end at the Canadian border.

Of course, most Canadians would consider the impacts, in Canada, of the Canadian CANDU option for the disposition of U.S. nuclear-weapons plutonium to be just as real, significant, and “applicable” as the impacts of the other options in the U.S. And informed Canadians — including Energy Probe — would be concerned that the Canadian and Ontario governments may not give much more attention to these real impacts than this U.S. PEIS does. For example, Canadian federal government officials, up to the Prime Minister himself, seem to have publicly concluded — without any recourse to public process, public opinion, or environmental assessment — that the MOX-CANDU proposal is the best option for disposition of both U.S. and Russian nuclear-weapons plutonium.2

In short, we are concerned that the Canadian public (especially Ontario residents) may be treated like citizens of a “banana republic”, with neither our own officials nor those of the United States respecting our rights to participate in this important decision. We urge the U.S. government not to take advantage of the weakness of Canada’s, and Ontario’s, political and legal safeguards in making this decision.

Indeed, we believe that it is consistent with the spirit, and perhaps even the letter, of the U.S. National Environmental Protection Act, that adverse impacts outside the United States be considered before an option is chosen.

Regardless of the legal issue, we do not see how you can hope to choose an option that minimizes adverse impacts, without comparing all the impacts of all the options.

Energy Probe’s comments on the submission by Nuclear Awareness Project3:

It is even clearer than NAP indicates that Ontario Hydro does not plan to retube the 4 reactors of Bruce-A station. Nuclear Awareness Project writes (Submission, p. 1):

Energy Probe’s Notes, page 2

Capacity Factors and Reliability of CANDU Reactors

The Atomic Energy of Canada Limited (AECL) proposal assumes that the four Bruce “A” Nuclear Generating Station reactors will be retubed regardless of whether or not the mixed-oxide (MOX) fuel scheme is implemented, and that these reactors will operate at an average capacity factor of 80% for a further 25 year period. These assumptions are inappropriate, given current debates about the future of the electricity sector in Ontario, and given operating experience at CANDU reactors.

The AECL Final Report Plutonium Consumption Program – CANDU Reactor Project notes:

“It is assumed for the purposes of this study that the Bruce NGS A units will be retubed because there is a demand for electricity.”

Retubing is the rebuilding of a CANDU reactor core where all fuel channels are replaced at a cost now

Energy Probe’s Notes, page 3

estimated by Ontario Hydro at about $350 million per reactor. The DoE should note that the Bruce reactor 2 was shut down in 1995 to avoid this cost and other major repairs, primarily to steam generators. The other 3 reactors are scheduled for retubing starting in 2000, but could instead by shut down at that time. The Bruce “A” Station began operations between 1977 and 1979. It is unlikely that Ontario Hydro will be able to justify the expense of retubing its aging reactors when faced with increasing competition in the electricity sector. [emphasis added; endnotes omitted.]

In fact, according to Ontario Hydro documents and sworn testimony, the other 3 reactors of the Bruce-A station are not scheduled for retubing starting in 2000, or at any other time. Rather, they are scheduled to be shut down when they reach the end of pressure-tube life, starting in 2000. Ontario Hydro, of course, retains the option of changing its mind and retubing one or more of these reactors. But AECL’s assessment of the likelihood of that outcome must be viewed in the context of AECL’s historical record of forecasting future events, which can best be described as “laughable”. Indeed, it is just as hard in Ontario as in the U.S. to find competent, informed experts who expect to see major capital refits to aging nuclear stations, especially as our electricity system becomes more market-oriented and competitive.4

In the early 1990s, Ontario Hydro spent a considerable sum — $203 million in Canadian dollars — on its plans to retube two of the reactors of the Bruce-A station — units 1 and 2, in reverse numerical order. In 1993, Ontario Hydro officially “wrote off” that investment, on the grounds that it was not expected to accrue to the benefit of electricity customers.5

Furthermore, on March 21, 1994, Ontario Hydro Nuclear submitted its “Strategic Plan for Future Operation of Bruce A Nuclear Generating Station” in writing to the Atomic Energy Control Board.6

That document is quite clear in assuring the Atomic Energy Control Board that all four units of Bruce-A will actually reach a premature end of life. Consider, for example, the following specific passages:

In paragraph 1.0 — “Strategic Plan Overview” — of Attachment 1 of the package and the corresponding chart — “Bruce ‘A’ Operating Strategy” — Ontario Hydro told the Atomic Energy Control Board that Bruce Unit 1 would “SHUT DOWN JANUARY )” in the year 2000, and gave the explanation “P/T [i.e., pressure tube] LIFE LIMIT”. For Bruce Unit 3, the notice “SHUT DOWN APRIL” appears in the year 2008, accompanied by “P/T LIFE LIMIT”. For Bruce Unit 4, the notice “SHUT DOWN APRIL” appears in the year 2006, accompanied by “P/T LIFE LIMIT”, but it is followed by the following Note: “ADDITIONAL SLAR IN THE 1990’S WILL ENABLE UNIT TO EXTEND PRESSURE TUBE LIFE LIMIT TO APRIL 2011.”

Attachment 4, Section 1, first paragraph, says “… the elements required to ensure safe operation of Units 1 and 2 to their planned end of life (which have now been firmed up) have been incorporated into their operating strategies.” Same section, page 2, first complete paragraph says “For Unit 1, an end of life in 2000 is now planned, based on fuel channel creep induced elongation.”

These passages make absolutely clear how firm and unambiguous Ontario Hydro has been in assuring the Atomic Energy Control Board that it actually plans to shut down Bruce A Units 1, 3, and 4 in January 2000, April 2008, and April 2011, respectively. Any assurances to the contrary — especially from AECL — should be given little credence.

The fear of exemption from environmental assessment in Ontario is even more well-founded than NAP indicates.

Nuclear Awareness Project writes (Submission, p. 4):

Energy Probe’s Notes, page 4

There is no guarantee that the plutonium fuel scheme will undergo an environmental assessment at either the provincial or federal level. An exemption was granted to the Bruce “A” Station in 1976 under the Ontario Environmental Assessment Act, and the use of MOX fuel may come under this exemption.

Indeed, Energy Probe has direct and painful experience in this matter: A legal attempt by Energy Probe to force an Ontario EA of another serious change at an exempted nuclear station — specifically the decision to build an Ontario-wide Tritium Removal [and storage] facility at the Darlington station — was rejected by the Ontario courts. The courts found that the proposal to build the nuclear station, which was exempted from the Ontario Environmental Assessment Act, was extremely vague and general. Therefore, the exemption from Environmental Assessment even covered the later decision to construct an Ontario-wide waste-extraction and – storage facility — on a part of the property that was shown as an open space on the maps drawn when the exemption was granted!7

Moreover, the Federal Environmental Assessment Panel on High-Level Waste Disposal (see p. 3 of NAP’s submission) has already repeatedly indicated its unwillingness to enter into discussions of the potential implications of this proposal on the quantity or nature of high-level nuclear waste in Canada, because it views the proposal as still hypothetical.

As one indication of the treatment of this issue before the Federal Environmental Assessment Panel, following is an intervention on the second day of the hearing by Dr. P. Brown of Natural Resources Canada, explaining why there is no need for that panel to review this proposal:

THE CHAIRMAN: Microphone number 3?

DR. P. BROWN: Thank you, Mr. Chairman. Your indulgence, please. This is more of a comment rather than a question.

The CANDU option — I just want to clarify one point, and that is that the CANDU option for burning MOX fuel is only a proposal for consideration; it is not a confirmed project. And any project that was there would not start until the year 2000, and, in any event, it would have to meet all applicable Canadian environmental and regulatory requirements before a decision to proceed with the option was indeed given.

So it is not a fait accompli at this point. Thank you.

THE CHAIRMAN: Thank you, Dr. Brown.8

These recent developments give further credence to NAP’s concerns in regard to any federal Environmental Assessment of this undertaking.

Energy Probe’s Notes, page 5

End-Notes

1. See, for example, PEIS, Summary volume, Attachment B: “Summary Comparison of Environmental Impacts for Plutonium Disposition Alternatives”, pp. S-122–S-155. http://web.fie.com/htdoc/fed/doe/fsl/pub/down/any/doedn006.htm Back to document

2. See, for example, Mark Nichols, “Debating the CANDU option: Should Canada process plutonium?” in Maclean’s, May 6, 1996, pp. 46-47; “Plutonium plan to go before G7” in The Financial Post, April 17, 1996, p. 2. Back to document

3. Nuclear Awareness Project, Submission to the U.S. Department of Energy Regarding the Storage and Disposition of Weapons-Usable Fissile Materials Draft Programmatic Environmental Impact Statement, June 6, 1996. Back to document

4. This morning’s release of A Framework for Competition, The Report of the Advisory Committee on Competition in Ontario’s Electricity System to the Ontario Minister of Environment and Energy, can only be seen as reinforcing and accelerating this widespread trend. Back to document

5. Testimony at the Ontario Energy Board, HR22 hearing, esp. Transcript volume 16, pp. 3174-3178. Back to document

6. The document bears Ontario Hydro file number BGA 00531 (P). It was distributed by AECB staff to its Board and to the present author as Board Member Document BMD 94-65A, dated 1994-03-30. This document was also filed (by Energy Probe) as Exhibit 4.2.17 at the Ontario Energy Board on June 8, 1994. As far as we know, this document remains in force and has not been superseded by any subsequent documents. Back to document

7. Specific citations on request. First the Ontario lower court dismissed our action, then the Court of Appeals declined our Application for Leave to Appeal, without giving any reasons. Back to document

8. ENVIRONMENTAL ASSESSMENT REVIEW AGENCY, NUCLEAR FUEL WASTE MANAGEMENT AND DISPOSAL CONCEPT, PUBLIC HEARINGS, MARCH 12, 1996, VOLUME 2, p.

 

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Comparative Review of Meter Reading Costs

Thomas Adams

April 1, 1996

Pre-filed Testimony on Behalf of Energy Probe
Thomas Adams
Senior Consultant, Borealis Energy Research Association
Presented to the Ontario Energy Board Regarding

E.B.R.O. 492

IN THE MATTER OF the Ontario Energy Board Act R.S.O. 1990, c. O.13;

AND IN THE MATTER OF an Application by The Consumers’ Gas Company Ltd. for an order or orders approving rates to be charged for the sale, distribution, transmission and storage of gas for its 1997 fiscal year.

Preamble

The following pre-filed evidence is submitted on behalf of the intervenor, Energy Probe. A résumé of the author is attached as Appendix A. The evidence addresses item 3.5.6, “Meter Reading and Billing”, of the Board’s Issues List in E.B.R.O. 492. The purpose of the evidence is to address meter reading costs related to residential and small general service customers (although, where costs for larger customers were available it is included.) The evidence benchmarks the meter reading costs of Consumers Gas against comparable municipal electric utilities in Ontario. The evidence also attempts to put meter reading costs in the context of total customer accounting costs.

Findings

The meter reading cost of Consumers Gas for residential customers is $0.965 per read. This cost is three or more times the current costs for meter reading reported by the three largest municipal electric utilities surveyed.

Meter reading costs at all the municipal utilities surveyed are being aggressively managed and are expected to drop this year or next year.

All of the municipal electric utilities surveyed are doing, or want to be doing, multi-utility metering, which they all recognize as efficient. Maintaining data integrity is a key competitive issue for the surveyed utilities.

The results of this survey suggest that the competitive pressure on municipal electric utilities to maintain load during and after a period of significant bulk power rate increase appears to have been a more effective force for promoting efficiency in meter reading than the exercise of Ontario Hydro’s regulatory oversight of these utilities. Competitive pressure on electric distributors since the early 1990s also appears to have been more effective in driving meter reading efficiency than did regulatory oversight of Consumer Gas during a period of generally declining gas commodity prices.

Recommendation

Consumers Gas should lower its meter reading costs for residential customers to the current level of comparable municipal electric utilities. The resulting reduction in the Consumer Gas’ proposed Test Year cost of service would be approximately $3.9 million. However, the Board may wish to make some accommodation for transition costs. I suggest that Test Year meter reading costs for general service customers be cut by $3.5 million. Whether or not accommodation is made for transition costs, the company should also be required to reduce meter reading costs in the near future at least to the current cost of Scarborough Hydro, which is almost four times as efficient as Consumers Gas.

Survey Method

I surveyed four municipal electric utilities: Scarborough Hydro, Milton Hydro, London Hydro, and another utility that is among the largest five in Ontario but wished to remain anonymous. The three large utilities were selected as broadly comparable to Consumer Gas in that they serve urban, industrialized parts on Ontario. Milton Hydro was included as an example of a utility serving a lower density area. Another reason these utilities were selected was because they are generally recognized within Ontario’s electricity industry as aggressive managers and industry leaders within Ontario’s power distribution sector. I also interviewed one of the major meter reading contractors in Ontario. At each of the surveyed utilities, I interviewed the respective general manager. Also, in each case, except for Milton Hydro, I interviewed utility personel directly responsible for meter reading.

Survey Results

All surveyed utilities read residential and small general service meters six times per year (except as noted below), as does Consumers Gas.

London Hydro’s meter reading cost for residential and small general service customers is $0.31 per read. This cost blends the costs of to hard-to-read and easy-to-read meters. London Hydro contracts out all of its meter reading. The most recent contract was signed in 1994. The price is fixed and the term is five years with an option for two additional years. The contract contains a clause that allows the utility to get out of the contract on a 30-day notice if the contractor’s performance is unsatisfactory. London Hydro currently owns its own hand-held hardware and provides it to the contractor. The utility is planning to sell its equipment and contracting for a bundled service, for both cost savings and improved flexibility. The anticipated cost premium for bundled service is expected to be in the order of one to two cents per read. London Hydro was created in that city’s municipal annexation in the early 1990s. Prior to annexation, London was served by the London Public Utilities Commission, which services water and electricity customers. Annexation led to the removal of the water service function and also added a significant number of low-density customers to London Hydro. Although the London Public Utilities Commission had a more dense service area, its meter reading costs, measured at dissolution, were higher, at 36 cents per read. London Hydro, through its contract, also collects water metering data for the City of London Works Department along with it own electric metering data. London Hydro is doing Automatic Meter Reading (AMR) for time-of-use metering and is strongly committed to AMR development. AMR is contracted out. London Hydro is also considering card swipe prepayment meters for customer service reasons and to reduce bad debt costs.

Milton Hydro’s meter reading costs per read are as follows:

Table 1: Milton Hydro Meter Reading Costs

Residential Outside Electric/Outside Water $0.40 Residential Outside Electric/Inside Water $0.71 Residential Inside Electric/Inside Water $0.75 Residential Rural Outside or Inside Electric (No Water) $1.04 Commercial Urban Electric (kWh, kVA, kW)/Water $1.00 Commercial Rural Electric (kWh, kVA, kW) (No Water) $1.87 Final Read – Residential Urban $1.25 Final Read – Residential Rural $2.35 Final Read – Commercial Urban $1.25 Final Read – Commercial Rural $2.25

These prices include equipment charges. Milton Hydro is the smallest surveyed utility by a substantial margin and has the lowest customer density. Milton Hydro is presently pursuing a cooperation agreement with Union Gas in an effort to reduce costs. All of Milton Hydro’s meter reading is contracted out and has been for many years. Milton Hydro also has an AMR development program.

Scarborough Hydro’s meter reading cost are currently the lowest of the surveyed utilities. Scarborough is Canada’s largest multi-service utility, serving both water and electricity customers. Scarborough Hydro’s residential meter reading costs per read are shown in Table 2.

The costs in Table 2 reflect the fact that Scarborough Hydro provides the meter reading equipment to the contractor. However, the utility currently has an request for proposals (RFP) out for meter reading services. Scarborough Hydro anticipates that the RFP will it out of the business of owning the meter reading equipment while lowering costs. Scarborough Hydro’s experience suggests that substantial economies exist in multi-utility meter reading. Scarborough Hydro has a strong commitment to AMR for time-of-use rates and is negotiating with Consumers Gas on shared meter reading.

Table 2: Scarborough Hydro: Current Residential Meter Reading Costs Electric Outside $0.25 Electric Inside $0.34 Water Outside $0.13 Water Inside $0.37

I also surveyed another large municipal utility. Its residential metering reading costs are approximately 30 cents per read. Its residential meters are read six times per year except for its electric heating customers which are read monthly. For industrial and commercial customers with demand and energy meters, the cost per read is approximately $1, and meters are read monthly. Large accounts are not included in this figure. This large utility is pursuing a joint program with another utility to contract out for multi-utility meter reading services. The hope of this large utility is that its residential meter reading costs can be reduced by 15% to 20% through co-operation.

The municipal electric utilities surveyed were not always as efficient in meter reading as they are today. Historically, some Ontario electric utilities had costs as high as $1 per read. The work was typically done by utility staff, and contracting out was limited or non-existent. Utility work rules were rigid and employees were typically paid hourly with little incentive for efficiency. The rate shock imposed on municipal electric utilities by Ontario Hydro in the early 1990s damaged the interests of the utilities. Sales volumes in virtually all market segments went into a period of sustained contraction. At the current bulk power rates, most municipal utilities are unlikely to see sales volumes return to the level they were at in 1989 until well after the year 2000. The need to retain load and reduce competitive losses to competing fuels, particularly gas, forced these utilities to re-examine all elements of their distribution costs, with particular attention to controllable O&M costs.

Discussion and Comparison

Metering reading costs are controllable O&M costs, not subject to cost-increasing pressures from third party influences. Energy Probe has had an active interest in the controllable component of Consumer Gas’ O&M costs since E.B.R.O. 487.

For Consumers Gas in the fiscal year 1995, the average annual cost of meter reading for general service customers was $5.79 (Ex. I Tab 4 Sch. 10). Since Consumers Gas reads meters six times per year, the cost per read is $0.965. Consumers Gas is increasing the share of meter reading contracted out. At present, approximately 70% of all meter reading is contracted out. The cost per read for contracted reading is in the order of $0.50. Consumers Gas is actively discussing shared meter reading with many other utilities. Switching to shared meter reading could initially be somewhat cumbersome given the number of utilities involved.

For Consumers Gas, inside meters are substantially more costly to read than outside meters. For Consumers Gas the annual cost for reading each inside meter is $11.16 in 1995 (Ex. I Tab 4 Sch. 10), or $1.86 per read. Approximately 300,000 of its residential meters are inside.

The primary factor driving meter reading costs appears to be the efficiency of the utility. The next most important factors are whether multiple meters are read, and whether the meter is located inside or outside. The electric utilities surveyed have added far fewer customers in recent years than Consumers Gas. Therefore the electric utilities have had much less opportunity, relative to Consumers Gas, to shift the proportion of their meters from inside to outside locations. Other significant factors driving costs include customer density on the streets served and the presence of meter obstructions.

I have attempted to quantify factors that may affect the comparability of meter reading costs between utilities. One factor that affects comparability is the treatment of utility-owned equipment. The case of London Hydro suggests that the premium for bundled service, including an equipment charge, may be in the order of a few cents per read. Another potential factor is the treatment of route planning costs. Route planning costs are primarily startup costs. I conclude that the data in Ex. I Tab 4 Sch. 10 appear to be roughly comparable with reported meter reading costs from municipal utilities.

Meter reading costs contribute to customer accounting costs through the cost allocation process. Customer accounting costs are insensitive to the volume of usage and should be recovered on a fully allocated basis through a fixed charge such as a monthly hookup charge. The annual customer accounting costs for each residential and small general service customers of Consumers Gas are shown in Table 3.

The customer accounting costs of Consumers Gas have escalated significantly over the five years as shown. Although meter reading costs are a modest component of total customer accounting costs, which for the Test Year will be over $10 per month per customer according to the company’s proposal, the savings to be obtained by bringing the efficiency of Consumers Gas up to the level of the largest surveyed electric distribution utilities is significant.

Table 3: Consumers Gas Annual Fully Allocated Customer Accounting Cost per Customer EBRO 492 EBRO 490 EBRO 487 EBRO 485 EBRO 479 Costs ($ millions) Rate 1 144.57 127.93 112.5 104.58 94.43 Rate 6 15.91 14.41 13.05 12.2 11.81 Customers (millions) Rate 1 1.177 1.136 1.096 1.054 0.99 Rate 6 0.13 0.126 0.124 0.121 0.118 Cost/Cust. ($/cust.) Rate 1 $122.83 $112.61 $102.65 $99.22 $95.38 Rate 6 $122.38 $114.37 $105.24 $100.83 $100.08

References: Fully allocated customer accounting costs: Ex. I, Tab 4, Sch. 8 Customer numbers: Exhibits C3, C4, C5, Tab 3, Sch. 1

Consumers Gas should have meter reading costs in the order of 30 cents per read with an expectation of further cost reductions in the near term. Efficiency gains of this magnitude would represent an annual saving of $3.00 per residential and general service customer and a reduction in revenue requirement in the Test Year of $3.9 million. In considering this matter, the Board may want to make some accommodation for transition costs. I suggest that Test Year meter reading costs for general service customers be cut by $3.5 million. Whether or not accommodation is made for transition costs, the company should also be required to reduce meter reading costs in the near future at least to the cost of Scarborough Hydro, which is almost four times as efficient as Consumers Gas.

This concludes my pre-filed evidence.

 

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Risk Methodology and Criteria for a Nuclear Waste Disposal Facility

Norman Rubin
Borealis Energy Research Association on behalf of Energy Probe
March 1, 1996

Part 4 of Energy Probe’s Submission on The Adequacy of Atomic Energy of Canada Limited’s Environmental Impact Statement on the Concept for Disposal of Canada’s Nuclear Fuel Waste. Submitted to the Federal Environmental Assessment Review Panel.

 

Introduction

As part of its participation in the federal review of the concept of deep geological disposal of nuclear waste, Energy Probe commissioned Borealis Energy Research Association to examine Risk Methodology and Criteria for a Nuclear Waste Disposal Facility. In Part 2 of Energy Probe’s submission, dated August 8, 1995, we addressed the adequacy of Atomic Energy of Canada Limited’s Environmental Impact Statement on The Concept for Disposal Of Canada’s Nuclear Fuel Waste (AECL’s EIS) in that area. In this paper, Part 4 of Energy Probe’s submission, we address the merits of the opinions and conclusions of the EIS regarding risk issues, and recommend alternatives. This paper focuses especially on the following areas (though not necessarily in this order):
(1) total population, individual, and environmental risks, especially due to radioactive substances that may be released from the envisaged repository (Guidelines, pages 10-11), including the risks of human health impacts such as “additional cancers” (Guidelines, page 55);
(2) the criteria that relate to those risks (Guidelines, pages 13, 18, and 20, etc.);
(3) the definitions of safety and acceptability (Guidelines, pages 9, 11); and
(4) adequate proof of safety (Guidelines, page 11).
Some introductory comments to the Panel
In general, when we examine earlier attempts to bury hazardous waste – from Love Canal, to S-Area Dump, to Soviet injection of radioactive liquid waste in deep boreholes, to the radioactive “pits” and sand-lined trenches at Chalk River – we find that they were too careless, and did more harm than good. Put another way, our generation would be more grateful to earlier generations if they had kept those wastes in well-maintained barrels in well-maintained buildings, rather than “doing us the favour” of burying them in the ground. In hindsight, the reasons for our predecessors’ carelessness include a lack of attention (we have had another generation to think about these things), a lack of technology (we have had another generation to develop better technology), and a lack of adequate regulatory standards (we have had another generation to develop better standards – scientifically and politically).

Completely ignoring these obvious historical facts, the international nuclear establishment – including AECB and AECL and the OECD’s Nuclear Energy Agency and the UN’s IAEA – suggests that our generation has an ethical imperative to rush to implement a “walk-away” “disposal” scheme for this generation’s high-level nuclear wastes. We believe that it would be foolish to ignore the weight of historical facts, or to imitate the past generation’s mistakes, when choosing as important course of action as this.

When charitable people attempt to excuse those earlier generations for their sloppiness, they often use expressions like these: “Those times were different; they didn’t know any better then.” This brief is intended partly to prod this Environmental Assessment Panel (and AECB, AECL, Ontario Hydro, etc.) to know as much as we can know, and partly to document Energy Probe’s belief that this generation does “know better”.

The field of public-health protection against persistent toxic materials like these nuclear wastes is rapidly evolving and will continue to evolve. The 1996 view of technology, public opinion, acceptability, and regulation are all snapshots of a changing picture. Long before the waste has decayed – indeed, before it is buried – this Panel’s report is almost certain to look quaint and out of date, like 1940’s writings about controlling persistent toxic substances, or sustainable development, or energy alternatives. The Panel can only hope to advance the evolution of “official” government intelligence if it is sensitive to trends, makes an effort to be progressive in a changing field, and relies more on demonstrated leaders of public opinion than on guardians of the status quo.

The Panel must separate what must be done from what can easily be done. This will be especially difficult if – when – it appears that some of what must be done seems to be impossible, at least with AECL’s approach and today’s technology.
Our decisions will be so important to so many humans and other beings for so many years, that this Panel must make unparalleled efforts to find and speak the truth, even if doing so is impolitic, inconvenient, or unflattering – in short, un-Canadian! Matters that demand truthful appraisal, in our view, include AECL’s credibility, demonstrated biases, and ethical record; the adequacy of AECB’s regulations and enforcement record; and even the challenge this incredible task will pose to the wisdom of the Canadian and Ontario governments.

This Panel needs to make choices that humans should never be forced to make – and preferably to state clearly that humans should never be forced to make such choices. E.g., the panel was absolutely right to be concerned about the health risks to the entire exposed population, and not just to the individual or “critical group”. But if our generation is to proceed with anything remotely resembling AECL’s Concept, we must choose, or at least come to grips with, an “acceptable” number of estimated future cancers, hereditable defects, and deaths – and that number is almost certain to seem unacceptable to many thoughtful members of the public and the Panel.

This Panel needs to be confident that a sensible, thoughtful, heroic, wise, and truthful report will have an effect on the disposition of these wastes – whether the report is initially accepted, or rejected, or ignored, by the Canadian government. Once these findings are published, they will reinforce and resonate with the Canadian public’s (and Canadian public-interest groups’) concern for the environment, and their descendants – and their dislike for carcinogenic and mutagenic pollutants.

This Panel needs to choose a reversible option that will minimize the chance of disaster – monitored retrievable storage for perhaps a century, while looking for better long-term options – as recommended by people as diverse as nuclear physicist Alvin Weinberg and anti-nuclear philosophy professor Kristin Shrader-Frechette.

Finally, this Panel should endorse one simple and true statement that is absolutely revolutionary and heretical to the nuclear establishment: The presence and extent of other causes of cancer in our environment – including natural background radiation – has absolutely no relevance to the cancers that may be caused by radioactive pollution released from this generation’s nuclear waste repository. We are responsible for the risks we cause to future living things, and the fact that all of us “live in a sea of risk” is unfortunate, but it does not justify adding one iota to that risk. There may be levels of artificial radiation, or cancer risk, that are low enough to be universally acceptable or negligible (though we doubt it), but those levels cannot be determined by some simple proportion to background levels of radiation or overall cancer risks.
What should we require from a proposed repository?
In the absence of meaningful information in AECL’s EIS on most of these issues – see Part 2 of Energy Probe’s submission, dated August 8, 1995 (henceforth, “EP2”) – public-interest intervenors like Energy Probe, and the Panel itself, are left with the task of defining safety, acceptability, and proof from first principles. This “God-like task” is uncomfortable and vexing, but it is extremely important that the Panel be resolute in doing it, and doing it well – not least because AECL has consistently avoided the task, and AECB’s regulatory documents are much too lax in the protection of human health and the environment.

Energy Probe’s two submissions on siting and siting process (EP1 and EP3) have outlined the centrality of two principles – informed consent (of multiple “communities”) and the protection of individual property rights – in safeguarding existing communities and individuals from abuse. Indeed, these two principles, if applied faithfully and rigorously, may well suffice to ensure the safety of existing communities and individuals, the acceptability of the risks they face, and the adequacy of their proof of safety.

On the other hand, this empowerment of existing communities and individuals is unlikely to provide comparable, or adequate, safeguards to those communities and individuals most likely to suffer adverse health effects from radioactive releases from the envisaged repository – those living in future centuries and millennia. We are therefore faced with the central dilemma of these wastes – a dilemma that was created right along with the wastes themselves:

Future humans have done absolutely nothing to create or to “deserve” these hazardous wastes and have not used any of the electricity these hazardous wastes generated. It is therefore ethically essential that they be protected, beyond any reasonable doubt, from any associated risks that they themselves would object to. Yet they cannot be consulted for their preferences, nor can we assure that they will not be exposed to cancer risks and other health risks that many of us consider unacceptable, even in return for some of our electricity. Further, virtually all estimates of these risks – including AECL’s – show that the repository will subject future individuals to much larger radiation doses, and presumably much larger health risks, than present communities and individuals. Finally, it is generally conceded (although perhaps too quickly) that we cannot create either reliable perpetual funds to compensate them for their losses, or reliable accountability mechanisms to ensure that those of us who are responsible for the losses of future victims are actually held responsible, or expect to be.

Ironically, the dilemma is outlined, inadvertently, in AECL’s EIS, on p. 65:

Research into people’s perception of risk . . . suggests that people consider the risk of an activity to be . . . more acceptable if

  • they are familiar with the activity,
  • they engage in or accept the activity voluntarily,
  • they believe they have some ability to control the risk,
  • they believe the distribution of risks and benefits is equitable,
  • they trust the organization responsible for the activity, or
  • they benefit from the activity.

We believe that all these factors weigh heavily against AECL’s plans to gain acceptance from today’s Canadians; when applied to Canadians living thousands of years in the future, it is clear that essentially none of these grounds for acceptance can be met.

This dilemma requires that we take two actions, at a minimum: (1) establish stringent regulatory standards for total population, individual, and environmental risks; and (2) ensure that no irreversible steps are taken until we are confident that we can quantify those risks, and confident that we have done all that is humanly possible to minimize them.

What is an acceptable individual risk?

Goals and principles:

We begin with a clear goal, derived from our ethical principles, which is not to be found in AECL’s EIS or any of AECB’s regulatory documents:

Before a nuclear waste repository is authorized, we must have a very high level of confidence that it will not expose any future individual to health risks that today’s relatively risk-averse individuals would object to.

This statement, while leaving two key terms unquantified – “very high” and “relatively risk-averse” – represents our attempt to codify one requirement noted above:

It is therefore ethically essential that [future humans] be protected, beyond any reasonable doubt, from any associated risks that they themselves would object to.

Failure to achieve this standard would mean that at least some number of future human individuals might well face a choice among three unattractive options: bear a risk that they would likely object to, relocate to avoid the risk, or attempt to eliminate the source of the risk. Given the incredible difficulty of fixing or excavating a leaking nuclear waste repository (at least with our level of technology), and the involuntary imposition of the first two options, we believe that it would be unethical for us to begin to disperse these toxic materials into the environment without achieving this standard.
But how to define the two unquantified key terms? We suggest that the “very high level of confidence” be set, at the very least, at the 99% confidence level (p=0.01, one-tailed), after incorporating all the uncertainty in the entire analytical process: the uncertainties in individual parameters, the models’ calculated (“Monte Carlo”) uncertainty, and the independently estimated uncertainty that the models are incomplete, simplistic, or otherwise wrong.

The level of “health risks that today’s relatively risk-averse individuals would object to” is somewhat more problematical. Specifically, when dealing with dreaded diseases like cancer, leukemia, and serious hereditable defects, it is very easy to find members of the public – indeed, a significant portion of the public – who will object to any imposed, non-zero risk. As is clear from AECL’s EIS and the data from the U.S. and elsewhere, the concept of deep geological disposal of nuclear waste cannot guarantee zero risk of dreaded diseases to future humans.

These facts leave us with two unattractive options: (1) we can concede the impossibility of attaining our goal with any disposal technology now available, or (2) we can compromise our principles to arrive at a less stringent goal, in order to approve a plan which fails our ethically principled goal.

Accepting the first option leads logically to an alternative concept to AECL’s: monitored retrievable storage, combined with research to find a disposal (or transmutation) approach which can meet our principled goal. Energy Probe recommends that the Panel adopt this option, and recommends against proceeding now with a disposal concept that does not promise to meet our principled goal.

Accepting the second option leads logically to an attempt to define non-zero risks of dreaded diseases (especially cancer and hereditable diseases) that we are willing to consider “acceptable” for us to impose on some future human beings, with our generation’s nuclear-waste repository.

We begin by surveying today’s standards for “acceptable” cancer risks from cancer-causing pollutants. What we find is a plethora of inconsistent standards and loopholes, with two important general characteristics: (1) The standards have been steadily evolving from leniency to stringency, and increasingly deal with new notions like “virtual elimination” or “zero emissions” of even “phaseout and sunset” of long-lived carcinogenic and mutagenic materials, which are increasingly characterized as “priority pollutants”; and (2) There is an important “double standard” at work: the levels of cancer risks considered “acceptable” for radioactive pollutants are generally much greater than those considered “acceptable” for non-radioactive, “chemical” pollutants.
That regulatory “double standard” has only recently been acknowledged in Canada, and is still the subject of active scrutiny by the governments of Canada and Ontario – the two signatories to the agreement that led to this Environmental Assessment. The official discovery of the “double standard” happened in the course of an examination of drinking-water standards for tritium – a radioactive form of hydrogen produced in and emitted from Candu nuclear reactors in large quantities. But the general nature of the double standard applies, mutatis mutandis, across the board to the regulation of radioactive and non-radioactive pollution – including to AECB’s regulation of predicted emissions from a nuclear waste repository. Because of this widespread relevance, and because we believe that our generation must adopt the more health-protective approach when judging a nuclear waste repository, we outline the progress of the discovery and reconciliation of the double standard at length, below.

Ontario’s review of the regulatory “double standard”:

In Ontario, the May 1994 report of the Advisory Committee on Environmental Standards (ACES), A Standard for Tritium, recommended that the maximum permissible concentration of tritium in Ontario’s drinking water be tightened immediately from 40,000 Becquerels per litre (40,000 Bq/L) to 100 Bq/L, and further to 20 Bq/L over the course of five years. Instead, the Ontario government established an Interim Drinking Water Objective at 7,000 Bq/L – 20 times higher than the Advisory Committee’s recommendation – as recommended by Ontario Hydro, the International Commission on Radiological Protection (ICRP), and Ministry staff. At the 20 Bq/L level, according to ICRP’s risk coefficients, tritium in drinking water would pose a calculated lifetime risk of one fatal cancer per million people. That lifetime risk level is not quite as restrictive as the risk level of one cancer (fatal or not) per million people, which was the basis of the Ontario Drinking Water Objective for N-Nitrosodimethylamine or NDMA – also set after public consultation by the Advisory Committee on Environmental Standards. Moreover, all the tritium calculations here and in the ACES report adopt the latest cancer risk coefficients from the ICRP, despite ICRP’s historical record of underestimating cancer risks, and despite the plausible technical reasons to believe the actual risks are at least twice as high.

There are two other differences in the way the risks are calculated and controlled that make the tritium risks significantly higher than those from NDMA and other carcinogenic chemicals. They are (1) the way the Maximum Acceptable Concentration or MAC is interpreted, producing an estimated ten-fold difference in protection levels, and (2) the way the statistical data and models of carcinogenesis are applied, producing a further estimated three-fold difference in protection levels.
In summary: The calculated fatal cancer risk from tritium at the ODWO, using ICRP’s coefficient (including DREF=2) is 350-fold higher than the total calculated cancer risk from NDMA. Assuming, generously, that there are only 1.5 total cancers for every 1 fatal cancer, the tritium risk is 525 higher than the NDMA risk (350 x 1.5). But the three other differences in the way the risks are calculated and controlled (DREF, 95% confidence, and annual average vs. never-to-be-exceeded) together contribute, by our estimates, a further 60-fold excess (2 x 10 x 3) in tritium risks compared to NDMA risks, for a total difference of 31,500-fold. Put another way: The two regulatory regimes, for NDMA and tritium, would make perfect sense if members of the Ontario public were more than 30,000 times more willing to contract cancer from tritium in drinking water than from NDMA in drinking water! Not surprisingly, we know of no evidence that members of the Ontario public have any such preference.

Throughout the government of Ontario’s review of the regulatory “double standard”, the Atomic Energy Control Board played an unworthy role: to discourage the Ontario government from making its standards more protective of health. Unfortunately, the AECB frequently feels compelled to oppose the tightening of standards, wherever exposures to radioactive pollutants are concerned – more recently in dealing with the Toronto Board of Health and Department of Public Health and with the Ministers’ [of Environment and Health] Expert Advisory Panel on the Second Priority Substances List under the Canadian Environmental Protection Act (CEPA).

The Ontario government’s decision to reject the Advisory Committee’s recommendation has been appealed under Ontario’s Environmental Bill of Rights, by the present author and several hundred other Ontarians, and is still officially under review. That review is awaiting the overdue results of the federal review of the regulatory “double standard”, discussed immediately below.

The federal government’s review of the regulatory “double standard”:

Federally, a Joint Atomic Energy Control Board / Health Canada Working Group On Risk Assessment Methods for Chemical and Radiological Hazards has been meeting and issuing drafts since early 1995, and has reportedly created its Tenth Draft, which is not available to the public, or to the present author. The final report was due on November 15, 1995, according to the Working Group’s Terms of Reference, but is still not finished. The introduction to Draft 6 (which Energy Probe received only via a “leak”, and not from the Working Group itself) explains that the purpose of the original AECB Working Group was “a close examination of the disparities and inconsistencies in the levels of risk considered acceptable for regulating nuclear power and those in use for regulating industrial chemicals and pesticides [emphasis added]”.
We believe that the sixth draft, although often incomplete or misleading, is significantly more open and honest than anything else ever published by AECB, Health Canada, or AECL on the subject of radiation control or regulation. That draft was circulated to reviewers outside AECB and Health Canada, which could be expected to lead to further improvements. But even in Draft 6, there are clear admissions that “the radiation paradigm” is less protective of health than “the chemical paradigm”; that unavoidable background exposures are considered in setting radiation risk levels, but not in setting chemical risk levels; and that “consultation with affected parties” plays a bigger part in setting chemical risk levels than in setting radiation risk levels. We hope that the Panel will be able to see the latest draft of this review, and discuss its implications with some members of the Working Group.

Incidentally, the Science Advisory Board of the United States Environmental Protection Agency (EPA) has also commented on the double standard, in a 1993 paper entitled “Harmonizing Chemical and Radiation Risk Reduction Strategies-A Science Advisory Board Commentary”. They were extremely clear in noting the difference in health-protection levels:
The discordance or lack of harmony between these different paradigms was not particularly evident until the Environmental Protection Agency (EPA) started to deal with radiation issues in the context of decisions that also needed to be made about chemicals, for example with respect to radionuclides as hazardous air pollutants under the Clean Air Act, or at hazardous waste sites, or in drinking water supplies where chemicals were also present. The application of standard chemical risk-reduction criteria to radionuclides in these situations leads to limitations on excess radiation dose that are small in comparison to natural background radiation. Knowing the history of the radiation paradigm, it should come as no surprise that some radiation scientists see such limitations on radiation exposures as unworkable or even misguided. Some chemical risk assessors who observe radiation protection guidelines corresponding to [lifetime cancer] risks greater than one in a thousand are similarly puzzled: how can such high absolute risks be tolerated?

Implications for this Review:

One reason that ICRP and AECB tolerate such high absolute risks is that they have always
traded off public health against the presumed “benefits” of nuclear technology, either explicitly or informally. This Panel, on the other hand, is expressly barred from duplicating that compromise by the Panel’s terms of reference, which prohibit the discussion of nuclear energy and energy policy. The Panel is therefore unencumbered by this controversial baggage in its search for a truly acceptable standard for nuclear waste disposal.
The “radiation-protection paradigm” and its approaches and standards, as codified by ICRP and practised by AECB and AECL and by nuclear polluters in most nuclear nations, are inadequate to protect the health of today’s people, who (we are told) receive benefits from the activities that create the pollution. That paradigm and those standards are much more inadequate to safeguard the rights and health of future people, who receive no such benefits. While we generally avoid seeing widespread conspiracies in the world around us, we must acknowledge that the durability and world-wide dispersion of the”radiation-protection paradigm” in official circles cannot be due to its prudence, popularity, or wisdom. In searching for alternative explanations, we do note the frequent international contact – personal and intellectual – among senior members of the nuclear-energy, nuclear-waste, “health physics”, and radiation-regulation establishment(s). Several submissions to the Panel must be read in this context, perhaps most notably that of the Nuclear Energy Agency of the OECD.

The Panel must expressly reject AECB’s regulatory approach to nuclear waste, specifically its suggestion that it would be “acceptable” for our generation’s nuclear-waste repository to expose individual future Canadians to risks of fatal cancer and serious genetic effects of 10-6 per year or even higher, within the first 10,000 years after closure, and still higher risks in subsequent years.
Recommendations on acceptable individual risk:

If the Panel wishes to adopt a non-zero definition of “acceptable risk” for future human individuals, from the planned repository, we recommend the following:

  • The general “Critical Group” approach to calculating individual doses should be amended to estimate and limit the dose to the hypothetically most exposed individual;
  • The maximum “acceptable” risk level should be set at least as low as today’s drinking-water standard for NDMA – at one total cancer, per lifetime, per million exposed individuals. Stated another way, the maximum acceptable individual lifetime probability of cancer should be set at 10-6, or one-in-one-million.
  • In converting that maximum “acceptable” risk level into a maximum “acceptable” radiation dose, the Panel should assume (1) that the total cancer risk of radiation is at least 50% greater than the fatal cancer risk; (2) that ICRP-60’s reasonably well documented coefficient of 0.10 fatal cancers per person-Sievert to a randomly distributed public is correct, but that its totally undocumented and non-conservative Dose Reduction Effectiveness Factor of 2 is not; and (3) that the average lifetime in future will at least equal today’s 76 years.

Combining these recommendations, the maximum “acceptable” dose to the most exposed future individual, at our (one-tailed) 99% confidence limit, would be calculated as follows:

1 x 10-6 lifetime cancer risk/ 0.15 total cancers per Sievert = 6.7 microSieverts (6.7 x 10-6Sv) over a lifetime.

Assuming (pessimistically) only 76 years per average lifetime yields a maximum acceptable annual dose of roughly 88 nanoSieverts (8.8 x 10-8Sv) per year.
This recommendation for maximum acceptable annual dose to an individual includes no explicit consideration for “genetic” (i.e., hereditable) health effects. Moreover, it is less than 500 times more stringent than AECB’s and AECL’s, despite our demonstration (above) that the chemical-protection approach, as used for NDMA in drinking water, is over 30,000 times more stringent than the corresponding radiation-protection approach. It is important that the Panel appreciate that, despite the significant difference between our proposal and AECB’s/AECL’s, we have not included every factor that our descendants’ descendants might want us to include.

Nonetheless, even this incomplete correction of AECB’s/AECL’s standards would disqualify AECL’s concept, as demonstrated by AECL’s computer simulations for its “reference case” site near Whiteshell. For example, Figure 7-7 on p. 297 of AECL’s EIS shows the mean individual annual dose rate exceeding that level (corresponding to just under 10-4mSv/a) at roughly 30,000 years, and rising to roughly 15 times that maximum acceptable level by 100,000 years, even without including the omitted radionuclide 36Cl.

Radiation-sensitivity: Rather than merely providing adequate protection for the average member of the public, the Panel should also seriously consider providing adequate protection for individuals who are more radiation-sensitive than average.

The approach we have taken above (like that of AECL, AECB, ICRP, OECD/NEA, etc.) calculates, and limits, only the risk to the average member of the public. But we already know that the public contains a number of smaller “publics”, some of whom are clearly more sensitive to radiation-induced cancer than others. For example, the brief from the National Action Committee of the Status of Women documents the higher radio-sensitivity of women compared to men (and compared to the average). In fact, women’s higher life expectancy makes them more susceptible to radiation-induced cancer than the age-corrected data would suggest. Similarly, it can be assumed that everybody who lives longer than average (roughly 50% of the public) will bear more risk of radiation-induced cancer than the ICRP’s “reference man” or any other average human. In the absence of informed consent from any of these future “publics”, it would seem prudent and ethical to afford them the same protection we have recommended for the average person.
In addition, modern science has discovered at least one extremely radio-sensitive “public”: the roughly 1% of all humans who are carriers of the rare, recessive hereditary disorder ataxia telangiectasia, or “AT”. Actual sufferers of this disorder – i.e., those who inherit it from both parents (parents who themselves are AT carriers ) – have an overall incidence of cancer which is roughly 1200 times greater than an age-matched control group, and usually die before adulthood from cancer and/or pneumonia. These AT sufferers are also well-known to be extremely sensitive to radiotherapy, and several have died as the result of radiotherapy treatments. Their cells, according to Malcolm Paterson’s research, are also 3 to 4 more times more sensitive to killing by gamma radiation than normal cells, and about 4 times slower in repairing (radiation-induced) base defects to their DNA. Even healthy AT carriers run an estimated five times the normal risk of dying from cancer before the age 45. Their cells are also more sensitive to killing by gamma radiation than normal cells, though less so than cells of AT sufferers. Paterson’s research does not expressly quantify the sensitivity of AT carriers to cancer from radiation exposures (and the latest ICRP report still claims that quantitative estimates are not possible), but he does conclude that “detection and protection” of such high-risk persons “could be used to reduce the amount of human ill-health arising from occupational exposure to radiation and toxic chemicals.

Our interest in AT carriers is not to suggest that they be barred from jobs in the nuclear industry. Rather, we recommend that the Panel recognize the rights of even these radiation-sensitive “publics” not to get cancer from our waste-repository’s leakage. Adopting this recommendation would further tighten the “acceptable” individual radiation dose by an unspecified factor – perhaps 5 for AT carriers, and perhaps much more for AT sufferers.

What is an acceptable total population health risk?

As we indicated and documented in Part 2 of Energy Probe’s submission, dated August 8, 1995 (henceforth, “EP2”), it is extremely unfortunate that AECL’s EIS does not estimate or discuss the planned waste repository’s total population risk (as opposed to its individual or “critical group” risk) despite clear direction from the Panel to do so. Moreover, we showed in EP2 that the EIS demonstrates a complete lack of serious thought about total population risk – culminating in the absurd suggestion that the potential “urbanization of the [radioactive] discharge site” would actually be an improvement, because it would lower the health impacts from the discharges! (See R-Postclosure, p. 56, table 4-1. Using the same “logic”, R-Postclosure also shows – as documented in EP2 – that there are health benefits from increasing the number of people who drink from a radioactive-contaminated well, and from releasing radioactive contamination into a lake, rather than a well! )

Unfortunately, pointing out the deficiency of AECL’s response to your Guidelines document in this regard is much easier than remedying it. Neither Energy Probe, nor anybody else without access to AECL’s computer models, is in a position to produce scientifically defensible estimates of the planned waste repository’s total population health risk. So, unless AECL decides to provide such estimates, the Panel will not have any total-impact estimates for AECL’s planned waste repository.

Nonetheless, we, and the Panel, are charged with defining safety and acceptability, and we do not believe that these terms can be defined without reference to total population health risk.
The basic question is as simple to ask as it is distasteful to answer: How many total cancers, genetic effects, and premature deaths can our nuclear-waste repository be predicted to cause and still be considered “acceptable”? We conclude from AECL’s failure to mention the issue in their EIS that the obvious answer – “None, of course!” – is far out of reach for AECL’s Concept. So, again, we must choose between the obviously “right” answer (we have no right to kill or maim or sicken anybody in the distant future) and something much worse, but more “practical”.

Unfortunately, we have no good suggestions for any acceptable level of total health effects, or deaths, other than zero. But if we are convinced that zero will remain forever unattainable (and we are not, although it would certainly take an enormous technological breakthrough), then we must choose as wisely as possible among the “non-zero-deaths” alternatives, just as we did in the case of individual risks.

Total population radiation dose is important even if it is not a standard: Even in the absence of any absolute non-zero standard or target, it is extremely important to calculate total population radiation dose, and total population health risks, in order to make important choices among alternative Concepts, technologies, sites, effort levels, and timing. Unfortunately, AECB’s regulatory document R-104 completely ignores the subject, and also rejects the traditional radiation-protection principle of optimization or “ALARA”, which logically would apply to the total population health risks. AECB’s and AECL’s abdication of responsibility to the future human population makes it imperative that this Panel be absolutely clear on this subject.

Ironically, AECB’s own Advisory Committee on Nuclear Safety (hardly a nest of nuclear-industry critics) has come out clearly in favour of both the calculation of total population radiation dose, and the traditional radiation-protection principle of optimization or “ALARA”, applied to the total population health risks.

The June 1988 publication ACNS-11, Principles and Guidelines for Radioactive Waste Disposal Facilities, devotes all of section 4 to “Collective Risk and the ALARA Principle”. In subsection 4.1, “ALARA”, we read, “It must be agreed that . . . no further improvement to reduce the predicted risks to present and future generations is warranted. Therefore an ALARA-type process should be applied to ensure that the predicted collective risk commitment is acceptably low.” The following subsection, “4.2 Estimation of Collective Risk Commitment” includes the following thoughtful suggestions, not one of which has been implemented by AECL in the EIS:

For widely-dispersed, and in some cases longer-lived, wastes (e.g., H-3, C-14, Kr-85, I-129), the integration limits for evaluating collective risk commitments should, in principle, encompass the Earth’s surface and extend for a time that is long in comparison to the half-lives of the waste products. The dispersion models available, however, are not always sufficiently accurate for such extrapolations, . . . judgment will have to be exercised concerning any integration limits, and the implications of these limits will have to be recognized and accepted. . . .
. . .
It can be expected that estimates of the global dose commitment will show that a substantial portion of the doses would be received at very low individual dose rates, less than a few microsieverts per year. Although this collective dose commitment may be considered significant, . . . For this evaluation, international boundaries should be ignored.
It should be noted that the collective risk calculations described above can also be used for comparing improvements to a chosen concept.

The following two sections of the ACNS report, “5. Selection of Preferred Disposal Concept” and “6. Improvement of the Chosen Disposal Concept”, both recommend “ALARA-type” procedures to compare alternatives on the basis of their predicted collective risk commitment, as well as their costs. AECB, unfortunately, has expressly rejected all of the ACNS’s sensible suggestions in their regulations, and AECL has provided none of the information that would be essential to carry out these comparisons: (1) a range of alternatives to be compared, (2) the “predicted collective risk commitment” (what we have called “total population radiation dose”) of each alternative, and (3) the approximate costs, and social impacts, of each alternative.

Of course, while we are happy to praise ACNS-11 for its inclusion of total population dose and ALARA-type optimization in their discussion, we totally reject its views on acceptable and de minimis dose rates and risk rates, which (like AECB’s, AECL’s, and ICRP’s) are firmly grounded in the old, outmoded “radiation paradigm” which (as discussed above) we believe and hope will soon be discredited. At any rate, ACNS’s definitions of acceptable cancer risk (like AECB’s, AECL’s, and ICRP’s) bear no resemblance to cancer risks that most informed people will actually accept, even in return for acknowledged benefits. They must not be used in a case like this, where we can offer no compensating benefits to those we put at risk.

Based on its disregard for the total health harm predicted from the planned repository, this Concept, as presented and defended by AECL and as regulated by AECB, must be rejected by this Panel. We urge the Panel to condemn these organizations for their decisions in this regard, and to avoid vesting in them any unnecessary responsibility in these important matters.
We are surprised that very few other reviewers of the adequacy of AECL’s EIS commented on AECL’s refusal to quantify or discuss total population radiation dose or total population health risks. But we note with satisfaction that the report of the Panel’s Scientific Review Group did give clear support to Energy Probe’s – and this Panel’s – position:

The SRG notes that the effects assessment relied upon the estimation of dose to an individual member of the critical group. This reliance was apparently based upon the assumption that if the greatest individual risk is acceptable then the total risk to all persons exposed over all generations would also be acceptable. This assumption requires detailed justification which was not presented in the EIS. [Op. cit., p. 84; similar paragraphs appear in Appendix E at pp. 188 and 192.]

The Postclosure Assessment does not meet the SRG criteria for acceptability. If analyses show that the greatest individual risk is acceptable, it cannot without justification be assumed that the total risk to all persons exposed, over all generations, would also be acceptable. Furthermore, should analyses show that the individual and collective risks to humans are acceptable, it cannot without justification be assumed that the risks are also small for all else that is of value in the environment. The SRG does not have sufficient confidence in the application of the performance assessment methodology to be convinced that predicted effects on the natural environment and particularly on human health would be below what is currently accepted and follows good engineering practice. [Op. cit., Appendix E, p. 193]

It must be noted that (1) we share the SRG’s lack of confidence in AECL’s Postclosure Assessment and AECL’s application of performance assessment methodology, but (2) we do not share the SRG’s definition of the test of acceptable performance, as stated in abbreviated form in the last sentence quoted above, and in full at p. 24:

SRG criteria for Acceptable Performance are that predicted or expected effects on the natural environment, and particularly on human health, are below what is currently accepted by the federal and provincial governments and that the concept follows good engineering practice. . . . (“Currently accepted” means standards that are current at the time of implementation, development and closure and does not imply 1995 standards alone.) [Op. cit., p. 24; bold in original.]

This definition, which at least allows for the tightening of standards since 1987, is certainly better than AECL’s or AECB’s definition, but still implies far too much legitimacy to “[standards] accepted by the federal and provincial governments”. As shown above, these standards have not been widely discussed, are not based on effective public consultation, and in fact are widely rejected by informed, concerned sectors of the public – including, but not restricted to, Energy Probe and other environmental Non-Governmental Organizations.
The Panel must expressly insist – and must demand that the regulatory regime insist – that any proponent or implementer of nuclear waste disposal must assess the total predicted impacts of its proposal, for both average and more extreme scenarios, and must demonstrate that those total impacts are less than those of alternatives that are available or likely to become available in the next several decades.
What is an acceptable environmental risk?

Just as AECL has avoided discussing the planned waste repository’s total (human) population risk, it has also avoided discussing the total inventory of persistent toxins which the planned waste repository is predicted to release into the environment. Instead, it has focused on concentrations, thereby taking credit for the fact that the Earth is a large planet. In the parlance of environmentalists, focussing on toxic concentrations rather than on total loadings or emissions is dismissed with a short rhyming phrase: “The solution to pollution isn’t dilution.”

It is that perverse attitude toward the release of large absolute quantities of persistent toxins that has led AECL to conclude (for example) that toxic releases into a lake would be better than release into groundwater-supplied wells.

Moreover, AECL has again confused two separate issues: (1) Is the estimated harm acceptable? and (2) Could the estimated harm be statistically proven and linked to the cause? For example, the fact that raised radio-toxic concentrations would be masked by “natural, local, spatial variation in concentration” would prevent even relatively large – and unacceptable – increases from causing “detectable environmental effects”.

We are pleased to announce that the nuclear establishment’s historic disregard for environmental risks may be nearing its end, through the involvement of Environment Canada. Late last year, the Ministers’ [of Environment and Health] Expert Advisory Panel on the Second Priority Substances List under the Canadian Environmental Protection Act (CEPA) included “Releases of radionuclides from nuclear facilities (impacts on non-human species)” among its twenty-five priority substances, out of about 600 substances initially considered. “The Ministers accepted the recommendations and published the list of 25 substances in Part I of the Canada Gazette on December 16, as the second Priority Substances List.” The next step is to determine whether or not these substances are indeed “toxic” in the meaning of CEPA; if so, management strategies may be developed.
The last time Environment Canada got seriously involved in the matter of radionuclide releases into the environment was in 1983-84, with the drafting of Environmental Codes of Practice for Steam-Electric Generating Stations. That document attempted to use the same approach for controlling radionuclide releases from nuclear stations to water as it used for chemical releases from fossil-fueled stations to water. The fossil-fueled recommendations generally became practice in Canada. The nuclear recommendations – which called for emissions reductions by factors of hundreds or thousands from current practice – created a furore among the nuclear establishment, led (again!) by AECB, which successfully neutered them all between the draft and the final document.

We are hopeful that Environment Canada will repeat its vigilant performance of the 1980’s, and that the concerned public will be able to prevent AECB and the rest of the nuclear establishment from overpowering them.

Regardless of the outcome of that process, however, it is incumbent on this Panel to ensure that the natural environment and its non-human species are protected, beyond reasonable doubt, from significant total loadings of persistent toxins like 14C, 129I and 36Cl.

We believe that this requirement may be more restrictive and demanding than the Panel’s requirement for total (human) population radiation dose (and total human population health risk), based on the following reasoning:

  • Many non-human species – at least the more complex mammals – appear to exhibit similar radiation sensitivities to humans.
  • Even in the “primitive” mid-1990’s (primitive compared to the era in which our repository’s predicted impacts mushroom), our willingness to expose non-human species to serious health detriment from environmental toxins is apparently decreasing. Arguably, we are willing to expose non-human species to perhaps only one or two orders of magnitude greater health risks than human species, and that “acceptable risk” can be expected to decline in future (judging by today’s trends).
  • Collective dose: Any one generation of humans can only be expected to consume a relatively small fraction of any widespread environmental pollutant, including the radionuclides of concern, when they are released into the environment. The coexistent population of non-human species can be expected to consume a somewhat larger fraction, given their lifestyles.
  • Individual dose: Compared to the humans in the Critical Group, or even the most exposed individual human in each generation, many non-human beings can be expected to be exposed to much higher doses of any widespread environmental pollutant, including the radionuclides of concern.

At any rate, when environmental laws and regulations governing releases of such persistent toxins are increasingly dedicated to the “virtual elimination” of emissions – even at the expense of banning commercially useful substances or phasing them out – this Panel should not condone any Concept which promises wholesale emissions of uniquely persistent toxins, in quantities predicted to increase for at least one million years!
Other issues

Funding for further research, and for implementation:

The Panel should ensure that today’s consumers of nuclear electricity (and, to a much lesser extent, commercial and medical radioisotopes) pay in full for the storage and disposal of the wastes generated along with those products. At present, there is every possibility that other parties – most likely present or future taxpayers – will bear part or all of these costs, for several reasons:

Federal taxpayers have paid, and are now still paying, part of AECL’s costs to develop and defend the Concept;

  • Funds collected from Ontario Hydro ratepayers for many years for reactor decommissioning and waste disposal – now totalling over $2 billion – have never been segregated from the near-insolvent activities of Ontario Hydro, despite a commitment by Ontario Hydro’s Board of Directors to segregate them. These funds are unlikely to be available when needed;
  • Those funds (and the much smaller amounts being collected by New Brunswick Power and Hydro Québec), even if available, will likely be insufficient to do the job. For one thing, the rate of collection is based on Ontario Hydro’s goal of amassing ten percent of the total real-dollar cost, by the time the nuclear station shuts down at the end of its predicted 40-year lifetime. The other 90% of the necessary funds are expected to be generated by investment returns above inflation over the ensuing 30 or 40 years. We believe this practice is imprudent and recommend that the Panel require the collection of adequate funds by the time the nuclear stations retire.
  • The assumption that each nuclear station will operate, and generate revenues for nuclear waste disposal, for 40 years, is already proving overly optimistic and therefore imprudent. For example, Bruce-A Unit 2 has shut down, apparently forever, after operating for about 19 years, and Bruce-A Unit 1 is scheduled to follow in about four years. Neither of the other two reactors at Bruce-A is expected to live to be 40 years old, either. These reactors’ diminished volumes of spent fuel, while welcome, will not diminish the total costs of the planned repository (according to AECL’s calculations) as dramatically as the early shutdowns will diminish the funding available. We believe the assumption of a 40-year life expectancy – especially combined with “straight-line” collection of waste-disposal funds – is imprudent, and recommend that the Panel require that the collection of these funds be “front-end loaded”, to minimize the adverse effects of early retirements.
  • The need to spend more time and money on research than Ontario Hydro and AECL have anticipated – very likely more time than even the newest Canadian reactor will operate – may require significantly more funds than will be available. The Panel should state clearly that inadequate funding provisions by the owners of Canada’s nuclear reactors must not limit or foreclose opportunities to do what is right in the disposal of Canada’s nuclear wastes.

The choice of an Implementing Organization

It should be obvious to this Panel, as it is to Energy Probe, that AECL and its EIS are biased and unsatisfactory. We believe the examples of imprudence, inadequacy and bias identified by Energy Probe’s submissions and many others suffice to establish that AECL, regardless of how many millions of dollars it spends, is unlikely to gain the trust of the Canadian public, Canadian environmental groups, or any well informed potential host community. Of course, there are also very good reasons for this conclusion outside the EIS and this Concept. We refer here to AECL’s position as a radioactive polluter, a marketer of nuclear reactors, and the owner of a radioactive-contaminated site. In addition, AECL has a long history of unfortunate public statements about nuclear waste disposal (and impartation), and a long history of questionable business practices and unfortunate choice of business agents and customers. Any one of these characteristics would be a serious obstacle in gaining public trust; together, they would make the job completely impossible, even if AECL’s EIS and Concept were thorough, adequate, satisfactory, or even above criticism.

We recommend that the Panel call for the establishment of a new and independent entity to carry on research in Canada, and monitor research internationally, to develop an acceptable Concept. It must be completely independent from the waste generators and from AECL, and must have no promotional or marketing responsibilities. This entity should receive its funds from the generators of nuclear wastes, including as much of those funds already collected as can be retrieved from the general operations of those companies.
In a research community as small as Canada’s, it would probably be unrealistic to restrict the new entity in hiring staff from what is now AECL. However, given the history of the matter, it would not inspire confidence of the new entity resembled Whiteshell Nuclear Research Establishment with a new sign in front.

We recommend that a future public review – perhaps the same one that is convened to review the next proposal for a Concept – should determine whether or not that new and independent entity should pursue the implementation of that Concept, based on its performance until then. (In Part 3 of Energy Probe’s submission to this Review, we address the question of whether the Implementing Organization should preferably be publicly or privately owned.)

Importation of high-level waste from other countries

Especially in light of (1) the numerous and recent statements by highly-placed AECL officials about the desirability of disposing of other countries’ nuclear wastes in a Canadian repository and (2) the apparent discrepancy between the capacity of AECL’s repository, as designed, and the volume of high-level waste that today’s Canadian reactors will generate, even if they live to be 40, the Panel must decide what to recommend on this subject. One option would be to acknowledge the inadequacy (or absence) of discussion on this subject in this Review, and reiterate recommendation 13 from the January 1988 report of the Standing Committee on Environment and Forestry:
A public review process should be launched if the Department of Energy, Mines and Resources should envisage the possibility of accepting nuclear waste from other countries.
Or course, the need for a public review is not limited by the source of the proposal (and “EM&R” is now renamed Natural Resources Canada), but by the prospect that another country’s waste would be entering Canada.

Possible fissioning of weapons-grade Plutonium
The Panel directed AECL to discuss “the possible changes in the nature and characteristics of nuclear fuel waste due to changes in nuclear power technology or in energy policies (Guidelines, page 4)”, as well as the effect of changes in nuclear technology on the amount of nuclear fuel waste (Guidelines, page 8). One change in nuclear power technology which is currently being proposed by Ontario Hydro and AECL to the U.S. government is the fissioning, in Canada (probably at the Bruce-A Nuclear Generating Station) of fuel containing weapons-grade Plutonium from U.S., or possibly former Soviet, nuclear weapons. Reportedly, the preferred option being proposed by Ontario Hydro and AECL involves the operation of the Bruce-A Nuclear Generating Station for many years longer than is currently planned by Ontario Hydro. Further, in all current proposals discussed in public, the resulting nuclear fuel waste would remain in Canada. This proposal could therefore change both the quantity and the nature and characteristics of the nuclear fuel waste awaiting disposal in Canada. The EIS documents do not discuss these changes, or their impact on the concept, but the Panel should either invite comments and make a recommendation, or again adopt and reiterate recommendation 13 from the January 1988 report of the Standing Committee on Environment and Forestry, quoted above.

“Postclosure” retrieval of buried nuclear fuel waste

In Guidelines, §3.3, page 11, “Retrieval of Buried Nuclear Fuel Waste”, the Panel directed AECL as follows:
The EIS should outline plans and procedures which would be required for the retrieval of nuclear fuel waste from a sealed and decommissioned disposal vault under emergency or other circumstances. This should include estimates of the cost of such an operation . . .
Appendix A of the EIS volume refers to two sections in that volume as addressing this topic: § 3.6.6, “Retrievability”, and § 5.8.9, “Waste Retrieval” (EIS, pp. 72-72 and p. 199). Neither provides the cost estimates specified in the Guidelines. Further, the description of “the reference disposal vault” on pp. 42-43 of R-Postclosure makes no mention of the topic at all.

We continue to believe that it is no favour to future generations to place extremely long-lived wastes irretrievably into a repository which will surely leak. Practical retrievability is an essential feature of an acceptable repository, at least until absolute safety can be guaranteed.

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The security implications for China of environmental degradation

Canadian Security Intelligence Service
March 1, 1996

 

COMMENTARY No. 67

a CANADIAN SECURITY INTELLIGENCE SERVICE publication


THE SECURITY IMPLICATIONS FOR CHINA OF ENVIRONMENTAL DEGRADATION

March 1996

Unclassified

Editors Note:

This month’s Commentary is an extension of an article by the same authors, “China: Environmental Stress and National Security”, which appeared in the Department of Foreign Affairs and International Trade’s Policy Staff Paper, No. 96/01, February 1996. Authors: Nicolino Strizzi and Robert T. Stranks

Disclaimer: Publication of an article in the COMMENTARY series does not imply CSIS authentication of the information nor CSIS endorsement of the author’s views.

Introduction

In China, the legacy of almost half a century of heavy central planning together with massive population pressures, rapid economic growth, chronic poverty, subsidized energy prices, widespread coal use, outdated industrial machinery and a lax environmental protection regime have contributed to serious environmental stress. While environmental degradation in itself does not imply violent conflict, it can become a basis for confrontation, particularly in conjunction with political and social factors. Likewise, because many environmental problems are global in scope, China’s environmental problems are likely to become of greater interest to Canada–whether or not they result in a violent intrastate or interstate response.

This paper examines the extent and nature of environmental degradation in China and assesses whether China’s current leadership is likely to follow a sustainable development strategy. The prospects for increased Canadian trade, investment and technology transfers and the security implications for Canadian interests in China are also considered.

The Scope of the Problem

The most immediate environmental threat to China arises from the degradation of its fresh water supply. Much of China’s coastal waters and many rivers, such as the Huaihe, the Chaohu, the Liaohe, and the Haihe, are badly polluted. Both surface and ground waters in many areas are contaminated. The key source of pollution in urban areas is industrial waste water. About one-third of industrial waste water is treated, but even after treatment some of it fails to meet effluent discharge standards. The share of municipal sewage receiving treatment is even lower.

As a result, the quality of drinking water in China’s cities appears increasingly to be at risk. It is estimated that some 85 per cent of China’s cities lack clean and safe drinking water. The figures are no better for rural dwellers, where Chinese official estimates indicate that only one in seven has access to safe drinking water. Heavy fertilizer use contributes to poor water quality through the leaching of nitrates into groundwater and the runoff of surface water into streams. China’s rapidly expanding township and village enterprises (TVEs) further compound rural industrial pollution problems. These enterprises are typically small, widely scattered and employ outdated technology. Waste from TVEs is rarely treated.

Any drop in the levels of major rivers in China could seriously disrupt commercial shipping traffic and hydro-power generation. Higher water tariffs would lessen China’s chronic water shortages and help eventually to encourage more productive water consumption and conservation efforts in the country’s industrial, transportation and commercial sectors and in Chinese households. For the foreseeable future, however, limited access to safe drinking water and sanitation will continue to pose a serious threat to public health in China.

The World Bank has calculated that China’s water and sanitation investment requirements could reach US $102 billion during the 1995-2004 period. But rising rural and urban household and industrial water demand is likely further to exacerbate China’s already strained water resources. If not managed carefully, serious water shortages could further jeopardize sustained rapid industrialization and modernization in China’s major urban centres. Water shortages already cost China’s economy an estimated US $27 billion in economic losses annually and are likely to undermine its long-run economic growth potential.

The combination of TVE pollution and the Chinese leadership’s interest in sustaining rapid economic growth have clear environmental implications. TVEs will continue to play a major role in job creation, absorbing up to 56 per cent (100 million) of China’s 180 million surplus rural workers. In turn, this will prevent an even larger rural out-migration toward China’s booming coastal areas. TVEs are also a major source of local tax revenues. There is thus strong local pressure for these enterprises to prosper, even if engaged in polluting activities.

In addition to industrial- and agricultural-related environmental concerns, China’s forests and wetlands are under relentless pressure from overharvesting as well as from rapid rural and urban development.

Energy Mix

Poor air quality in China is largely related to the consumption of coal–the country’s most abundant fossil fuel. About 80 per cent of the coal consumed is uncleaned before combustion and consequently has higher emission levels. The environmental impact of burning unwashed coal (carbon dioxide emissions and acid deposition) has local, regional and global effects. Failure to address these problems has the potential to contribute to heightened international tensions, especially with such nearby neighbours as Japan and South Korea.

China has commercially exploitable coal reserves of around 127 billion tons and almost 5 trillion tons in total reserves. At present, coal accounts for roughly three-quarters of China’s total energy consumption and production. With enormous recoverable and estimated coal reserves and ageing onshore oil- and gas-producing facilities, including those at Daqing, Shengli, Liaohe and Sichuan, it is unlikely this percentage will change significantly in the near future. Based on current proven reserves, China’s coal deposits can meet domestic needs for at least another 250 years.

The industrial sector accounts for over one-half of China’s total coal use, with thermal electricity generation the next largest consumer of coal (26%) followed by the commerce sector and households (22%). Failure to decontrol energy prices fully will discourage improvements in energy efficiency and in conservation efforts, particularly in China’s iron and steel, cement, fertilizer and pulp and paper industries.

In China, population growth, rapid industrialization, urbanization, increased motor vehicle ownership, greater use of electricity-consuming household appliances and higher per capita incomes ensure that domestic energy demand will grow and pollution levels inevitably rise. Significant health risks arise from exposure to suspended particulate matter like lead and sulphur dioxide. Heart disease and respiratory problems in older people, coupled with inadequate nutrition, will likely make the Chinese people more prone to pollution-related illness. Greater exposure to water and air pollutants means increased human suffering and increased health-care infrastructure burdens.

In spite of environmental concerns, sustained rapid industrialization and modernization in China guarantees the continued widespread burning of cheap and abundant quantities of coal. China has little scope for fuel diversification. Large-scale substitution of less polluting fuels for coal is not an economically viable option.

Greater use of natural gas could reduce environmental degradation but currently natural gas represents only two per cent of commercial consumption, and proven reserves are low. Hydroelectric and nuclear power generation have promise, but their development requires huge capital outlays and long construction periods. They are also not without massive environmental and human costs, as illustrated by international concerns over the storage, shipment and disposal of radioactive waste and the siting and decommissioning of nuclear plants, and by the controversy over resettlement and flooding from the Three Gorges dam. Geothermal, wind, solar and other renewable sources hold promise but are very costly and, at best, can have only a marginal impact on current and future energy needs.

Grain Deficit

China’s much-prized goal of food security, and in particular grain self-sufficiency, will increase the demands on its environment. Chinese officials have ambitious plans to boost grain production targets from 465 million tons in 1995 to 500 million tons by the end of this decade. Still another estimate suggests that China’s grain output target should be between 515 to 530 million tons by the year 2000. Whatever the objective, China’s need to expand grain production will heighten competition for water and land resources. It will also mean escalating use of chemical fertilizers and pesticides to increase grain yields. This will exact a heavy toll on China’s environment.

If, as seems highly probable, China’s grain production target were only partly achieved, any shortfall could be covered through imports. This should drastically reduce the possibility that many of China’s millions of desperately poor people may be put at increased risk of famine. In 1995, China imported almost 16 million tons of grain.

There are no reliable projections of China’s future grain output shortfalls or volumes of grain imports. For example, a study conducted for the Organization for Economic Cooperation and Development (OECD) estimates that, at most, China’s grain imports could reach over 44 million tons by the year 2000, before tapering off at 48 million tons by 2010, and likely holding at that level until 2020. Meanwhile, an Australian study predicts that China’s grain imports could increase to as much as 100 million tons by the turn of the century. A joint Sino-Japanese study recently calculated that China may need to import around 24 million tons by the year 2000, 69 million tons by 2005 and 136 million tons by the years 2010 and 2020. Still another, less reliable projection by The World Watch Institute indicates that China’s grain imports may be as great as 81 million tons by the end of this decade, 156 million tons by 2010 and 260 million tons by 2030.

Whatever the actual figures, a combination of numerous environmental and non-environmental factors such as a growing population, rising per capita incomes, changing diets, ongoing import liberalization, an expanded livestock sector, continued farmland losses and pollution imply that China will become more heavily dependent on imported grain. This will lead to larger trade deficits in grains, resulting in ballooning import bills. That will contribute to foreign debt accumulation, rising debt servicing costs and decreasing foreign exchange reserves, further compounding China’s short-term budget and financing problems.

The longer-term danger, however, is that China’s expanding dependence on grain imports will make it increasingly vulnerable to sharp grain price hikes and supply swings. Chinese officials fear that this could put China at an economic and geo-strategic disadvantage.

Economic Dynamism

Despite their public rhetoric, Chinese authorities have yet fully to integrate environmental management into the larger process of economic reform and industrial restructuring. Overall, the Chinese Communist Party remains committed to implement further economic reforms and open up to the outside world. But the top leadership’s desire to minimize short-term structural adjustment and social costs required to maintain political and social stability has led to a slowing of the pace and extent of the reform process. Chinese officials, for instance, have targeted an average annual real gross domestic product (GDP) growth rate of eight per cent during the Ninth Five Year Plan (1996-2000) period. This compares with an average annual real GDP growth rate of 12 per cent achieved during the 1991-1995 Plan period.

If, as expected, this pace is achieved and sustained, such rapid industrialization and modernization will require greater fossil-fuel consumption. Consequently, this will produce large-scale greenhouse gas emissions and effluent discharges, adding to China’s pollution burden and contributing to global climate change. Moreover, the continued increase in emissions which generate acid rain and produce greenhouse gases will progressively internationalize China’s environmental problems.

The current collective leadership in China will continue to struggle with the issue of how best to maintain social order. Realizing that political legitimacy and stability depend on improving living standards, they will continue to debate whether to try to moderate growth rates or to maintain them as high as possible while running the risk of having to brake suddenly. Policy differences will therefore focus not on the need for economic reform, but rather on the pace and extent of such reforms. These considerations make the achievement of both economic and environmental objectives overly ambitious and unrealistic.

In theory, China’s pollution levy system is designed to provide an incentive for enterprises to reduce pollution. Under the system, violators pay a fine for failing to meet emissions standards and, should violations persist, enterprises may face additional fines. But, in practice, fees and fines are low and do not provide enough incentive for guilty enterprises to change their polluting habits. Another flaw is that part of the fees collected by local environmental agencies goes into their budget, thus creating an incentive to tolerate, if not on occasion encourage, pollution to maintain their budgets.

Consequently, pending more extensive price and enterprise reforms, neither pollution fees and fines nor administrative regulations are likely to carry sufficient force or be systematically applied to encourage the reduction of environmental degradation.

Loss-Making Enterprises

China’s widespread use of obsolescent industrial and electrical equipment has raised average energy consumption and waste in Chinese plants well above international standards. One recent Japanese study, for instance, found that almost 60 per cent of China’s current plant, equipment and technology was outdated; only 20 per cent was described as modern, while the remainder lay somewhere between.

The willingness and capacity of Chinese industry to install new, cleaner, energy-efficient capital stock is constrained by mounting inter-enterprise debts of over US $80 billion, ongoing social and employment burdens, and chronic operational losses. Delays in state enterprise reform will persist. In the absence of massive industrial upgrading and restructuring, there will be little significant reduction in greenhouse gas emissions and effluent discharges over the next decade.

In the longer term, the installation of modern capital equipment together with the introduction of market-oriented corporate governance and the establishment of a national social safety net is likely to improve enterprise performance. This will eventually contribute to future enterprise reductions of greenhouse gas emissions and effluent discharges.

Political Uncertainty

China is undergoing a major transformation in leadership. With the succession, control will pass to a post-revolutionary generation. But it is highly doubtful that Deng Xiaoping will be succeeded immediately by a more powerful leader. Political and social stability, not sound environmental stewardship, are the key priorities for China’s top leadership–and this is not about to change soon. One-party communist rule will remain unchallenged for the foreseeable future. A collapse or disintegration of the country into regional fiefdoms is unlikely, although the ability of Beijing to exercise tight central control over subordinate jurisdictions may further decrease. More realistically, China may well find itself in a state of policy uncertainty and paralysis until a dominant faction in the communist party emerges. Should a prolonged internal party power struggle ensue, massive economic and environmental costs would result.

Social Progress

Most Chinese remain unaware of the nature and extent of their country’s environmental degradation. Although urban dwellers are acutely conscious of increased land, air and water pollution, the majority grudgingly accept this as the necessary cost of rapid economic development, social progress and improved living standards. As Chinese attitudes evolve, Chinese policy makers will need to consider citizens’ demands for a higher quality of life. Meeting these demands will be a long-term endeavour.

Before environmental degradation and scarcity turn socially violent, certain conditions are needed. First, there must be broad dissatisfaction with environmental conditions. Given the choices facing the average Chinese between concern for environmental degradation and demands for better living conditions, there is little to suggest there is widespread dissatisfaction with the state of the environment. Neither Chinese peasants nor urban workers are altruistic consumers concerned with inter-generational equity. Where environmental discontent exists, or may most readily develop, it is with local conditions and not global issues.

Second, there must be obstacles to the public’s ability to express preferences on environmental issues in a peaceful manner, or a complete lack of governmental response to environmental problems. There is no question but that China has a poor record of tolerating public expressions of concern. However, while the government could do more for the environment, it has taken some action to address environmental damage. The question is whether the government’s actions are in keeping with the public view of what constitutes a sufficient and appropriate environmental response.

Moreover, before serious challenges to authority arise, public disenchantment needs to be organized. Currently, there is no strong, well-organized interest group in China supportive of environmental issues. Nor does it appear that the entrepreneurial class is eager to become one of environmental activists and assume a leadership role in this area. These newly emerging business people are focused on making money, not promoting broader social causes, such as income redistribution, equity, and environmental protection. This entrepreneurial class is also absorbing cadres and intellectuals who might otherwise take leadership roles.

An illustrative case of how the Chinese regime has recently responded to public views on environmental issues is the Three Gorges dam construction project, scheduled for completion in 2009 at a cost of approximately US $30 billion. This project will create a reservoir stretching 385 miles up the Yangtze River, resulting in flooding, the loss of farmland and the destruction of archeological and historic treasures. It will also lead to the resettlement of more than one million people. Even more disturbing, it is speculated that were the dam to collapse, the lives of ten million Chinese could be endangered. Despite the project’s massive environmental and human costs, the government stresses the view that the megadam will provide electricity, improve river navigation, contribute to rapid economic growth and control potential floods. Ignoring general expert opinion, the Chinese leadership has put unchecked development ahead of environmental interests.

The Population Bomb

China’s large and growing population is a major contributor to environmental degradation. Even the geographic distribution of the population influences the environment and can generate potentially serious environmental stress. Growth rates, and the relative rise in percentages of urban vis-à-vis rural dwellers will place increasing pressure on China’s socioeconomic infrastructure. Demographic projections suggest that China’s population could increase from about 1.22 billion currently to around 1.39 billion by the year 2010, 1.53 billion by 2025 and 1.61 billion by 2050. If these projections are correct, there will be enormous pressure on China’s food, land, water, housing, health-care, infrastructure and energy resources.

China is expected to become substantially more urbanized. A United Nations’ study shows that China’s urban population could increase by more than one third from over 300 million to over 450 million people by the end of this decade. The number of Chinese city dwellers could balloon to about 840 million people (55% of the population) by 2025. Projections indicate that the populations of Beijing and Shanghai could swell to 19 million and 23 million inhabitants, respectively, over the next few decades.

If such rapid urban population growth occurs, it will put immense strain on the land and water resources of these “megacities”. It is also likely to overwhelm their respective infrastructure and social service delivery systems. Railway and road traffic congestion, power shortages, water and sanitation problems are all likely to mount. This augurs ill for China’s environment.

Migration Pressures

The recent mass movement of Chinese rural workers to urban centres is essentially in response to rapid and sustained economic development and improved job opportunities in the coastal region. Up to now, there has been little to suggest that environmental factors have been significant in prompting this large-scale migration to the cities. Rather, “pushed” by lack of new agricultural lands and falling demand for agricultural workers, and “pulled” by the hope of a better life in a major urban centre, millions of rural labourers will continue to be drawn to the booming coastal areas in the next decade.

The eventual demise of China’s household registration system will accelerate rural to urban migration, especially towards such favoured destinations as Beijing, Guangzhou, Shanghai and Tianjin. With a “floating population” of rural migrant workers estimated at 80 million to 120 million people at present (and expected to grow to around 200 million by the year 2000), it is extremely unlikely that this surplus labour will soon be fully absorbed into China’s more industrialized areas, even given the most optimistic economic growth forecast.

Reducing inter-regional growth rate disparities and per capita income gaps is one of China’s top five priorities under its Ninth Five Year Plan. Despite this, central authorities will be hard pressed to raise sufficient investment development funds for its poorer inland and border areas. Not only will this exacerbate already large and growing regional disparities, it will trigger further migration toward the high-income, high-growth coastal regions. This means that overcrowding and pollution will worsen in migrant-receiving areas. Newcomers living in extremely poor conditions are likely to become more vulnerable to highly communicable diseases, including tuberculosis, cholera and dysentery. This could easily overwhelm China’s health-care infrastructure, placing public health at increased risk.

Equally worrying, the mass movement of people within China is likely to pose a serious challenge to the ability of police and civil authorities in the major migrant-receiving centres to maintain law and order. This will make public administration and governance in China extremely difficult. Public safety may be endangered.

At the very least, domestic migrants are perceived to pose a threat to China’s public security. Numerous Chinese media reports and Chinese authorities claim that migrants, particularly unemployed ones, account for as much as 70 per cent of all criminal activity in major urban centres, including murder, robbery, assault, theft, fraud, drug trafficking and prostitution.

From an economic standpoint, however, migrants represent a huge pool of cheap, unskilled and semi-skilled workers for the fast-growing industrial, construction and service sectors in China’s major cities and coastal areas. Of equal significance, these migrants represent a major source of remittances and entrepreneurial know-how for China’s labour-exporting provinces, such as Anhui and Sichuan. In 1995, for example, remittances reached seven per cent (or over US $2 billion) of Sichuan’s GDP. Not only does this contribute to household earnings, it also helps to lessen regional growth disparities and per capita income differences.

There is no denying that future large-scale population movements could be environmentally- motivated, fostered by acute environmental degradation. For example, scientific evidence indicates that ongoing burning of fossil fuels is likely to lead to the buildup of greenhouse gases in the earth’s atmosphere, contributing to climate change and global warming, and resulting in sea level rise and land erosion. According to one estimate, a 50cm rise in sea levels would pose a threat to over 90 million people worldwide.

If the sea level were to rise as projected, China’s densely populated coastal region, especially Shanghai and Guangzhou, would be at greatest risk of flooding. That would force millions of people to flee coastal cities and disrupt both industrial and agricultural production. Environmentally motivated migrants would cause enormous political, economic and social difficulties for areas, both domestic and foreign, that were forced to receive them. Southeast Asia, Japan, Russia and western countries with sizeable ethnic Chinese communities, such as the United States and Canada, could become the main destination of Chinese migrants.

Environmental Strategy

In response to the call of the United Nations Conference on the Environment and Development (UNCED) for all countries to develop sustainable development policies, China’s State Council approved in early 1994 its “White Paper on China’s Population, Environment, and Development in the 21st Century”. This document (China’s “Agenda 21”) contains the right rhetoric and seems to be well intentioned. Like UNCED, it recognizes environmental problems, but is short on practical approaches and the political will to resolve them. The prescriptions of China’s Agenda 21 are more of a wish list than a long-term vision to guide sustainable development. Lack of real public participation and, more importantly, inadequate funding will impede implementation efforts.

Since 1979, China has enacted a large number of laws and regulations dealing with environmental protection, the implementation of which is mainly at the subnational level. Unfortunately, under the current system, the government is, in many situations, both the principal polluter and the environmental manager/regulator. As a result, it is often difficult for regulators to carry out objective reviews or assessments of the actions of state entities, or to take contrary positions from them. It has also been reported that Chinese environmental officials accord higher priority to large-scale polluters, which are often large state-run enterprises. Lack of qualified staff and financial resources hinder action against smaller enterprises, which may use older, less environmentally-sound technologies and often lack pollution control equipment.

At present, China does not need new environmental legislation. What is required is tougher and more effective enforcement of relevant existing laws and regulations. Poor administration of penalties and spotty collection of fines and fees levied against emissions and effluent discharges imply that polluting enterprises in China have little incentive to change significantly their polluting behaviour.

Similarly, although China is party to many international agreements on the environment, including the UN Framework Convention on Climate Change and the Montreal Protocol on Substances that Deplete the Ozone Layer, there should be no illusion about the capacity of developed nations to influence events in China. This means that environmental policy in China–as for so many other spheres–will most likely be determined by domestic and not international considerations. The waning of tight central control means that officials at the centre will find it tougher to implement and enforce international accords and conventions on climate change and ozone depletion. Combined with demographic pressures and continued rapid economic growth, this implies that even if particulars of China’s future greenhouse gas emissions are uncertain, the indications are that these emissions will rise. Current estimates hold China responsible for one-tenth of the world’s greenhouse gas emissions.

Clean Up Bill

The costs of cleaning up China’s environment are immense. The government plans to invest around US $18 billion, or less than one per cent of its annual GDP, in cleaning up its polluted environment during the 1995-2000 period. China’s State Environmental Protection Agency, however, estimates that environmental cleanup expenditures should be at least three times the current planned spending level (or US $54 billion).

Worse still, the funding constraints imposed by declining budgets and competing demands for scarce capital, skilled labour shortages, rampant corruption, bureaucratic foot-dragging and the sheer magnitude of environmental degradation suggest that progress on cleaning up China’s environment is likely to be very slow and uneven. Delays in cleaning up China’s environment will only increase future cleanup costs beyond present projections. This means that little if any noticeable improvement can be anticipated over the next decade.

China will need to attract massive foreign capital and know-how to support environmental cleanup efforts. During the 1996-2000 period, for instance, it hopes to draw US $25 billion in foreign investments annually. Of this amount, Chinese officials expect to attract around US $4 billion, mostly from international financial institutions (IFIs), in environmentally related investments. This will mean numerous commercial possibilities for foreign investors, lenders and suppliers of anti-pollution equipment and cleaner industrial technology, especially through joint ventures, direct investment, technology transfers and licensing agreements.

Canadian Implications

In 1995, Canada exported over $3 billion to the Chinese marketplace, making China our fourth largest export market. At the same time, the value of Canadian imports from China totalled almost $5 billion. The latest available data indicates that Canadian direct investment in China reached $177 million in 1993. Canadian firms intend to invest about $2 billion in China during the remainder of this decade. For fiscal year 1993-1994, Canada’s total development assistance to China totalled almost $133 million. Of this amount, nearly $31 million was disbursed through the CIDA bilateral program.

 

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Protecting Communities and Individuals When Siting a Nuclear Waste Disposal Facility

Elizabeth Brubaker
Borealis Energy Research Association on behalf of Energy Probe
February 28, 1996

Part 3 of Energy Probe’s Submission on The Adequacy of Atomic Energy of Canada Limited’s Environmental Impact Statement on the Concept for Disposal of Canada’s Nuclear Fuel Waste. Submitted to the Federal Environmental Assessment Review Panel.

Introduction

As part of its review of Atomic Energy of Canada Limited’s Environmental Impact Statement on
the Concept for Disposal of Canada’s Nuclear Fuel Waste (AECL’s EIS), Energy Probe commissioned Borealis Energy Research Association to examine approaches to siting. In Part I of Energy Probe’s submission, dated July 28, 1995, we addressed the adequacy of the EIS. In this paper, Part III of Energy Probe’s submission, we address the merits of the opinions and conclusions of the EIS and recommend alternatives.

A successful siting process will be one that works and is fair. The process proposed by AECL, which excludes many affected parties from decision making, meets neither requirement. We propose alternatives that will help shield communities and individuals from the costs and risks of proposed facilities, making the process more equitable and increasing its prospects for success. To protect communities, we recommend obtaining informed consent from all potentially affected communities; to protect individuals, we recommend preserving common law property rights.
Protecting Communities: The Importance of Identifying and Consulting All Affected Communities

In Procedures for Public Hearings, The Environmental Assessment Panel poses a key question: “Who would be selected to participate substantially in decision-making, and how?” More generally, the panel promises “to examine and develop criteria by which . . . acceptability should be evaluated.”

AECL has contributed little on the subject of who, beyond a host community, should participate in decision making. Focussing on obtaining a host’s acceptance of a proposed facility, it has remained vague about the roles of other potentially affected communities. It has neither defined such communities nor specified the nature or extent of their participation. It has merely stated, “Potentially affected communities that are not potential host communities would establish with the implementing organization methods for consultation that would provide opportunities for their views to be taken into account in decision making.”
Experience with voluntary siting processes in both Canada and the United States points to the importance of broadly defining affected communities and of gaining acceptance from all of them. Agencies siting controversial facilities have generally defined affected communities too narrowly. While they have sought volunteer hosts, they have rarely made sure that neighbouring communities or those along transportation routes also benefited from and supported their proposals. The resulting conflicts between potential host communities and their neighbours have frequently poisoned, or derailed, the siting processes.
Communities in Conflict

One study of low-level radioactive waste disposal in the United States, Canada, and Europe referred to “the ‘spatial differentiation’ of opposition to repository siting plans.” Local communities, which are more likely to gain economically from disposal sites, may welcome proposals that surrounding regions, which are less economically dependent on the projects and less likely to be compensated for associated risks, oppose.

Examples of such “spatial differentiation” abound. In the U.K., consultations about the siting of low-level radioactive waste have pitted supportive host localities against opposing surrounding regions. Likewise, in Alberta, while 77 per cent of the voters in Riley would have accepted a hazardous waste facility, a majority of the residents in the surrounding county voted against the proposal, discouraging the province from continuing to seek a site there. Attempts to site low-level radioactive waste in Nebraska have met with similar divisions, with the village of Butte, the beneficiary of a compensation package, supporting the proposal and neighbouring communities and the surrounding county registering strong opposition. In Tennessee, both the City of Oak Ridge and the County of Roane supported hosting a proposed temporary storage facility for high-level radioactive waste, while the state opposed the plan.

The host communities that get financial benefits in exchange for accepting hazardous facilities are not necessarily the communities that bear the various costs of the facilities. Facility impacts may be sufficiently widespread to affect people in many jurisdictions. But even narrow impacts may affect neighbours more than hosts: Communities frequently locate hazardous facilities near their borders, subjecting those in other jurisdictions to their effects. In such cases, those bearing considerable economic, environmental and social costs may have had no power over the siting of the facility.
Siting Low-Level Radioactive Waste in Ontario

Ontario’s low-level radioactive waste siting process exemplifies the problems that result when potentially affected communities do not participate in decisions that may affect them. In September 1995, over 72 per cent of the voters in a Deep River, Ontario, referendum approved an agreement-in-principle to accept low-level waste from Southern Ontario. Deep River Council had negotiated a benefits package in return for agreeing to take the waste. Job security headed the council’s list of demands: It would accept the waste only if the federal government agreed to maintain 1995 employment levels at AECL’s nearby Chalk River Nuclear Laboratories for 15 years. The council also demanded $8.75 million in economic diversification funds.

Both Deep River residents and neighbouring communities were deeply split on the issue of whether the proposed waste facility would benefit or harm them. The community liaison group for the third phase of the siting exercise recommended opting out of the process. In 1994, its successors resigned en masse, with the group’s chairwoman complaining of “deceit and manipulation” in the siting process.

Nearby communities-especially those downstream and downwind of the proposed facility who would likely suffer from any toxic releases from the site and subsequent contamination of the Ottawa River, along with those who were concerned about transportation risks-also expressed considerable opposition to the proposal. In 1994, when five nearby municipalities placed questions about the proposal on municipal election ballots, 80 per cent of the voters opposed the proposal. Several municipal councils also passed resolutions condemning the proposal.

Deep River Council’s decision to exclude neighbouring communities from its 1995 referendum exacerbated local ill will. A former community liaison group representative for the townships complained bitterly about a process that defined community by map boundaries. In denying its neighbours the right to vote in the referendum, she went on, Deep River Council treated them as second class citizens.

Indeed, a number of Deep River’s neighbours continue to criticize the referendum process. Some, feeling disempowered by the process, despair of making a difference and have no plans for further action. Others, however, are calling for a full federal environmental assessment of the proposed facility-a course of action that could delay the project considerably.

The discord created by Deep River’s approach illustrates the importance of adequately defining an affected community. The siting process violated the fundamental principle that those most likely to be affected by a proposed project should have the greatest say in whether or not it goes ahead. Perversely, only people living upwind and upstream from the proposed facility had the opportunity to vote in the deciding referendum. Those most likely to be adversely affected by the facility-those living downstream and downwind from it, or those living along transportation routes-had no voice.
Siting a Monitored Retrievable Storage Facility in New Mexico

The siting process for the Monitored Retrievable Storage (MRS) facility for high-level radioactive waste in the United States similarly illustrates the importance of involving all affected communities in controversial siting decisions. The federal MRS negotiator sought only a willing host community; although he promised to consult surrounding jurisdictions, he did not require their approval. Furthermore, the Department of Energy awarded study grants only to those interested in hosting a facility; it made no monies available to those who might be affected by a facility hosted by another community.
After the Mescalero Apache Tribe applied for an MRS study grant in 1991, it began consultation with the larger New Mexico community. In the following months, the Mescaleros consulted the governor’s office, a state representative, and members of the New Mexico Congressional delegation. They arranged an informational briefing for representatives of three nearby counties and three villages, and meetings with local economic development groups.

While consulting affected parties may have led to a greater understanding of the proposed project, it did not ensure that those consulted were willing to accept the proposed risks. As the federal MRS negotiator noted, “Public understanding does not automatically mean public agreement.” Serious concerns about the Mescaleros’ plan existed at all levels of government. New Mexico’s governor, its state legislators, and its national representatives and senators adamantly opposed the project. Local politicians worried that their tourism-dependent economies would suffer if the project went ahead. In 1991, the Lincoln County Commission, representing the county surrounding the Mescalero reservation, voted to oppose the siting of an MRS facility in their county.

The Mescaleros promised that those affected by the proposed facility would benefit. A Tribal Council representative explained, “fundamental fairness dictates that every community which would be impacted by an MRS located on Mescalero lands is not only entitled to be compensated for those impacts, but should also share in whatever benefits might be negotiated.” He did not limit beneficiaries to immediate neighbours: “Residents of the state of New Mexico deserve to reap tangible rewards from an MRS sited in their state.”

But the Mescaleros didn’t back up their promises of benefits with promises of control. They didn’t offer their neighbours the opportunity to negotiate their own benefits, or to veto a project that, in their estimation, left them worse off. In the end, only tribal members would be able to vote in the Mescaleros’ referendum.

Disempowered by the siting process, those fearing they would be affected by the MRS turned to the political process. Opposition from New Mexican politicians became so strong that in 1993 the Senate voted to prohibit funding for the next phase of feasibility studies. The official siting process soon fell apart, to be replaced by private negotiations between the Mescaleros and 33 nuclear utilities. In 1995, the Mescaleros voted to go ahead with the project. The tribe prevented those opposed from further obstructing the siting process by invoking tribal sovereignty.
Siting High-Level Radioactive Waste in Nevada
While not a voluntary process, the U.S. Department of Energy’s (DOE’s) efforts to site a permanent high-level nuclear waste repository at Yucca Mountain in Nevada again demonstrate the clashing interests of various affected communities. The strongest opposition comes not from the local officials who are directly involved in negotiations but from those who are further removed-those with less power to influence the terms and conditions of any arrangement.

Local communities’ support or opposition to the Yucca Mountain proposal reflect, in part, their potential to benefit financially from it. Many neighbours to the west, who will likely profit from the facility, approve of it. Their counterparts to the east, who are too far away to earn income from the repository, are more suspicious of it.

The greater Nevada community is concerned about the negative effects of a repository on the state economy; polls indicate that over 75 per cent of Nevadans strongly oppose the proposed facility. Many professional and trade associations have also registered their opposition. And virtually all political bodies-including Nevada’s governor, the state legislature, the state’s congressional delegation, and most local governments-are opposed. Their concerns have disrupted the siting process. The State of Nevada, for example, at one point refused to issue necessary licences, leading to a DOE court challenge.
Empowering All Communities of Interest

One principle behind voluntary siting is the inherent value, in a democratic society, of informed consent. The principle surfaced a number of times in AECL’s treatment of the social aspects of nuclear fuel disposal, particularly in its discussions of ethical decision making. AECL proposed an ethical framework that includes the principles of voluntarism and shared decision making-principles that, in its words, “incorporate . . . the achievement of informed collective consent.” But the principles of voluntarism and informed collective consent should not be limited to a host community. On the contrary, they require that a facility, before it may proceed, earn broad support from whomever it may affect, regardless of their political jurisdiction. Whenever possible, risks, whether to immediate neighbours, to those living downwind or downstream of a proposed facility, or to those living along transportation routes, should be voluntarily assumed.

To ensure that risks are accepted willingly, it is necessary to identify all potentially affected communities and to invite all such communities to vote on, and support, the proposed project. Only if majorities in all affected communities support the project should it go ahead. Requiring separate votes will avoid problems associated with a larger community “selling out” a smaller or less powerful community.

As political boundaries do not determine who will be adversely affected by a proposal, they should not determine who falls within the voting communities. Instead, the boundaries should reflect “communities of interest,” or groups of people who are likely to experience similar impacts. Communities of interest need not be mutually exclusive: An affected individual could fall within a number of communities of interest, and be eligible to vote with each of those communities.
In order to obtain the approval of all communities of interest, the implementing organization will have to approach each one to ensure that those who may be affected will on balance benefit from the project. Defining real communities of interest will make it easier for the implementing organization to negotiate appropriate compensation, and to ensure that those bearing specific risks will enjoy comparable benefits. The most directly affected communities will insist on effective mitigation and generous benefits; less adversely affected communities will have more modest demands. Ultimately, if a majority in any community of interest rejects a facility, if it cannot be persuaded through enhanced mitigation or increased compensation to change its mind, and if no alternatives exist that will spare it from impacts and risks (therefore eliminating its right to vote), the project should not go ahead. Such opposition indicates that the costs or risks remain unacceptably high.

The definition of communities of interest will inevitably be somewhat arbitrary. The federal or provincial government could identify communities of interest, or communities could present themselves to a regulatory body. Alternatively, the implementing organization could propose a definition that would then be subject to an environmental assessment. Whatever the method, if approached with honesty and fairness, the definition used thus far in voluntary siting processes can be much improved. Possible communities of interest could include: close neighbours; those within a certain radius; those living downwind or downstream of the facility; or those within one or more “risk perception shadows”-areas influenced by public awareness of the facility and by the number, directness, significance, and duration of any impacts.

Those living along transportation corridors should also make up a community of interest. AECL has not proposed applying the principle of voluntarism to this group. But its members, subject both to ongoing nuisances and to the threat of accidents, are clearly potentially affected by a facility. Transport Canada noted that the transportation of nuclear waste will increase the current risk level and potentially affect the safety of those living along transport routes. According to the author of one book about nuclear waste facility siting, “environmental risks in the transportation of hazardous wastes are at least as great as those in storage and disposal.” “Accidents,” he continued, ” are an inevitable feature of any system of transportation. On average, trucks [in the United States] are in accidents once every 400,000 miles of travel. Between 1971 and 1985, trucks carrying radioactive materials were in 167 transportation accidents (mostly on highways) involving 2,602 packages of radioactive materials; a total of 67 packages experienced some release of their contents.” Rail accidents involving spills of dangerous goods also occur frequently.

Past siting experiences suggest that to satisfy the potentially affected transportation community the implementing organization may have to agree to strict procedures regarding schedules, training, maintenance, rest stops, or weather conditions. It may have to assist communities in upgrading fire or safety services. Or it may have to financially compensate those living along transportation routes, as Browning-Ferris Industries has done at its Ridge Landfill near Blenheim, Ontario, or as the Ontario Waste Management Corporation considered doing for those living along access routes to its hazardous waste facility.

Protecting Individuals: The Importance of Preserving Property Rights

The siting process proposed above, while protecting the rights of the majority in all communities of interest, does little to protect minority rights. Only a purely voluntary system-one in which an implementing organization would have to gain permission from every potentially affected individual-would perfectly protect all individuals. But such a system would likely be unworkable in the context of nuclear waste, given the virtual certainty of some irreconcilable opposition to any proposal regarding the use, transport, or disposal of radioactive materials.

Over the centuries, our political and legal systems have evolved to accommodate both majority and minority rights. While our political tradition promotes democratic decision making (decision making by majorities) our common law tradition emphasizes individual rights. Empowered with common law property rights, those in the minority may protect themselves against abuses by the majority.

In siting a nuclear waste facility, it will be essential to protect the interests of those who were wrongly excluded from the communities of interest voting on the proposal, those who voted against the proposal, and those who did consent but who may experience unforeseen-and thus uncompensated-problems. The best way to protect such individuals is to explicitly protect their common law property rights.

If those affected by the transportation or disposal of nuclear waste maintain their traditional common law property rights, they may be able to obtain injunctions against hazardous operations or damages for injuries suffered. They may be able to take action not only against actual harms but also against potential harms, or risks.

For centuries, courts have heard cases about risky activities that have not yet harmed anyone. They have often determined that merely exposing others to risk constitutes a nuisance which should be enjoined (i.e. stopped by a court injunction), or if it has already occurred, compensated or punished.

But courts have disagreed over what constitutes an actionable risk. Some have required proof of actual, immediate danger. Others have required proof of a likelihood of harm. Still others, particularly in the United States, have ruled that whether the disputed activity is actually dangerous or likely to be dangerous is irrelevant: What matters is whether the public believes it to be dangerous. Such courts have treated perceived risks as nuisances that should be enjoined on the grounds that they frighten neighbours, interfere with their quiet enjoyment of their property, and lower their property values.
Quia Timet Injunctions
Canadian courts tend to issue injunctions against proposed or ongoing activities if they pose a real and substantial risk of harm, if the harm would be irreparable, and if a monetary payment could not adequately compensate for the harm. A plaintiff who sues quia timet (“because he fears”) must demonstrate that his apprehension is well founded, or reasonable; unfounded apprehension does not justify an injunction.

In their decisions, Canadian courts often repeat the description of the quia timet injunction found in Attorney-General v. Corporation of Manchester, an 1893 case regarding a proposed smallpox hospital in Manchester, England. The judge in that case specified that “the Court does not require absolute certainty [that injury will arise] before it intervenes; something less will suffice.” He explained, “The principle which I think may be properly and safely extracted from the quia timet authorities is, that the plaintiff must shew a strong case of probability that the apprehended mischief will, in fact, arise.” In 1918 the Supreme Court of Canada approved this principle; contemporary courts continue to follow it.

The judge deciding Attorney-General v. Corporation of Manchester referred to a number of quia timet precedents. Several involved activities that posed public health risks. In one case, for example, a court indicted a woman who carried her smallpox-infected son on a public highway. Other quia timet precedents cited in the Manchester case involved the risk of explosion or fire. Neighbours, fearing that such events would cause them irreparable injury, convinced the courts to prevent them from occurring.

When considering quia timet injunctions, courts often weigh both the probability and the consequences of the apprehended danger. In the often cited Earl of Ripon v. Hobart, one judge noted the practicality of “balancing the magnitude of the evil against the chances of its occurrence.” The law, the judge went on, will “provide against a somewhat less imminent probability in cases where the mischief, should it be done, would be vast and overwhelming.”
Accordingly, if the injury feared were extensive, the court would be more likely to issue an injunction: “[T]he only means of attaining certainty, amidst the discrepancy of learned opinions, is actual experience. If the waiting for that might, by any proximate possibility, occasion such irreparable and extensive damage as some of the witnesses speak of, the inducement would be strong to grant an injunction in the meantime.”

As the above passage suggests, a consideration of the consequences of a threat materializing includes an assessment not only of the magnitude of the harm but also of its reparability. A British judge explained in 1974 that an injunction would not be premature if probable damage could not be prevented or repaired at a later date. The judge cited an earlier decision to that effect: “[I]f the damage is not proved to be so imminent that no one can doubt that, if the remedy is delayed, the damage will be suffered, I think it must be shown that, if the damage does occur at any time, it will come in such a way and under such circumstances that it will be impossible for the plaintiff to protect himself against it if relief is denied to him in a quia timet action.” Another judge summed it up this way: “I think the origin of quia timet may be an illustration of the rule that prevention is better than cure, and in a case of this kind the cure may be uncertain.”
Injunctions against Perceived Risks

Many U.S. courts have pursued an even tougher line of reasoning about threatened harms-one that treats perceived risks as actual harms, either because they interfere with people’s quiet enjoyment of their property or because they reduce property values. This approach, epitomized by a series of decisions made by the Supreme Court of Washington, favours those who fear the adverse effects of proposed developments.

In a 1910 case, Everett v. Paschall, the Supreme Court of Washington issued an injunction against a small tuberculosis sanitarium in a residential neighbourhood of Seattle. Although medical science insisted that a well-run sanitarium posed no threat, the public feared infection. The dread inspired by the facility disrupted its neighbours’ “mental quiet,” interfering with their comfortable enjoyment of their property. The facility also reduced their property values.

Arguments that the public’s fear was “unsustained by science” did not move the court. In one judge’s words, “The theories and dogmas of scientific men, though provable by scientific reference, cannot be held to be controlling unless shared by the people generally.” He explained, “we question our right to say that the fear is unfounded or unreasonable, when it is shared by the whole public to such an extent that property values are diminished. The question is, not whether the fear is founded in science, but whether it exists; not whether it is imaginary, but whether it is real, in that it affects the movements and conduct of men.”

The judge also acknowledged the reasonableness of the public’s safety concerns. Even careful management could not ensure security: “[T]he security of the public depends upon proper precautions and sanitation, which may at any time be relaxed by incautious nurses or careless or ignorant patients.”

The court concluded that the sanitarium constituted a nuisance. Citing the ancient maxim, “use your own property so as not to harm another’s,” it ordered the facility to shut down.
In its decision, the court referred to a number of other cases in which activities provoking fear-substantiated or not-had been deemed nuisances. In one, Stotler v. Rochelle, the Supreme Court of Kansas issued an injunction to prevent a cancer hospital from opening. A neighbour had argued that the hospital would emit offensive smells, threaten public health and reduce property values. The court agreed that the hospital would constitute a nuisance. In its words, “In the present state of accurate knowledge on the subject, it is quite within bounds to say that, whether or not there is actual danger of the transmission of the disease under the conditions stated, the fear of it is not entirely unreasonable. . . . The question is not whether the establishment of the hospital would place the occupants of the adjacent dwellings in actual danger of infection, but whether they would have reasonable ground to fear such a result, and whether, in view of the general dread inspired by the disease, the reasonable enjoyment of their property would not be materially interfered with. . . . However carefully the hospital might be conducted, and however worthy the institution might be, its mere presence, which would necessarily be manifested in various ways, would make the neighborhood less desirable for residence purposes, not to the oversensitive alone, but to persons of normal sensibilities.”

In Baltimore v. Fairfield Improvement Co., also referred to in Everett v. Paschall, a Maryland court similarly enjoined a family from housing a leper, citing the public’s terror and dread of leprosy. It explained, “There are modern theories and opinions of medical experts that the contagion is remote, and by no means dangerous; but the popular belief of its perils . . . cannot, in this day, be shaken or dispelled by mere scientific asseveration or conjecture. It is not, in this case, so much a mere academic inquiry as to whether the disease is in fact highly or remotely contagious, but the question is whether, viewed as it is by the people generally, its introduction into a neighborhood is calculated to do a serious injury to the property of the plaintiff there located.”

In the intervening years, courts have both followed and criticized the decision in Everett v. Paschall. Courts have cited it when contemplating a variety of nuisances, including a cemetery, a public beach, a trade school, and a sewage lagoon.

In 1922, the Supreme Court of Washington issued an injunction against a proposed hillside reservoir that could have menaced nearby homes. The court found that the potentially affected property owners had a “reasonable apprehension of danger.” Those complaining, it explained, were “men and women who, in the ordinary business of life, are not to be charged as victims of hysteria, nor ready dupes of conjectural and imaginary fears, having a very real and present apprehension that their lives and properties will be jeopardized by the hanging of this modern sword of Damocles above their heads, and that fear is bolstered by the testimony of expert witnesses, and confirmed by the common sense of any one to whom the facts come. It does not take the testimony of experts, although that was produced, to advise one that the proposed structure would cause a most serious depreciation of property values within the affected area. It is an obstruction to the free use of property as it interferes essentially with the comfortable enjoyment of life and property. It is a nuisance, for it annoys, injures, and endangers the comfort, repose, health, and safety of these respondents and renders them insecure in life and the use of their property.”

In determining whether the reservoir posed an enjoinable risk, the court examined both the probability of an accident occurring and the consequences of such an accident. While experts differed on whether a large embankment would successfully impound the water, it was clear to the court that, should an accident occur, not only property but also lives would be in danger. In the words of the Chief Justice, “If the breaking of the proposed reservoir would probably result in comparatively small damage and no loss of life, I would not demand proof of its safety with a high degree of certainty; but, in view of what now seems to me would be the appalling result of such breaking, I would want the necessity of its location there, and its safety, to be proven beyond all doubt, before withholding the injunctive relief prayed for.”
In a 1946 decision prohibiting the establishment of a psychiatric institution in a residential neighbourhood, the Washington Supreme Court affirmed a lower court’s decision that specialists’ disagreement about the threats posed by such operations validated neighbours’ fears. “If,” it repeated, “there is this difference of opinion among those skilled in the profession, can this court say that the fear expressed by a layman for his safety and that of his family is unfounded or imaginary?” Occasioning such fear and reducing nearby property values, the institution constituted a nuisance. In order to prevent it from depriving “property owners of that repose and comfortable enjoyment of their homes to which they are entitled,” it should be enjoined.

Many recent cases about perceived risks have pertained to the transportation or disposal of hazardous wastes. One 1977 case involved a chemical waste disposal site in Wilsonville, Illinois. The host community, fearing that the site was unsafe even though it had acquired necessary permits from the Environmental Protection Agency, went to court and asked for an injunction.

The trial court determined that the site constituted both a present and a prospective nuisance. Although it acknowledged the need for hazardous waste disposal, it noted that such need could not justify the creation of a nuisance: “[N]uisance cannot be justified on the ground of necessity, pecuniary interest, convenience or economic advantage. . . . [W]here disposal of wastes create a nuisance said disposal site may be closed through legal action.” The court granted an injunction against the site’s operation, and ordered its owners to exhume and remove the toxic waste that had already been buried and restore the site.

Several years later the Supreme Court of Illinois upheld the lower court’s decision. The court confirmed that an injunction could be granted against the threat of harm-a prospective nuisance-where harm is highly probable. The waste disposal site in question could, under a number of scenarios, contaminate neighbouring air, water or ground. “A court does not have to wait for it to happen before it can enjoin such a result. . . . Under these circumstances, if a court can prevent any damage from occurring, it should do so.”

In a concurring opinion, one judge suggested that an injunction would be called for even if contamination were not dangerously probable: “[T]here are situations where the harm that is potential is so devastating that equity should afford relief even though the possibility of the harmful result occurring is uncertain or contingent. The Restatement’s position applicable to preventative injunctive relief in general is that ‘[t]he more serious the impending harm, the less justification there is for taking the chances that are involved in pronouncing the harm too remote.’. . . If the harm that may result is severe, a lesser possibility of it occurring should be required to support injunctive relief. . . . Although the ‘dangerous probability’ test has certainly been met in this case, I would be willing to enjoin the activity on a showing of probability of occurrence substantially less than that which the facts presented to this court reveal, due to the extremely hazardous nature of the chemicals being dumped and the potentially catastrophic results.”

Maximizing the Availability of Injunctions in Canada

It is difficult to predict how-or even whether-the American court decisions discussed above could affect the rights of Canadians living along waste transportation corridors or near a nuclear waste disposal site. Historically, American courts have greatly influenced their Canadian counterparts; although not binding, their decisions have often been persuasive. Canadian courts continue to cite American cases in their decisions, especially when they have no Canadian or British precedents to look to.

If Canadian courts do adopt American thinking on perceived risks, the transport and storage of nuclear waste could be prime candidates for the application of the principles. Canadians perceive nuclear waste to be an extremely risky material. In one 1992 survey, 42 per cent of the men surveyed and 54 per cent of the women surveyed considered nuclear waste a high risk to the public. “Nuclear power and nuclear waste rank at the top of perceived personal health risks even when respondents live in British Columbia or the Prairies where nary a nuclear generator exists.”

AECL’s study of the social aspects of nuclear waste disposal confirmed the public’s widespread fear:

[M]any members of the public view nuclear waste as uniquely hazardous and difficult to handle. The risk associated with it is seen by some people to be absolute rather than relative, and some hold the view that unknown catastrophic events are somehow inevitable. . . . Researchers who conducted a word association test in the United States on the words “nuclear waste repository” found that the most frequent single associations were dangerous, danger, death and pollution. In addition, there were a large number of images referring to war, annihilation, weapons, and things military. In short, the responses revealed pervasive dread, revulsion, and anger.

AECL later added that “Canadians feel personally at risk, no matter where they live, from nuclear waste more than from any other health hazard.”

Scientific opinion regarding the risks associated with nuclear waste is more divided than is public opinion. If courts demand proof of a substantial risk of harm before issuing injunctions, trials will inevitably become battlegrounds between conflicting experts and studies. In contrast, if courts need only be convinced of a general public fear of nuclear waste before ruling against its transport or burial, plaintiffs will have a far easier time proving their cases.

Regardless of the standard that prevails (regardless of whether courts enjoin perceived risks or scientifically proven risks), as long as those adversely affected retain their common law property rights, they will have a better chance of enjoining land uses that constitute nuisances than they otherwise would. There remains, however, a major impediment to obtaining injunctions against public works.

AECL has not proposed, nor has the panel or government chosen, an “implementing organization” for a nuclear waste disposal project. We therefore do not yet know who would construct and operate transportation and disposal facilities. If the federal or provincial governments were to assume that role, those affected by the facilities would be unable to obtain injunctions against them: Courts issue injunctions only against private parties, not governments or their agents.

In contrast, if the implementing organization were based in the private sector, those affected by its activities could have access to the full range of common law remedies. Private proposals for nuclear waste disposal have been floated in the past, both in the United States and, to a lesser extent, in Canada. New Mexico’s Mescalero Apaches are negotiating private agreements with utility companies regarding a Monitored Retrievable Storage facility on their land. Similarly, the Meadow Lake Crees’ proposal to dispose of nuclear waste in northern Saskatchewan has been described as “a fully privatized spent fuel disposal system opportunity.”

But even private projects, if government-authorized, may be immune from injunctions. Statutes and regulations override the common law. A statute authorizing a party to take a specific action also authorizes all inevitable consequences of that action, whether or not they would otherwise be permissible. Therefore, if one party damages others as an inevitable result of exercising its statutory authority, its victims don’t automatically have recourse to common law injunctions; instead, they have recourse to the procedures or remedies laid out in the statute that has authorized the damage. Only if the statute explicitly so provides do they maintain their common law rights.

Federal and provincial legislators must therefore ensure that statutes and regulations regarding nuclear waste disposal don’t leave those affected without recourse to injunctions to prevent harm. They must permit activities only on the condition that they do not violate others’ property rights. When wording laws and regulations, they must specify that nothing in them legalizes nuisances or other unlawful acts.

If those adversely affected do retain their rights to injunctions, they will have considerable power over proposed transportation routes and disposal facilities. Under a strict property rights regime, the courts might consider either element to be an enjoinable nuisance. If so, the implementing organization could proceed only with its neighbours’ full approval. Facilities that did proceed would thus be not only “acceptable” but also accepted.
Damages or Compensation for Harms or Risks
If injunctions are unobtainable, damages would be the common law remedy available to those adversely affected by the transportation or disposal of nuclear wastes. While governments and their agents are immune from injunctions, they are not exempt from ordinary tort liability; courts can therefore assess damages against them if their activities harm others or put them at risk. As noted above, those authorized to construct public works may or may not be immunized from liability for the inevitable results of their activities, depending on the wording of the authorizing statute. Again, it is essential that the legislation authorizing public works specify that it is not authorizing any nuisances, and that those adversely affected by the works retain their common law remedies. If the legislation does permit activities that would otherwise be considered nuisances, against our recommendations, it should at least specify that those affected acquire broad compensation rights.

Many court cases about compensation have been launched by people who have had some of their land expropriated for public works, or who live in the vicinity of such works. If part of someone’s property is expropriated, the value of the remaining (non-expropriated) property may decline. The owner may obtain compensation for “injurious affection” caused by the expropriation itself or by the actual or anticipated use of the expropriated land. In some cases, others living near a public work may also obtain compensation if its construction interferes with their property rights or decreases the value of their land. Neighbours of highways, hospitals, fire stations, sewage lagoons, airports and other “obnoxious” land uses frequently fall into the latter category.

In Toronto v. J. F. Brown Co., for example, the Supreme Court of Canada ordered the city to compensate a store owner for a decline in the value of his property resulting from the construction and operation of public lavatories nearby. As one judge explained, “the presence of such conveniences makes the property less desirable from the point of view of possible purchasers and lessees, and therefore diminishes its selling and letting value.” Since the statute authorizing the project didn’t specify that those affected retained their rights to common law remedies, the owner couldn’t seek an injunction or traditional damages for nuisance. He could, however, claim compensation for injurious affection.

Neither federal nor provincial expropriation acts guarantee full compensation for injurious affection by the construction and use of public works to those whose land has not been expropriated. The federal act includes no such provisions; many provincial acts limit compensation to the damages caused by the construction, rather than the operation and maintenance, of public works. If the specific statutes governing a public work do not contain compensation provisions, the inadequate provisions of the general expropriation acts apply by default. To avoid disempowering potential victims, it is therefore essential that laws regarding the transportation and disposal of nuclear waste provide for compensation for both the construction and the use of any facilities.
Damages for Perceived Risks
In a number of recent U.S. cases, courts have awarded damages to landowners who, after partial expropriations, have been left with land of reduced market value, thanks to the public’s fear of the use to which the expropriated land would be put. When deciding whether or not to compensate for diminished values resulting from fear, courts have disagreed over how reasonable that fear must be, with some courts requiring a rational basis for the fear and others completely disregarding the fear’s reasonableness. Texas Electric Service Company v. Nelon exemplifies the former approach, while Santa Fe v. Komis illustrates the latter. Both cases addressed the transportation of nuclear waste.

In 1975, Texas Electric Service Company acquired an easement on a strip of Mr. and Mrs. Burlyn Nelon’s peanut farm. The public utility planned to construct a railroad line which would carry nuclear waste away from its nearby nuclear generating station. Upon expropriation, the market value of the Nelons’ remaining land plummeted from $800 to $500 per acre-a change attributed in part to potential buyers’ fear of radiation escaping from transported waste.

In affirming a lower court’s decision to compensate the Nelons for the loss of value in their remaining land, the Court of Appeal reviewed one witness’s testimony regarding the danger of accidents or sabotage. The court determined that the witness need not prove that an accident was probable, or that similar accidents had occurred in the past: The rule established in previous cases “does not require that an accident of the type feared already [has] occurred; it is sufficient if there is a basis in reason for the fear.”

Other courts have not required that the public’s fear be reasonable in order to justify compensation. In 1988, the City of Santa Fe, wanting to construct a bypass on which to transport nuclear waste going from Los Alamos to the Waste Isolation Pilot Project near Carlsbad, expropriated 43 of the 674 acres owned by John and Lemonia Komis. The Komises sought compensation for reduction in the value of their remaining land. Public perception of the hazards of nuclear waste transportation, they claimed, reduced their land’s market value, either as subdivided residential land or as recreational land, by one million dollars.

In support of their claim, the Komises commissioned a public opinion poll indicating that 71 per cent of those polled believed that property values near the new bypass would decrease. Forty-one per cent of the county’s residents predicted decreases of between 11 and 30 per cent on residential properties near the bypass.

The case went to the Supreme Court of New Mexico, which agreed with the lower court that in the case of a partial expropriation for a land use that frightened potential buyers and diminished the value of any remaining land, compensation would be required regardless of whether the public’s fear was well-founded. It confirmed the jury’s award of $337,815 for public-perception damages.

In its decision, the court referred to a number of cases regarding high voltage transmission lines that reduce the value of lands through which they run. It favoured an approach holding public fear of the lines to be compensable regardless of its reasonableness, since even unfounded fears affect market value: “[I]f loss of value can be proven, it should be compensable regardless of its source.”

The same, the court found, would apply to a highway used to transport nuclear waste. Arguments about the safety of radioactive waste transport were of no interest: “Whether the transportation of hazardous nuclear materials actually is or is not safe is irrelevant; the issue is whether public perception of those dangers has a depressing effect on the value of the property not taken.”

As noted in Santa Fe v. Komis, transmission lines are frequent subjects of perceived risk lawsuits in the United States. Those living near high voltage lines increasingly claim damages for reductions in their property values caused by the public’s fears that the lines’ electric and magnetic fields will cause cancer. Disputes over the validity of such fears, arising from the contradictory or inconclusive nature of many studies on the subject, have not deterred the courts from holding companies liable for the consequences of the fears.

In a 1993 case, Criscuola v. Power Authority of New York, the New York Court of Appeals awarded damages against a utility whose new transmission line lowered neighbouring land values. The court ruled that it was irrelevant whether or not the public’s “cancerphobia” resulted from a genuine danger, since even an unreasonable fear could result in a very real loss of market value: “Whether the danger is a scientifically genuine or verifiable fact should be irrelevant to the central issue of its market value impact.”
The Importance of Maintaining Insurance

Property rights, to be meaningful, must be enforceable. Those who may be harmed by the transport or disposal of nuclear waste must be confident that they will be able to assert their rights should the need arise. To assure people that, should harm come, they will be able to recover full damages, the implementing organization must maintain adequate insurance coverage on both transport and disposal activities. Furthermore, to ensure that victims will be able to obtain justice long after the implementing organization has ceased doing business, provisions should be made to finance future clean-up and compensation.
The Implications of Requiring Consent from Communities of Interest and Maintaining Individuals’ Rights to Injunctions and Damage Awards

Executing the recommendations presented throughout this paper will likely increase the implementing organization’s costs. But such provisions will not actually increase the total costs of nuclear waste disposal; they will simply make visible otherwise hidden risks and costs, redistributing them away from potential victims. They will force the implementing organization to internalize its externalities, to pay any costs it imposes on its neighbours. Such an equitable distribution of costs is an essential element of any ethical waste disposal system.
The implementing organization may be allowed to pass its costs on to taxpayers. Alternatively, it may be required to pass them on to the nuclear industry, possibly affecting the financial viability of nuclear waste generation. Eliminating hidden subsidies to waste generation by requiring the nuclear industry to pay the full costs of waste disposal may encourage power generators to reduce their production of nuclear waste.

Increased liability, backed by sufficient insurance, will increase the safety of the nuclear waste disposal system. Insurers’ exposure will prompt them to demand additional safety measures, procedures, or reconfigurations that will increase the implementing organization’s level of care and improve the safety of both transportation and disposal facilities.

While the costs (to the implementing organization) of executing our recommendations may be high, considerable benefits-both ethical and pragmatic-will result. The siting process, resting on the principles of informed consent and property rights, will distribute costs and benefits far more equitably than its predecessors, or than the process proposed by AECL. The process will be more voluntary, more truly characterized by shared decision making, and more fair-in short, far better able to satisfy the worthy principles of implementation proposed by AECL.

Furthermore, a siting process relying on such principles is more likely to succeed than one that forces people to bear risks. AECL has pointed out that accepted risks tend to be acceptable risks: “[P]eople consider the risk of an activity to be lower or more acceptable if . . . they engage in or accept the activity voluntarily.” Knowing they have a choice, and armed with strong, enforceable property rights, communities and individuals will be more willing to cooperate in the siting process. They will know that they can vote no if they stand to lose more than they will gain. And they will know that they will be able to obtain an injunction or damages if the implementing organization creates (or perhaps even threatens to create) a nuisance. The knowledge that they will be protected by the law will give people the necessary confidence to say yes to a proposal.
Summary of Recommendations

To protect potentially affected communities, Energy Probe recommends that:

Those overseeing the siting process should identify all potentially affected communities and invite all such communities to vote on the proposed project. Only if majorities in all affected communities support the project should it go ahead.

The boundaries of the voting communities should reflect “communities of interest”- groups of people who are likely to experience similar impacts. Communities of interest need not be defined politically, nor need they be mutually exclusive. An affected individual could fall within a number of communities of interest, and be eligible to vote with each of those communities.

Communities of interest could include: close neighbours; those within a certain radius; those living downwind or downstream of the facility; those within one or more risk perception shadows; and those living along transportation corridors.

To protect potentially affected individuals, Energy Probe recommends that:

Laws and regulations regarding the transport and disposal of nuclear waste should explicitly preserve the common law property rights of all who may be affected, thus enabling them to obtain injunctions against hazardous operations or damages for injuries suffered. Such laws must permit activities only on the condition that they do not violate others’ property rights. They must specify that nothing in them legalizes nuisances or other unlawful acts.

If the legislation does permit activities that would otherwise be considered nuisances, against our recommendations, it should at least specify that those affected acquire broad compensation rights. To avoid disempowering potential victims, it is essential that laws regarding the transportation and disposal of nuclear waste provide for compensation for both the construction and the use of any facilities.

To assure people that, should harm come, they will be able to recover full damages, the implementing organization must maintain adequate insurance coverage on both transport and disposal activities. Furthermore, to ensure that victims will be able to obtain justice long after the implementing organization has ceased doing business, provisions should be made to finance future clean-up and compensation.

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Manitoba public utilities board inquiry into the future role of Central Gas Manitoba

February 26, 1996

 

Energy Probe’s Prefiled Evidence in Manitoba Public
Utilities Board June 1996 Inquiry into the Future Role
of Centra Gas Manitoba


Separating Gas Merchant from Distribution Functions in Manitoba
Pre-filed Testimony on Behalf of Energy Probe

Thomas Adams Senior Consultant Borealis Energy Research Association

Presented to the Manitoba Public Utilities Board

Regarding

REVIEW OF NATURAL GAS SUPPLY PROCUREMENT, TRANSPORTATION AND STORAGE FUNCTIONS OF CENTRA GAS MANITOBA INC. AND REVIEW OF GUIDELINES FOR ACCEPTABLE CONDUCT BETWEEN CENTRA GAS MANITOBA INC. AND AFFILIATED COMPANIES

Preamble

The following pre-filed testimony is submitted on behalf of the intervenor, Energy Probe. A résumé for the author is attached as Appendix A. The testimony responds to the “List of Issues” attached to the Board’s letter of January 19, 1996. A preliminary description of the testimony was provided to the Board in a letter from Energy Probe’s counsel, Mark O. Mattson, February 15, 1996. This testimony focuses primarily on issues of principle and regulatory policy rather than on empirical, quantitative analysis.

The Board’s Issues List and Our Response

Issue 1

i) Please describe current market conditions from the well head to the customers’ meters in the context of their structure, behaviour and stability in the areas of supply, transportation and storage. ii) In discussing the structure, behaviour and stability of the current market, please describe any constraints or concerns that unfavourably impact on the current marketplace.

Response

This testimony addresses key elements in the current market conditions in Manitoba related to market structure, the basic methods of price formation, and customer information.

Centra Gas Manitoba Inc. has a dominant position as gas merchant in Manitoba’s core gas market. This position is a reflection of past regulatory practice. Opportunities exist to change the market structure to benefit the public interest.

System gas pricing issues are now administered by way of a forecasted weighted average cost of gas (WACOG) and a deferred purchase gas variance account (PGVA). Direct purchase pricing is managed by way of monthly buy/sell reference prices. Residential customers receive a bundled price for system service.

WACOG is widely recognized as an inefficient means of price formation which leads to the likelihood of inaccurate prices being received by consumers in the marketplace. Average cost pricing is an undesirable residue of administered pricing regimes which existed prior to the advent of market pricing. WACOG is based on forecasts of market prices and customer use volumes, forecasts which can and have been significantly in error. The result often is inefficient pricing signals being provided to the market. Average cost pricing for energy commodities leads to many well recognized ill effects, particularly incentives for excess conservation during times when the average cost exceeds market price and incentives for excess consumption during times when market price exceeds average cost.

Under the former regime of totally regulated gas prices, WACOG created the appearance of price stability. However, evolution toward market pricing has revealed WACOG to be inherently unstable. Customers, at liberty to move to and from utility system gas, have an incentive to abandon system gas when market prices are falling. Conversely, when market prices are rising, customers flock back to system gas. Customers who seek security by staying on system gas are buffeted by these moves as WACOG reacts to changing demands and prices in a lagged fashion.

Reliance on a forecasted WACOG creates a need for a PGVA. PGVA protects utilities from price forecast error, which in itself is good. However, PGVA does not solve the fundamental problems created by WACOG. PGVA adds to inefficiency and administrative burdens while creating unfairness. Use of PGVA results in rate making after the fact. Clearing PGVA balances can lead to significantly distorted prices in the market place whereby current users contribute to, or benefit from, the activities of previous users.

Buy/sell reference prices are artificial pricing constructs that also create inefficiency. Reference prices have the potential to deflect from market prices. Reference prices may also deflect significantly from WACOG and the prices received by customers. In addition, reference prices can constitute an artificial barrier to the development of competition. Non-utility gas vendors are exposed to the risk of reference prices fluctuating not only due to changes in the underlying market prices but also due to actions of buy/sell price administrators.

Bundled prices, which Manitoba residential gas consumers now receive for gas service, pose an additional and substantial artificial barrier to entry for competing suppliers. Some of the key costs within the service bundle include costs for the commodity, transmission, storage, load balancing, metering and billing, and distribution. Without completely unbundling prices, the further development and differentiation of the gas market—whether driven by customer knowledge and choice, or by the entrance of competing suppliers of some of these services that are suited for competition—will be hampered unduly.

Looking at the prevailing market conditions from the vantage point of the small user, gas commodity competition is weak as it is dominated by utility gas, what competition exists presents itself to the customer as an opportunity for rebates rather than pure prices, price drivers are artificially bundled and opaque, and choice among purchase options is virtually non-existent.

Issue 2

i) What changes in the current marketplace do you recommend? Please explain your recommendation providing estimates of the economic benefits and risks of such changes by customer class. ii) In making your recommendations, please discuss the anticipated market structure, behaviour and stability in the changed environment including any constraints or concerns that may impact on the function of such a changed marketplace.

Response

I recommend that the Board move in an orderly but determined way toward a pure utility by completely separating from regulation all functions suited for competitive market delivery, particularly the merchant function. My purpose in recommending enhanced supply competition is to improve efficiency, expand customer choice, and strengthen customer protection. Competition in the merchant function is best achieved through separation from the distribution business. In turn, separation of the merchant function is best achieved by restructuring elements of the utility currently performing the merchant function into a separate enterprise and selling that enterprise to different owners. My second main recommendation is that the Board should move the utility toward maximally efficient, unbundled prices for regulated goods and services.

Gas deregulation to date has produced many successes: lower rates for consumers, improved utilization of capital resulting from developments such as the secondary market for pipeline capacity, and more efficient gas purchasing practices. Even those who have not participated in direct purchase have benefitted from commodity deregulation. These gains suggest strongly that consumers and the public interest will benefit by pursuing further deregulation.

The public interest is unlikely to benefit by keeping regulatory control over the pricing and provision of energy goods and services if they are suited for delivery to customers in a competitive market.

Selling the merchant business at its market value is a method of achieving complete separation while keeping existing shareholders whole.

By boosting competition, separating the merchant business from the distribution business will have the beneficial effects of encouraging a greater range of products and services to further customer choice and of enhancing the flexibility of the gas market to respond to changing market conditions. In addition, separation will simplify the regulatory process by eliminating the effort associated with commodity regulation, thereby allowing regulators to focus more on decisions related to the pure utility. Competition increases the range of interests participating in the gas market, which can have many indirect effects such as strengthening the regulatory process by expanding the range of perspectives available to the Board.

I recommend that the Board pursue unbundling of prices for discrete goods and services remaining within the regulatory ambit. Unbundling will benefit consumers directly by empowering them to make more informed energy decisions. As well, unbundling will benefit consumers indirectly by enhancing the potential for competition to develop. Candidates for unbundled prices include, but are not limited to, transmission services, storage services, customer accounting including metering and billing services, and load balancing. Unbundled prices will reveal to customers the underlying factors that drive their cost of service. Non-utility service providers will be able to acquire utility services for re-bundling with competitive services to provide new products that meet customer needs and enhance choice.

The Board should commit the gas industry in Manitoba to moving away from WACOG and buy/sell reference prices, and to replace them with market prices. Separating the merchant function for regulation will assist in this transition. The gas commodity market, in its current state of development, can be described as mature, highly liquid, competitive, and continental in scope. Market prices, in my opinion, are an excellent reflection of marginal cost. Beyond eliminating the inefficiencies and competition damping tendencies of WACOG and buy/sell reference prices, the positive benefits I would anticipate from market pricing for gas include increasing awareness of the seasonality of the value of gas, enhancing incentives for energy conservation on peak, and reducing costs for achieving service security during times of supply constraint.

One method of eliminating WACOG and buy/sell reference prices while enhancing customer choice is now being advanced in Ontario. The development of innovative Agent, Billing and Collection (ABC) service in Ontario, which I expect will provide significant benefits to customers, is a concrete example of benefits from both commodity deregulation and unbundling.

More than two years ago, Energy Probe developed and promoted the concept of fixed-price/fixed-term gas contracting for residential consumers. Under Energy Probe’s scheme, gas marketing would work like mortgage marketing in that competing marketers could offer consumers a menu of packages featuring various levels of price risk and time duration. The marketer would offset customer requirements by making matching orders to buy from gas sellers. Small users would gain the opportunity to eliminate uncertainty in commodity gas costs.

Happily, some utilities are now starting to enable customers and non-utility suppliers to make arrangements for fixed-price/fixed-term service. The three major Ontario distributors have recently committed themselves to provide ABC service for customers and their non-utility suppliers. Use of the ABC concept will allow residential and small general service customers the option of price security for fixed terms. For customers of Consumers Gas on ABC service, bills will separately identify fixed monthly charges, delivery charges, and commodity costs. The commodity supplier will also be identified on the bill along with its contact phone number. This separately identified information will allow customers to become much better informed about their gas service.

Under ABC, the price that customers receive for their commodity gas is negotiated directly with the supplier and not reliant on WACOG or buy/sell reference prices.

In Ontario, the organizational drive to develop ABC has come from non-utility suppliers seeking methods of responding to customer needs. Utilities are facilitating ABC by sufficiently unbundling and expanding their service offerings to allow marketers to couple Western Bundled T-Service with an Agency Billing and Collection service agreement. Without deregulation and unbundling, fixed-price/fixed-term service would probably not have become available.

ABC service is now before the Ontario Energy Board for approval in the current Consumers Gas rates case. I anticipate that ABC service will be in place for residential and small general service customers by the fall of this year.

Unfortunately, the future of the ABC option is clouded by the expressed intentions of Ontario distribution utilities to offer competing options through streamed prices. If the utilities pursue fixed-price/fixed-term service within the ambit of regulation, the integrity of the competitive environment could be threatened. Potentially, competitors will be unwilling to commit themselves to fully develop the market due to the threat of utilities competing against them using the many special advantages inherent to monopolies. The Ontario utilities have not yet released the details of their fixed-price/fixed-term rate plans. If their plans allow these rate options to remain outside and unrelated to regulation, gas customers will be better off.

Issue 3

Please describe the role of Centra Gas Manitoba Inc. in any changed marketplace including a description of what is the “minimum level of service” that can or should be provided by the utility.

Response

Any changes to the prevailing service arrangements in Manitoba must ensure protection of the interests of default customers—those who, for whatever reason, do not choose to deal with non-utility suppliers. Default customers should be supplied with system gas. System gas would be priced on as short a term as practical. The purpose of short term pricing is to eliminate the problems created by WACOG. Customers on system gas who seek price stability would be able to make arrangements with a non-utility supplier.

Issue 4

If the minimum level of service does not include natural gas procurement, transportation or storage, please discuss separation issues related to existing contracts, security of supply, obligation to serve, backstopping, nominations and load balancing.

Response

Under my merchant function separation and service unbundling proposals, the distributor’s obligation to supply would be unchanged. Existing commitments must be met regardless of separation decisions. I have commented on backstopping under Issue #3 and only have comments on load balancing to add.

As the gas market in Manitoba matures further, utility load balancing may eventually be reduced in importance and phased out from the pure utility. Utility load balancing may be replaced by efficient, alternative means of meeting the need. The development of an efficient and liquid spot market price for gas at relevant delivery points within Manitoba, particularly if combined with more advanced means of pricing gas at the meter and communicating those prices to consumers, could eliminate the need for utility load balancing services. Demand-sensitive prices in a mature market may eventually contain sufficient information to stimulate appropriate responses from transmission and storage service providers as well as consumers in order to balance loads reliably.

Issue 5

Describe what regulatory directives or legislative amendments may be required to support such changes. Please discuss what regulatory framework would be required in the new environment.

Response

I have no specific submissions on amendments to Manitoba laws or regulatory directives to implement these proposed changes.

Issue 6

Please describe any transitional considerations as well as a timetable for transition. Please discuss the dissemination of market information under the changed environment.

Response

The Board should encourage the utility to maximize supply flexibility. Flexibility will ensure that future commitments to storage, transportation, and commodity gas are not “strandable.” In the interests of fairness, all gas users should be allowed to come and go from system supply only on terms that leave other users unaffected. However, the flip side of this commitment ought to be that utilities manage themselves so as to maximize customer choice. Put another way, inflexible supply commitments, being impediments to customer choice and competition, ought to be minimized.

The market share of gas supply competitors after separation should be allowed to develop in a climate of fair competition. Complete separation in the merchant function is a most effective way to achieve fair competition. However, in the short run, the former utility affiliated gas merchant might enjoy substantial market share. I recommend extreme caution or forbearance in using regulation specifically to dilute market share. Assigning the appropriate market share would be entirely arbitrary. Competition will cause market shares to evolve over time.

Deregulation has been a success to date. However, the exact manner in which consumers have benefitted would have been impossible to predict at the outset of the process of deregulation. Similarly, it would be unreasonable now to demand predictions about the benefit of further deregulation. Deregulation will create incentives for producers to develop new products and find efficiencies, but we cannot now know what they will be.

Issue 7

Please discuss the guidelines for acceptable conduct between Centra Gas Manitoba Inc. and affiliated companies, including the methodology and costing for the transfer of assets, the sharing of resources including human resources and the use of a common name.

Response

Incomplete divestiture of the merchant business would be a costly second-best relative to complete separation. Problems created by adopting the second best include the question of how to manage and regulate affiliate transactions, who should bear the cost of regulating affiliate transactions, how to impute a value for the use of the utility’s name, what to do about the utility’s special access to information about customers such as load patterns and credit history, and how to ensure comparability of service to affiliates and competitors. Each of these problems is highly complex and controversial. A complete enquiry into these subjects would be a major undertaking. In the event of incomplete divestiture, affiliated companies and utility parents will have powerful profit-based incentives to skew the outcome in their own interest. At every turn, regulators will be confronted with impediments to their ability to serve the public interest.

Cleanly separating the merchant function from the distributor through a change in ownership eliminates these difficult problems. Affiliate transactions would not be an issue because the divergent interests of different owners would eliminate the problem of cross-subsidies. Without the risk of cross-subsidies, there would be no need for regulatory oversight over the merchant. The value of utility’s name and reputation would be recognized in the sale price. Similarly, information obtained by the utility merchant would be recognized in the sale price but after the sale, the former utility merchant would have to obtain market information by the same means available to any other vendor.

This concludes my pre-filed testimony.

 

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