The Federal Regulation of Electricity Exports

Lawrence Solomon
Submission to the National Energy Board
September 26, 1986

Energy Probe Research Foundation, an independent think tank on energy issues funded primarily by some 20,000 supporters across Canada, supports the government’s desire to deregulate the electricity export sector, as we have supported prudent deregulation in the entire energy sector. We have favoured world oil prices since 1974, the decoupling of oil and gas prices since 1978, the across-the-board removal of subsidies to all energy projects since 1980, and the breakup of electric utility’s monopoly over generation since 1982. Deregulation, we feel, has been an important contributor to our nation’s energy security, primarily because it has allowed many conservation technologies to compete. As deregulation takes firmer hold, we believe more conservation technologies and decentralized renewable energy technologies will be given the right to compete, further assuring our nation’s security of supply. With full deregulation, we believe that the demand for energy, including electricity, will be at least halved, as the energy sector becomes dominated more and more by service corporations selling demand management and other conservation techniques.

Deregulation, in our view, is not always appropriate. Whenever technology or social institutions cannot internalize all the costs of an endeavour, and innocent third parties or the environment may be affected, regulations must be maintained. As you will see from the balance of my presentation, there are several instances in which regulations may be safely relaxed, and several where they need to be maintained or even strengthened.

Regarding Overlap Between Federal and Provincial Regulation in Electricity Exports

It is our position that the interests of Canadians would be best served by treating electricity like any other commodity, like one not considered to be of strategic or national interest. As electricity is ordinarily a provincial resource, its export should not be regulated at the federal level, except under limited circumstance. These include:

  • where cross-boundary impacts, such as acid rain, are significant 
  • in case of war, or other emergency 
  • where the owner of the resource is federal, or where federal lands are involved 
  • where areas under federal jurisdiction, such as native rights or nuclear energy, are involved.

Even in these instances, our preference is that appropriate government departments, such as the Departments of Environment, Indian and Northern Affairs, and External Affairs, be involved, rather than the NEB. The resulting absence of a regulatory role for the NEB would leave the Board free to play a strong advisory role, to conduct inquiries such as this one free from the conflicts noted by the Law Reform Commission of Canada, which maintains that the Board’s responsibility of being both an advisor and the regulator who would be carrying out the advice, constitutes a conflict of interest.

In our preferred scenario, regulation of electricity exports would devolve to the provincial level, soon leading to a diversity of approaches. This diversity, we feel, would lead to national benefits, as jurisdictions which had developed more desirable regulatory regimes would be emulated by those who had not. Such a devolution would also lead to greater public participation, as it would generally be easier for intervenors to become involved in local hearings.

Regarding the method used in determining whether the electricity to be exported is surplus to Canadian reguirements

Until such time as regulation becomes a provincial responsibility — and as long as the electricity marketplace prevents or limits competition from conservation and decentralized renewable electricity sources — the NEB will likely continue to be charged with the responsibility of ensuring that Canadian consumers are protected. My presentation thus assumes a continuing regulatory role for the NEB.

 

As this Board well knows, the forecasting of future demand for power is fraught with peril. Time and time again, predictions from sources such as utilities, governments, independent consultants and others, including this Board, have proven unreliable, resulting on the one hand in costly overexpansions of capacity domestically and on the other in the failure to maximize revenue from export sales.

Clearly, the dismal forecasting-dominated procedures of the past need to be overhauled. In their place, Energy Probe wishes to propose new operating principles that will reflect regional differences — such as different generating and conservation options and different volatilities in the economy. These principles will provide a high degree of confidence that the needs of domestic markets will be met, while allowing for firm sales in large quantities when appropriate.

These are two ways for a provincial utility to meet its domestic obligation to provide a secure supply of electricity into the future: by building additional generation capacity and/or transmission capacity for imports sufficient for its needs; and by experiencing a drop in domestic demand through conservation and efficiency measures. In either case, the assurance a utility is able to give the Board is inversely proportional to the lead time involved in building a new plant, or in bringing on new conservation measures. Utilities with a lead-time of 15 years, as is the case with those which prefer large-scale generating options, cannot quickly respond to an unanticipated change in domestic demand. The Board, to be prudent, should require very stringent guarantees that the needs of a province will be met, when confronted with a proposal from a utility which relies on long lead-time options. Conversely, when a utility relies on options which require short lead times, say of one or two years, the Board can be confident that, should demand patterns begin to change, the utility will be able to respond in a timely fashion. Export proposals from short lead-time utilities should thus require far less stringent guarantees. Similarly, proposals from the utilities of those jurisdictions which may have long-term conservation plans should require more stringent tests than those which can demonstrate plans for rapid energy conservation implementation should the need arise.

Many provinces often experience electricity growth rates in excess of seven percent, and several, such as New Brunswick, Alberta, and Saskatchewan, have recently experienced ten percent growth (although we have seen that past performance in electricity demand is no guarantee of future trends). In the absence of a competitive electricity sector, it is Energy Probe’s view that the Board should limit firm power sales on the following basis.

Assume that, for the life of the contract, a utility will be able to sustain a growth rate equal to the highest growth rate it achieved in any of its last ten years. Then, using the utility’s own measure of its ability to bring on new capacity or savings, determine if the utility’s domestic customers can be assured that their needs will be met. For example, in a jurisdiction where ten percent growth has occurred, a utility that had a 30 percent surplus (above its own reserve requirements) and a long lead time could thus enter into a contract to sell firm power only for the next three years (all 30 percent the first, less than 20 percent the second and less than 10 percent the third), while one with the same 30 percent surplus but a one- year lead time could sell the entire 30 percent on an indefinite basis.

To satisfy the Board that the lead-time requirement is met, utilities should advise the Board of their contingency plans should their surplus disappear. The feasibility of implementing the plans within the time-frame claimed by the proponent should be subject to challenge in public hearings.

Regarding the approval of export prices

As shown by Jenkins, Zucker, and the Economic Council of Canada (see appendices for excerpts), Canada’s utilities are highly inefficient enterprises that lead to economic waste on a very large scale (estimated by Jenkins at an annual loss of approximately one percent of Canada’s GNP). Much of this loss, as found in Blue Gold (Zuker and Jenkins) and “Public Utility finance and economic waste” (Jenkins), is exported to the U.S., in effect as a subsidy to our competitors.

The NEB, in approving electicity exports, should recognize that utilities are not profit maximizers, they are not subject to shareholder restraint, and they are often subject to their political masters. For this reason, long-term firm sales tied to the importing utility’s costs should be banned altogether. As an example, Manitoba Hydro’s sale of Limestone power to Northern States Power is pegged to NSP’s costs, which may drop dramatically in future due to wild cards such as a change in the value of the U.S. dollar, coal costs, and further railroad deregulation in the U.S. In several scenarios, the citizens of Manitoba may find they are assuming large losses for the benefit of U.S. consumers. This kind of speculation, from a private corporation whose shareholders are willing to assume those risks, is a private matter that Energy Probe would not want to interfere with. But when a crown corporation is involved, when its ultimate shareholders have no vote and cannot avoid unwanted risks by selling their shares, and when the power is held by a board of directors with political masters who have priorities not necessarily related to financial prudence, this speculation is abhorrent.

This ban on contracts tied to the importing utility’s costs should apply to all contracts of five years or more in duration.

For other contracts, the following factors and procedures should be incorporated to ensure that the country doesn’t suffer economic losses in its power export activities:

  • When transmission lines are built substantially for export, their capital costs should be charged to export sales, not to domestic customers, as is currently the case. Should the lines become necessary to import power at some future date (i.e., should they cease to be substantially dedicated to exports), an increasing share of their capital costs, if still being depreciated, could then be borne by domestic customers. 

     

  • Transmission corridors dedicated to exports are not at the service of the Canadian public, but are strictly pecuniary enterprises. For this reason, utilities must not be allowed to use the power of expropriation. Instead, the land required for the corridor should be purchased from landowners. 

     

  • The full environmental costs of any export endeavour should be considered a cost like any other and be factored into the export price formula to ensure that the Canadian environment, and Canadian owners of that environment, are not subsidizing our exports. For example, those who should be entitled to compensation for acid gas emissions include tourist operators who suffer economic losses due to acidified lakes, cottage owners whose properties become devalued, fishermen who may be affected, and forest and agricultural land owners whose resources are devalued. In addition, the health care system should be compensated for the medical costs associated with toxic emissions, including acid gas. 

    In many cases, there is a likelihood that costs which are unrecognized today may present themselves in future. To cover such contingenies, the Board should require that the exporter be expressly liable for such contingencies, and that the exporter take out insurance to cover these potential liabilities. This insurance cost should be considered a cost of exporting and factored into the price. When such insurance may be unavailable because the risks may be perceived by the insurers as too great (as may be the case with nuclear power), then the project should not be granted an export license. There is no evidence that Canadians are willing to assume uninsurable risks in return for the financial benefits associated with power exports, and it would be inappropriate for this Board to make any presumptions in this matter.

    In some cases, the environmental costs cannot be measured in economic terms — for example, when the survival of a community is at stake, or when a wilderness area of special significance is threatened. In these instances, the project should not proceed without the widest possible public review involving all parties involved. Some of these hearings may require a national debate, and if foreign interests are potentially harmed, then the debate should be international in scope.

     

  • Whenever environmental costs are assigned, and revenues for them collected, those revenues should, whenever possible, be directed to compensate the injured party. When the injured party cannot be identified, the revenues should go to the most appropriate government agency, in an attempt to indirectly compensate the injured parties. For example, monies to health care systems provide some compensation for health effects, and monies to environment ministries would help to mitigate or compensate for environmental damage. 

     

  • The revenue from “economy” export sales is currently determined by averaging the operating costs of the exporting plant and the importing utility’s marginal plant. This formula (P = [C+V]/2) results in discounted export prices, since in a competitive market the price would be much closer to the importing utility’s avoided, or marginal, cost. Where the utilities on both sides of the border are exporting comparable amounts of power, this formula has a ring of fairness to it since discounts are shared by both countries; but when structural differences in the electricity sectors in Canada and the U.S. guarantee that the export trade will be almost entirely one way, a change is in order. 

    Although higher export prices will lead to the loss of some sales to competing U.S. utilities, the overall revenue to Canadian utilities should be greater if the formula is revised to be more favourable to Canada. We recommend that the NEB commission an economic analysis of the effect of revising the [C+V]/2 formula to [C+2V]/3.

    In doing so, we acknowledge the difficulty in moving away from a cost-based formula to a market arrangement, especially when our competitors (U.S. utilities) maintain the [C+V]/2 system among themselves. Far from considering our [C+2V]/3 formulation a panacea, we regard it only as a step in the right direction.

     

Thank you.

 

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

Probability Times Consequence: Rational and Scientific, or Just Imprudent?

Norman Rubin
University of Waterloo Press
May 23, 1986

Originally presented at a Symposium on the Risks and Benefits of Energy Alternatives held at the University of Waterloo. May 20-23, 1986.

I’d like to begin with a few words of introduction, which might help prevent some misunderstanding of my position in this paper. Like most delegates to this conference, I was raised as a scientist and a quantifier-in my case, leading to a degree from M.I.T. just about twenty years ago. I am, in short, part of that minority in society which I and others often refer to as technocrats, technically literate, or occasionally as “techno-twits”. I am also, personally, not particularly risk-averse-and if anybody needs proof of that, just take a look at the car that I drove to this conference!

As part of my training at M.I.T., I was taught the meaning of “risk”. I was taught that risk is a technical term, that it is basically a negative value of the technical term “expectation”, and that it is equal to the probability of an unfortunate event multiplied by its consequence. Thus, risk, as I was taught, is one of several English words-like work, color, and charm-that scientists have borrowed or stolen and given very specific definitions. For example, I was also taught that work is the application of force through a distance, and is mathematically the force multiplied by (or integrated over) the distance.

It was made clear that the public, and the makers of dictionaries like Webster’s, continue to attribute other meanings to these words. So, for example, a Physics professor, who knows that work = force x distance, can still ignore that definition when talking to a teaching assistant who thinks that standing motionless in front of a class for thirty hours a week is too much work. In fact, the technical definition of work is obviously a nuisance in any discussion of human work, working conditions, labour relations, appropriate pay for doing work, etc.

In risk, as in work, it was made clear at M.I.T. (as it has been made clear at this conference) that the public definition and the technical definition are different. For example, as many speakers here have acknowledged, the high (estimated) consequences of potential catastrophes like nuclear meltdowns concern the public far more than the low (estimated) probabilities of those catastrophes. The technical definition obviously gives precisely the same weight to each.

But while the technical definition of work and the “normal person’s” definition of work were both acknowledged by my Professors to be meaningful concepts, I was taught that the public’s definition of risk is irrational, emotional-in short, a “Bad Thing”, to be educated out of them by scientists like us.

So, like most “techno-twits”, I was taught (1) that the concept of risk is linear from zero to infinity, (2) that it is the product of probability and consequence, each of which is also linear from zero to infinity, (3) that probability and consequence are not only commensurable, but interchangeable, and (4) that anybody who disagrees is irrational and uneducated. Implicitly, if not explicitly, I was taught that public policy on hazards should be designed to minimize the product of probability times consequence, and that society should spend money avoiding hazardous activities only when it is cost-effective to do so, using that technical definition of risk.

The problem with all of this is simply that none of it is science, although it is taught in science classes. It is either religion or politics, but it is not science. In fact, I would suggest that it is precisely part of the current religion of science.

As religious dogma, the technical view of risk is unchallengeable. But as science-thai is, as a guide to rational thought-the technical view of risk is a bit like Newtonian physics: it works well as a rule of thumb as long as all the numbers are “in the middle of the scale”. But when the numbers become extremely large or extremely small, it breaks down-in fact, it produces patent nonsense. So, for example, I myself multiply probability times consequence when I play poker, but only when I am betting amounts I can easily afford to lose.

In fact, I believe the behaviour of scientists as human beings generally violates their own stated definition of rational behavior, where risk is concerned. Two questions are illustrative here: (1) How does a scientist gamble? and (2) How docs a scientist insure? I suspect that there are very few scientists who would bet their house, or their entire estate, on even a very good poker hand. Yet, if the probability of winning is over 50%, the effect of not betting, or of betting less, is (according to the linear definition) tantamount to throwing away large sums of money, which scientists do not usually do. Here the scientists throw out their linear risk-benefit calculations and agree with the public’s common-sense idea of prudence: betting the farm-even on a very good hand-is imprudent and irresponsible unless there’s no alternative. In short, the public and the scientistgambler agree in this case that consequence (losing the farm, the’house, the
whole estate) is simply more important than probability (odds are, you won’t lose).

Similarly, I suspect that many of you now hold insurance policies. Yet it is childishly simple to show that any insurance policy (unless it was acquired fraudulently) decreases your expectation and increases your “technical” risk. So, for example, if you have examined your estate, and determine that it is, say, 550,000 smaller than the minimum amount you would consider “acceptable” for your spouse and children to have if you died tomorrow, you would probably respond by buying a $50,000 life insurance policy. But if there is statistically a one-in-a-hundred chance of your dying this year, the risk that the policy eliminates is exactly $500 (1/100 probability times $50,000 consequence), and the policy will surely cost more than that. Why would a scientist ever insure? Simply because, as in this case, the consequence-dying and leaving your heirs impoverished-is unacceptable, even though the probability is low. As human beings, even scientists understand that “It’s only one in a hundred” is not a satisfactory answer to an unacceptable consequence, if the risk is your own. The only satisfactory answer is to make it zero, to take it away, which is exactly what the insurance company does for a fee. Another policy, that would pay the $50,000 on your death nine times out of ten, or even ninety-nine times out of a hundred, would not solve the problem, because the problem is neither probability, nor probability times consequence, but the presence of a non-zero chance of an unacceptable outcome.

So, the scientist’s behaviour, when gambling or insuring, generally departs from the “rational”, linear model in favour of the public, “irrational” human aversion to unacceptable, catastrophic consequences-even unlikely ones. This generalhuman attitude is well encapsulated by what I call The American Express Principle: “Never carry more than you can afford to lose”.

At several points during this conference, we have already heard the overwhelming majority of delegates, from the nuclear industry, agree that “the public doesn’t understand risk,” and more specifically that “the public understands consequences, but doesn’t understand probability.” I see the public’s attitude toward nuclear risks in a different way: (1) the public doesn’t put its faith in vanishingly small theoretical probabilities of inherently possible failures in new poisoncontainment systems like nuclear reactors, and (2) the academic/nuclearindustry “risk” community does not understand how and why the public values consequences-specifically, catastrophic consequences~as it does.

The basic reason for the public attitude-and the reason that it is ultimately more rational than minimizing estimated probability times estimated consequence-is survival. And by survival I do not primarily mean survival of the individual, but of the group: the family, the tribe, the village, the nation, the culture, the race, the species. We are, all of us, the direct descendants of a long line of survivors, and our genes and our culture reflect that evolution. There may have been tribes of ancients that hit on the idea of minimizing the product of probability times consequence. It would be fascinating to interview their descendants, but it is impossible, for they long ago became extinct. One can imagine a situation: crop failure, the tribe is hungry enough that they estimate that, on average, two of their fifty members will be weakened enough overnight that they will die. But they have found a field full of a new mushroom, that looks quite a bit like a mushroom that is safe and nourishing. Their wise men estimate that there is only one chance in fifty that the mushroom is poisonous. Their choice is mathematically
obvious, and leads eventually, inevitably, to extinction. Our ancestors fed the mushroom to the dog.

If there is one thing that is clear, it is that our modern society has increased its power to threaten group survival, perhaps even the entire human species. And those few specific technologies that create most alarm in the public are all credibly group-threatening: chemicals, nuclear energy, genetic engineering, and of course nuclear weaponry. I personally believe that all of these are in fact credibly species-threatening-although I would be content for today to have you delegates agree on the principle and agree to disagree on the technologies.

To take a locally less controversial example than nuclear energy: the experts in Washington are apparently convinced that building about 1500 nuclear warheads this year-and avoiding a Freeze and a Comprehensive Test Ban-will make the world safer, presumably by lowering the probability of nuclear war. The public clearly favors a Freeze, and is apparently more eager to reduce the consequences of nuclear war (by decreasing, not increasing, the number of warheads) than the experts.

One similarity between the nuclear weapons industry and the nuclear energy industry is that both are dependent on the spending of public (i.e., taxpayer) funds for their continued existence, so the views of the public should, at least in theory, be easier to impose than in a largely private endeavour like the chemical industry.

Given the human response to unacceptable consequences-“Don’t make it unlikely, take it away”-it is illustrative to compare the response to two recent catastrophes: Bhopal and Chernobyl. First, who are the actors? At Bhopal, themain actors in risk decisions are corporate risk managers, acting on behalf of their shareholders/investors, and the insurers, who will pay the first several hundreds of millions of dollars of the settlements of the accident. At Chernobyl, the main actors are the Soviet and Ukraine nuclear and economic technocracies, and the governments.

Second, what is the response? At Bhopal, it appears that a solution is being implemented, in all the plants that use MIC (Methyl isocyanate), to eliminate completely the bulk storage of MIC, by manufacturing it only at the moment it is needed. Unlike the other possible responses-stronger tanks, stronger buildings, backup cooling and drying systems, computer-controlled emergency response, and so forth-the chosen solution actually addresses the public’s concern (which in this case roughly coincides with the company’s and the insurer’s) by eliminating the possibility of an unacceptable consequence. The other, rejected solutions do not eliminate the unacceptable consequence, but make it less likely. In other words, a high-consequence problem has, it seems, received an appropriate, consequence-lowering solution.

At Chernobyl, it is too soon to see what the ultimate response will be, but the possibilities include: shutting down the RBMK-1000 reactors, slowing down the construction of nuclear stations in general or of nuclear stations near population centres, building better containment buildings, installing better/more engineered safety systems, and providing computer control of reactors. Except for the first two, which would be unpalatable to any nuclear industry, all the solutions address the probability of a catastrophe, not its consequences or its possibility. In fact, the catastrophic hazard in a large nuclear reactor is inherent. One simply cannot eliminate fission products and actinides (or decay heat production) from a nuclear plant the way one can eliminate bulk MIC storage from a pesticide factory.

Finally, it would be illustrative for the nuclear-dominated academic risk community to look at the other professional risk communities: the financial/corporate risk-takers (investors and corporate risk managers) and the insurance industry. For the former, the key risk issue is containing risk-that is, limiting consequences. Thus, it is the corporate risk managers in chemical companies that are leading the push for non-catastrophic processes (may it continue!). For the insurance industry, increasing consequences generally lead to higher rates, in a more-or-less linear fashion, until the consequences become unacceptable to the company. At that point, the insurers write in a specific exclusion or limitation in the policy. In other words, they behave just like normal people, faced with an unacceptable consequence: they say “Don’t tell me it’s unlikely. Don’t ask me how unlikely is unlikely enough. Take it away.”

Of course, among the occurrences insurers have refused to insure is the property damage from a nuclear plant accident. Your home-owner policies have a specific exclusion in this regard. In terms of the operator’s liability for property damage and bodily harm from a nuclear plant accident, the risk-makers and the insurers have insisted on nuclear-specific legislation to reduce their liability. In the U.S., it’s the Price-Anderson Act; in Canada, it’s the Nuclear Liability Act It is worth asking whether or not the nuclear manufacturing industry, and its risk experts, would be willing to take the financial risks of nuclear power-those now borne by taxpayers, and those now borne by potential accident victims.

In closing, the risk-assessment community should be very slow to try to influence public policy or public opinion in this field until it has devised a model of risk that is at least half as subtle, sophisticated, and especially as survivalenhancing as the public attitudes that it criticizes. One approach could be to try to model group survival: program one group to minimize probability times consequence, and another to avoid all avoidable catastrophes, and see which one survives for more generations. If the “rational” group wipes itself out first, go back and change your definition of what is “rational”.

Any model of risk-aversion (like risk = probability x consequence) that is less subtle and less survival-enhancing than the public response that got our ancestors and us this far is not a positive contribudon to the public-policy debate, and will continue to be ridiculed by the public. And rightly so.

Read Norm Rubin’s Bio

Posted in Nuclear Safety | 2 Comments

Limit on nuclear liability law challenged

Limit on nuclear liability law challenged

Christie McLaren
The Globe and Mail
August 7, 1985

13 groups launch action

If a nuclear disaster similar to Chernobyl happened in Canada, the nuclear industry would pay only a fraction of the cost of the damage to people, homes and property because it is protected by a federal law, documents filed in the Supreme Court of Ontario say.

In sworn affidavits filed with the court yesterday, the anti-nuclear group Energy Probe and 12 other plaintiffs launched a constitutional challenge to the federal Nuclear Liability Act, which ensures that the nuclear industry pays no more than $75-million if there is an accident at a Canadian-built Candu nuclear reactor.

A major accident “would cause human health and property damage far in excess of $75-million,” said Ralph Torrie, an energy researcher and policy analyst.

Mr. Torrie – an expert adviser to the Ontario Nuclear Safety Review, a Government-appointed committee studying the safety of Ontario Hydro’s nuclear reactors – said that Candu reactors are not immune to catastrophic accidents for several reasons.

In addition to the large amounts of radioactive material and stored-up energy in Candu reactors, Mr. Torrie cited other factors that point to the possibility of major accidents: the poor performance record of some safety features; the aging of reactor parts; and the fact that the federal Atomic Energy Control Board does not require older plants to be fitted with the most up-to-date safety features.

The possibility of an accident “exists in all large thermal power reactors,” he said, “and the Candu is no exception.”

Currently, 22 Candu nuclear reactors are operating or under construction in three Canadian provinces – Ontario, Quebec and New Brunswick. Ontario Hydro’s 16 reactors at the Pickering and Bruce power stations represent one of the largest geographical concentrations of nuclear power in the world.

The Nuclear Liability Act – passed by Parliament in 1970 and proclaimed into law in 1976 – says, in effect, that companies supplying parts to Canadian nuclear reactors are free from liability claims if the parts fail and cause an accident.

If there is an accident, the law ensures that reactor operators such as Ontario Hydro and the New Brunswick Electric Power Commission would be legally liable for no more than a maximum of $75-million.

In the United States, the liability limit was raised last week to $7-billion – more than 100 times higher than Canada’s limit. This is the maximum amount that all victims, combined, of a single accident at a U.S. nuclear power plant could collect.

Quoting from a 1978 report by the Ontario Royal Commission on Electric Power Planning, Mr. Torrie said a catastrophic accident at a Candu reactor would release a cloud of radioactivity that would be carried downwind, producing “both prompt and latent cancers” and threaten the public with contaminated food and water.

According to the royal commission, he said, the risk of a reactor accident in Canada was 100 times higher than official industry estimates.

In addition to cancer, Dr. Harry Griffiths, chief of radiology at Toronto General Hospital, said in an affidavit that radiation can lead to genetic mutation and birth defects.

“Exposure to even minute quantities of ionizing radiation” from a nuclear accident “creates a risk of cancer for the person exposed and a risk of genetic mutation for descendants of that person, and a teratogenic risk (a risk to normal development) of children exposed in utero,” Dr. Griffiths said.

Norm Rubin, director of nuclear research at Energy Probe, said in another affidavit that the April, 1986, accident at the Chernobyl reactor in the Soviet Union released clouds of radioactivity that drifted around the world, killed at least 31 people, and, according to Soviet estimates, caused more than $3-billion (U.S.) in economic costs in that country.

In addition, the Swedish Government will pay an estimated $200-million in damages to reindeer herders in Lapland whose animals were contaminated and deemed unfit for human consumption by the radiation, 1,500 kilometres from Chernobyl.

If a catastrophic reactor accident happened at Ontario Hydro’s Pickering Generating Station near Metro Toronto, Mr. Rubin suggested, the radiation could “encompass virtually all of Ontario, Quebec and the Maritime provinces.”

He said Canadians cannot fully protect themselves financially because insurance companies routinely refuse to insure people against nuclear incidents in many of their policies.

He said the Nuclear Liability Act is “incompatible with the claims of the (nuclear) industry” and the federal Government that a serious reactor accident in Canada is improbable or impossible.

Last week, the U.S. House of Representatives voted overwhelmingly to raise the nuclear industry’s liability to $7-billion from $705-million in case of an accident.

Spokesmen for the Canadian nuclear industry have argued that the federal law protects Canadians.

Ian Wilson, a vice-president of the Canadian Nuclear Association, said last spring that the law makes nuclear operators absolutely liable, so damages in the event of a reactor accident can be claimed without proving negligence in court.

If damages exceed $75-million, Mr. Wilson said, the federal Government has the power to pay for the rest of the costs. He added that it may be appropriate to raise the $75-million limit.

No date has been set for the court case, which has been absorbed with preliminary motions on various legal procedural matters.

On Aug. 27, lawyers for the provincial Crown corporations, Ontario Hydro and New Brunswick Power, will argue that Energy Probe and the other plaintiffs do not have legal standing to challenge the Nuclear Liability Act.

13 groups launch action

If a nuclear disaster similar to Chernobyl happened in Canada, the nuclear industry would pay only a fraction of the cost of the damage to people, homes and property because it is protected by a federal law, documents filed in the Supreme Court of Ontario say.

In sworn affidavits filed with the court yesterday, the anti-nuclear group Energy Probe and 12 other plaintiffs launched a constitutional challenge to the federal Nuclear Liability Act, which ensures that the nuclear industry pays no more than $75-million if there is an accident at a Canadian-built Candu nuclear reactor.

A major accident “would cause human health and property damage far in excess of $75-million,” said Ralph Torrie, an energy researcher and policy analyst.

Mr. Torrie – an expert adviser to the Ontario Nuclear Safety Review, a Government-appointed committee studying the safety of Ontario Hydro’s nuclear reactors – said that Candu reactors are not immune to catastrophic accidents for several reasons.

In addition to the large amounts of radioactive material and stored-up energy in Candu reactors, Mr. Torrie cited other factors that point to the possibility of major accidents: the poor performance record of some safety features; the aging of reactor parts; and the fact that the federal Atomic Energy Control Board does not require older plants to be fitted with the most up-to-date safety features.

The possibility of an accident “exists in all large thermal power reactors,” he said, “and the Candu is no exception.”

Currently, 22 Candu nuclear reactors are operating or under construction in three Canadian provinces – Ontario, Quebec and New Brunswick. Ontario Hydro’s 16 reactors at the Pickering and Bruce power stations represent one of the largest geographical concentrations of nuclear power in the world.

The Nuclear Liability Act – passed by Parliament in 1970 and proclaimed into law in 1976 – says, in effect, that companies supplying parts to Canadian nuclear reactors are free from liability claims if the parts fail and cause an accident.

If there is an accident, the law ensures that reactor operators such as Ontario Hydro and the New Brunswick Electric Power Commission would be legally liable for no more than a maximum of $75-million.

In the United States, the liability limit was raised last week to $7-billion – more than 100 times higher than Canada’s limit. This is the maximum amount that all victims, combined, of a single accident at a U.S. nuclear power plant could collect.

Quoting from a 1978 report by the Ontario Royal Commission on Electric Power Planning, Mr. Torrie said a catastrophic accident at a Candu reactor would release a cloud of radioactivity that would be carried downwind, producing “both prompt and latent cancers” and threaten the public with contaminated food and water.

According to the royal commission, he said, the risk of a reactor accident in Canada was 100 times higher than official industry estimates.

In addition to cancer, Dr. Harry Griffiths, chief of radiology at Toronto General Hospital, said in an affidavit that radiation can lead to genetic mutation and birth defects.

“Exposure to even minute quantities of ionizing radiation” from a nuclear accident “creates a risk of cancer for the person exposed and a risk of genetic mutation for descendants of that person, and a teratogenic risk (a risk to normal development) of children exposed in utero,” Dr. Griffiths said.

Norm Rubin, director of nuclear research at Energy Probe, said in another affidavit that the April, 1986, accident at the Chernobyl reactor in the Soviet Union released clouds of radioactivity that drifted around the world, killed at least 31 people, and, according to Soviet estimates, caused more than $3-billion (U.S.) in economic costs in that country.

In addition, the Swedish Government will pay an estimated $200-million in damages to reindeer herders in Lapland whose animals were contaminated and deemed unfit for human consumption by the radiation, 1,500 kilometres from Chernobyl.

If a catastrophic reactor accident happened at Ontario Hydro’s Pickering Generating Station near Metro Toronto, Mr. Rubin suggested, the radiation could “encompass virtually all of Ontario, Quebec and the Maritime provinces.”

He said Canadians cannot fully protect themselves financially because insurance companies routinely refuse to insure people against nuclear incidents in many of their policies.

He said the Nuclear Liability Act is “incompatible with the claims of the (nuclear) industry” and the federal Government that a serious reactor accident in Canada is improbable or impossible.

Last week, the U.S. House of Representatives voted overwhelmingly to raise the nuclear industry’s liability to $7-billion from $705-million in case of an accident.

Spokesmen for the Canadian nuclear industry have argued that the federal law protects Canadians.

Ian Wilson, a vice-president of the Canadian Nuclear Association, said last spring that the law makes nuclear operators absolutely liable, so damages in the event of a reactor accident can be claimed without proving negligence in court.

If damages exceed $75-million, Mr. Wilson said, the federal Government has the power to pay for the rest of the costs. He added that it may be appropriate to raise the $75-million limit.

No date has been set for the court case, which has been absorbed with preliminary motions on various legal procedural matters.

On Aug. 27, lawyers for the provincial Crown corporations, Ontario Hydro and New Brunswick Power, will argue that Energy Probe and the other plaintiffs do not have legal standing to challenge the Nuclear Liability Act.

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Thank you for making the demise of nuclear power possible

Thomas Adams
Energy Probe

December 31, 1969

The era of nuclear power is coming to a close and your support for Energy Probe is a big part of the reason. For decades we have advocated a non-nuclear future for Canada, pointing out the environmental and economic irresponsibility of continuing with the nuclear option. Ontario Hydro is finally starting to appreciate the truth of this position and is closing seven more reactors on top of the one reactor that closed in 1995.

Our work would not have been possible without the financial and moral support of thousands of individual Canadians like you. We wish to express our deep gratitude to everyone for their confidence in us.

Our work is not finished. Fourteen nuclear power reactors will remain in use in Ontario, New Brunswick and Quebec after the seven closures are completed next year. In addition, Ontario Hydro is threatening to restart its reactors at some undetermined future date. We need your support to continue the fight to permanently close all the nuclear plants in Canada.

Ontario Hydro is also threatening to replace the dying nuclear plants with dirty coal-fired power. Energy Probe is advocating an environmentally and economically attractive alternative to the irresponsible coal option, based on the principles of customer choice, efficiency, and tight regulation of polluters. We need your support to ensure that cogeneration and renewable energy, not coal, replace the dying nuclear plants.

Please give generously so we can finish the job.

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CANDU Reactors – buyer beware

December 31, 1969

Every nuclear reactor is a disaster waiting to happen — and CANDU reactors are no exception. Canadian utilities are no longer building CANDU reactors because of their high cost and poor performance. CANDUs have a number of serious technical, and safety problems, as well as the unique environmental problem of tritium emissions.

However, Atomic Energy of Canada Ltd. (AECL), a Canadian government agency, is still trying to sell CANDUs — let the buyer beware! CANDU reactors will inevitably worsen the economic and environmental situation of importing countries.

The CANDU has been a marketing failure. Despite 35 years of effort, only six commercial CANDU reactors have been sold outside of Canada. Canada has only 22 commercial power reactors, one of which is being shut down early due to technical problems. All of these reactors have been heavily subsidized by Canadian taxpayers. CANDUs account for only about 5% of power reactors in operation and under construction worldwide. With the failure of CANDU sales, it is not likely that the Canadian government will continue to support the nuclear industry as it has in the past. Thus, CANDU buyers may be left without adequate research and technical support in the future.

CANDU Reactors: Not Economic

The cost of new CANDU reactors are mainly determined by the initial capital cost, and the performance of the reactor over time. In addition there are operating and maintenance costs and the need for large ongoing capital expenditures.

Initial Capital Cost — Because of the need for heavy water to be used as moderator and coolant, the CANDU is even more expensive than other reactor systems. High capital cost has killed nuclear power expansion in Canada — in the last 25 years, the cost of CANDU reactors has more than doubled in real terms.

Cost overruns are one of the most serious risks for CANDU purchasers. Canadian utilities have never estimated capital costs accurately. Ontario Hydro’s Darlington Nuclear Station (four 881 MW reactors) was estimated in 1978 at $3.95 billion, but by 1993, the cost was over $14 billion — an increase of over 250%. The Point Lepreau Nuclear Station in the Canadian province of New Brunswick is a single 600 MW reactor, similar to the standard CANDU-6 offered by AECL for export. It was originally estimated at $500 million but cost $1.25 billion when it started in 1983.

All of AECL’s commercial exports to date have been single unit 600 MW reactors (CANDU-6). AECL does not reveal the selling price of its reactors publicly.

Performance — AECL likes to brag that performance of CANDU reactors has been superior to other reactor designs. In fact, CANDU performance follows a pattern similar to other reactors. CANDUs improve their performance in the first few years of operation in a “learning curve”. However, after ten years, performance begins to decline at an increasing rate. As performance declines, costs increase proportionally.

Capacity Factor is the reactor’s actual electricity production divided by “perfect” output — what the reactor would produce if it always operated at its design rating. By 1994, the average lifetime Capacity Factor at Ontario Hydro’s 20 reactors was 73.85% — significantly below the target performance of 80%. For the single year 1993, Ontario Hydro’s reactors had a Capacity Factor of 64.8%.

Capital Modifications — CANDU reactors also require very high annual capital expenditures which increase with time. By 1993, capital modifications at Ontario Hydro CANDU reactors had risen to about $40 per kW of capacity — about twice the amount (in constant dollars) that was being spent in the mid- to late 1980s. In 1993, Ontario Hydro spent $530 million (in capital alone) on its twenty CANDU reactors.

Operation & Maintenance — Performance of nuclear plants is closely related to spending on operation, maintenance & administration (OM&A). Given a flat level of OM&A, performance will decline as a nuclear plant grows older. By 1993, Ontario Hydro was spending over $1 billion ($109 CDN) per year on OM&A for its twenty reactors — an average of about $51 million per reactor. In the late 1980s, Ontario Hydro’s OM&A expenditures increased in real terms at annual rates of about 20%

CANDU Reactors: Unsafe

In the five-year period from 1989 to 1993, there were over 900 incidents at Ontario’s five nuclear stations that required reporting to the federal nuclear regulatory agency. These events included: failure of operating or safety systems, breaches of security, radiation releases in excess of allowable limits, and exposure of workers to excessive radiation.

The CANDU and its prototypes have experienced some of the world’s most serious accidents:

  • In 1952, the NRX (a 40 MW reactor that was used to supply plutonium to the US military) at AECL’s Chalk River site in Ontario, had the world’s first major nuclear accident. Fuel melting, and an explosion destroyed the reactor core, and there was a large radiation release.
  • In 1958, an irradiated fuel element at the NRU (another reactor at Chalk River) broke off and caught fire after being removed from the reactor. 600 men (mostly Canadian and American soldiers) were involved in the clean-up of the radioactive contamination.
  • On August 1, 1983, a pressure tube in Pickering Reactor #2 had a one-metre rupture due to embrittlement, dumping coolant into the reactor building.
  • In January 1990, a computer problem caused a Loss of Coolant Accident resulting in a 12-tonne leak of heavy water from a fuelling machine on Bruce Reactor #4.
  • In August 1992, a tube-break in the moderator heat exchanger on Pickering Reactor #1 dumped 3,000 litres of radiation-contaminated heavy water into Lake Ontario. It was the largest tritium release in CANDU history, causing the shutdown of a nearby water supply plant.
  • In December 1994, a valve failure at Pickering Reactor #2 led to 140 tonnes of heavy water being dumped out of the reactor. For the first time in CANDU history, the Emergency Coolant Injection System was used to avoid a melt-down.
  • In May 1995, a valve failure caused a 25-tonne leak of radioactive heavy water at Bruce Reactor #5.

There are also a number of “generic” concerns about safety at CANDU reactors.

Positive Void Effect — Drastic increases in the rate of the nuclear chain reaction can occur if coolant does not circulate properly in the core, leaving a ” positive void” or space. This can lead to a loss of reactor control.

Flux Tilts — The flow of neutrons can vary beyond the specified limits in various sections of the reactor core, leading to a loss of control and fuel melting. There have been numerous flux tilts at CANDU reactors.

Reactor Explosions — Steam explosions are possible if melted fuel contacts the moderator. Hydrogen explosions are also possible in CANDU reactors.

CANDU Reactors:

Environmental Impacts

Even if a severe accident is avoided, routine radioactive pollution from CANDU reactors can lead to environmental and public health problems. Radioactive contamination is impossible to see, smell or taste, and its health effects may take years to show up, but it is still deadly.

Tritium — The emission of large amounts of the radioactive element tritium is unique to the CANDU reactor, because it is produced by the exposure of heavy water to radiation. A 4 Sievert dose of tritium oxide absorbed into the body is lethal to half of those exposed. This dose is caused by about 200 gigabecquerels (i.e. 200 X 109 becquerels, or about 5.4 curies) of tritium oxide. From 1989 to 1992, the eight Ontario Hydro CANDU reactors at Bruce released on average over 4,500 terabecquerels (TBq) (i.e. 4,500 X 1012 becquerels) of tritium oxide to air and water per year (about 570 TBq per year, per reactor). However, accidental tritium releases can be very large — an accident at Pickering in August 1992 resulted in a leak of 2,300 terabecquerels (i.e. 2,300 X 1012 becquerels) into Lake Ontario.

Low-level radioactive waste — Uranium mines in the Canadian provinces of Ontario and Saskatchewan have left a deadly legacy of over 200 million tonnes of radioactive and acidic tailings. The tailings release the hazardous radioactive elements radium and radon (a gas). Radioactive wastes are also created by the uranium refining and conversion processes. The best method to clean up this radioactive waste is very controversial and very expensive.

High Level Radioactive Waste — High level radioactive waste (used reactor fuel) is a problem that lasts virtually forever. In Canada, that waste is currently being stored in water-filled pools, or in dry canisters at reactor sites. The Canadian government is holding an environmental assessment on a nuclear industry proposal to bury the waste in rock formations of the Canadian north. Environmentalists strongly oppose the underground disposal concept, instead supporting above-ground storage. AECL has often suggested that high-level radioactive waste could eventually be returned to Canada by CANDU buyers. However, this would face strong public opposition and is not an approved policy.

CANDU Reactors:

Building the Bomb

Through its international trade in uranium, heavy water, tritium and nuclear reactors, Canada has contributed significantly to the proliferation of nuclear weapons. Until 1962, Canada supplied plutonium for American nuclear weapons. In 1974, India detonated a nuclear bomb using plutonium manufactured in a reactor given to them by Canada.

The CANDU reactor can aid proliferation in several ways. CANDUs possess on-line refuelling capability — the reactor continues to operate while fuel is being removed and inserted. This makes it much more difficult to determine if spent fuel is being removed to make plutonium for nuclear weapons. Because CANDU uses natural uranium, fuel enrichment is not required. Since uranium enrichment is difficult and expensive, this may make it easier for a CANDU owner to build a bomb.

CANDU Reactors:

Unsustainable Development

CANDU reactors will inevitably worsen economic and social problems.

CANDU reactors have a very high capital cost, and produce very few permanent jobs. This is a gross mis-match for most developing countries, which tend to lack capital, but have abundant labour.

The high level of borrowing required for nuclear reactors increases debt problems. Huge cost overruns are typical, and the cost of decommissioning and waste management are usually underestimated.

Because of its high cost, investment in nuclear power precludes investment in truly sustainable energy alternatives: conservation measures and renewable energy.

Large reactors require extensive infrastructure, including: a large electricity grid; technical and regulatory staff; uranium mining, heavy water and uranium fuel capability; and waste management facilities.

Because of the connection, or potential connection to nuclear weapons development, nuclear power can become an important factor in regional military conflicts.

CANDU Reactors:

Small Is Not Beautiful

AECL has designed a smaller 450 MW reactor, “CANDU-3”, targeting countries with smaller energy needs. However, attempts to construct a prototype reactor in two Canadian provinces (New Brunswick and Saskatchewan) have failed. An attempt to have the reactor licensed in the United States has been put on hold after the U.S. Nuclear Regulatory Commission requested better documentation.

AECL also designed a smaller reactor, the 10 MW “Slowpoke Energy System”, or “Mega-Slowpoke”, intended for district heating and radioisotope production. Between 1985 and 1990, AECL’s offer to build a Mega-Slowpoke for free was turned down by four different communities across Canada because of safety concerns. This program has since been cancelled.

Endnotes

1. Bruce Reactor #2 was shut down in October 1995. Bruce 2 was an 848 MWe (net) reactor that began commercial operation in 1977.

2. Canada also sold three smaller CANDU prototypes, one to Pakistan, and two to India. As of October 31, 1994, there were 436 “operable” reactors, and 48 reactors under construction, for a total of 484. See: World Nuclear Industry Handbook 1995, Nuclear Engineering International, p. 9.

3. Charles Komanoff, Capital Cost Escalation at Ontario Hydro CANDU Plants: What Should be Expected in the Future? Coalition of Environmental Groups, December 1992.

4. Charles Komanoff, Performance Reliability of Ontario Hydro CANDU Plants: What Should be Expected in the Future? Coalition of Environmental Groups, November 1992, p. 12.

5. William Marcus, The Cost of Nuclear Plant Capital Modifications: A Statistical Analysis, IPPSO, April 1992.

6. Ontario Hydro, Interrogatory Response 4c.15.17, Ontario Energy Board Hearing HR 22, May 19, 1994.

7. Charles Komanoff, OM&A and Capital Modifications Costs at Ontario Hydro CANDU Plants: What Should be Expected in Future? Coalition of Environmental Groups, 1993, p. 2.

8. Ontario Hydro, Interrogatory Response 4c.45.4, Ontario Energy Board Hearing HR 22, May 19, 1994.

9. Ontario Hydro, A Journalist’s Guide to Nuclear Power, 1988, p. 2.

Box 1

CANDU: What is it?

CANDU stands for CANadian Deuterium Uranium reactor — playing on the North American boast of capability, “can do”. The CANDU is a Pressurized Heavy Water Reactor (PHWR) using heavy water (deuterium) as both a moderator and coolant. The CANDU reactor core is a horizontal cylinder known as a “calandria”.

Through the calandria run hundreds of horizontal tubes, inside which are pressure tubes containing fuel bundles. U.S. Light Water Reactors require enriched uranium fuel at about 2% to 4% uranium235 and use a relatively poor moderator (ordinary “light” water); whereas CANDU reactors use natural uranium at about 0.7% uranium235, but have a very good moderator (heavy water). Heavy water is very expensive and difficult to manufacture, making CANDU more expensive than other reactor designs.

In 1993, Ontario Hydro and AECL sold heavy water to South Korea for over $300 (CDN) per kg (about $225 US/kg). CANDUs require about one (metric) tonne of heavy water for every megawatt (MW) of capacity.

Heavy water moderator and coolant slow down neutrons to sustain a chain reaction. In addition, heavy water coolant flows through the pressure tubes past the fuel bundles, to transfer heat to the steam generators.

box 2

Retubing of Pickering “A” — CANDU reactors must be retubed — virtually rebuilt — after 15 to 20 years of operation. This is the single largest expense for CANDU reactors after construction — more than the original capital cost of the reactor. Pickering “A” was retubed after a massive pressure tube rupture at Pickering reactor #2 in 1983. CANDU tubes become brittle and subject to breakage after irradiation and the absorption of hydrogen.

The retubing of Pickering reactor #2 began in August 1983, after just 12 years of operation, and was followed by retubing of the other three reactors at the station. The cost of retubing the Pickering “A” reactors was $935 million — $219 million more than the original $716 million cost of the four reactors!

box 3

CANDU Power Reactors Worldwide *

CountryNumber of Station Names

Reactors

Canada 21Pickering (8)

Bruce (7)

Darlington(4) Gentilly (1)

Point Lepreau (1)

South Korea 4Wolsong

Argentina 1Cordoba

Romania 1Cernavoda

* Smaller prototype and research reactors, sometimes referred to as “CANDU” reactors exist in India, Pakistan and Taiwan

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Roentgen Treatment of Infections

(1942) “Much has been well written about the x-ray treatment of skin diseases and the same may be said for the neoplastic diseases, but no text has been written in this country with special attention to x-ray treatment of the infections”. – Kelly and Dowell Continue reading

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