Ontario New Build – Treading Water

There have been developments this summer that reinforce my assessment that it will be some years before we see the new build reactors at Darlington.

The first was the statement by Ontario’s Energy Minister Chris Bentley – that’s right the half-hour plan guy mentioned earlier in this blog. The Toronto Star reported on June 8 in an article entitled “Energy minister hedges on new nuclear plant”:

“Ontario’s energy minister ducked Friday when asked whether the province intends to go ahead with building new nuclear reactors at Darlington. Chris Bentley said the province is still mulling the options of new nuclear reactors, and refused to comment directly when asked whether one option is no new reactors at all.”

The other to me even more interesting  development was the news in July that that Ontario Power Generation is paying $26 million to CANDU Energy (SNC Lavalin) and Westinghouse to develop detailed plans for the new reactors. An OPG spokesman quoted in a July 11 article in the Toronto Sun (“OPG paying $26 million for estimates on building new nuclear reactors”) said:

“This is common in large projects like this as there is recognition that firms will incur expenses in order to provide the level of detail we require”

Really – is this true? I don’t know of another case where bidders for reactor projects were paid by the purchaser to produce their bids. Perhaps, a reader can provide one? In any case my interpretation is that it hedges the Ontario government against complaints and maybe lawsuits from the bidders if the reactors are not actually built. It also puts in place a process that postpones for a two to three year period the need to make a definitive decision on going ahead with the new reactors.

What also leaps out is that there are only two bidders left. What happened to the Areva EPR? Certainly construction of the EPR in Finland has had serious cost and schedule overruns and is now enmeshed in legal and regulatory challenges. The second EPR being built in France has fared somewhat better but still has regulatory difficulties. I haven’t been able to determine how the two in China are doing but overall it seems fair to say that saying the EPR hasn’t attracted the buyers Areva expected. Westinghouse with more AP1000 sales has out-competed the EPR.  It also appears that Areva’s sales effort has shifted to their ATEMEA1 reactor and away from the EPR.  However, as usual the secrecy under which the Ontario government loves to operate and which I detest so much, prevents the public from knowing whether Areva jumped or was pushed out of the contest.

One can speculate there are many reasons that Ontario is unwilling to commit to new build although it’s hard to judge which ones are most important?  Ontario is in a serious budget crisis and is trying to reduce expenditures. Therefore, they are very reluctant to embark on a reactor building adventure that will be perceived by many as escalating the already swollen provincial debt. Since the government has a minority in the legislature in practice it would be necessary to have the support of both opposition parties; with the Conservatives in decline and the smaller socialist NDP on the rise this would be tricky. If the anti-nuclear NDP wins the next election then there would be no new built. I believe the fiscal and political issues are the main reasons but we could also add decreased public support as a result of Fukushima, the current surplus of electricity in Ontario, static or very low growth in power demand for the last decade, recent lower prices of gas fired electricity, the substantial cost and schedule overruns for the Bruce and Pt. Lepreau refurbishments, the government’s ideological commitment to renewable energy, and the credibility gap in energy planning from cancelling two gas plants under construction apparently to counter strong local NIMBY sentiments blocking the election of local government candidates.  Take your choice it could be any of the above or none of the above.

The Ontario government is now treading water on the new reactors so probably there won’t be a definite decision until after the next election.

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