Bruce Nuclear Waste Repository: The Wrong Place at the Wrong Time – Part III Social License

Local support and the sleazy politics used to obtain it were discussed in the Part I post. However, there is a serious issue concerning the social license per se namely whether it should be considered at all by the hearing Panel.

The first Canadian commission to consider a DGR was the Seaborn Commission formed in 1989 to do an Environmental Assessment (EA) of AECL’s technical plan developed over the previous twenty years to deposit nuclear fuel waste deep in a granitic rock pluton in the Canadian Shield. There was extensive public consultation with over 500 oral submissions and a similar number of written submissions over the nine year mandate of the Commission.  Its 1998 report concluded that while the technical plan was a sound basis for proceeding, public acceptability of the concept had not been demonstrated. In today’s terminology the proponents weren’t able to prove they had the necessary “social license”.  A few years later, the federal government passed legislation establishing the Nuclear Waste Management Organization (NWMO) with a primary objective of ensuring the social licenses necessary for nuclear fuel waste disposal were in place.

The CNSC has recently stated in the slides from a recent Calgary speech by its president:

“[CNSC’s] Mandate does not include social licence” [but rather] “Commission makes science-based risk informed decisions”

“The CNSC does not make determinations based on social acceptance or economic benefits”

Since it’s acting on behalf of the Commission the Panel reviewing the Bruce DGR according to the CNSC president should have no business assessing social license issues and must stick to technical matters only.  I find it remarkable that they can make this claim in view of the historical precedent of the Seaborn Commission.  However, as the recent Federal Court decision has shown the CNSC doesn’t have a good handle on how to conduct an EA.  This position is also taken in spite of CNSC’s aggressive promotion of the nuclear industry under the guise of providing technical information (personally I’m all in favour of promoting nuclear power but the-should-be-unbiased CNSC is the wrong agency to do it).

At the Panel hearings OPG highlighted the approval of the local community as a major argument for the Bruce DGR and thus, the Panel accepted lots of testimony on this issue. By so doing the Panel now can’t avoid making a pronouncement on whether there’s a social license for the facility. If it doesn’t then that omission alone would be grounds for an appeal to the Federal Court of Canada especially since the Canadian Environmental Assessment Act (CEAA) requires an EA to take into account factors relevant to the social license such as: public comments, purpose of the designated project and alternative means of carrying out the objective of the project. An EA must be conducted in accordance with the CEAA and the opinions of the CNSC president quoted above are totally irrelevant.

During the hearings intervenors noted that some 125 municipalities around the Great Lakes had passed resolutions opposing the Bruce DGR and so OPG’s social license was obtained by dubious means from only 11,000 people in the Bruce area and not the 11,000,000 represented by the resolution s. Clearly, the major reason for the widespread public opposition is that the proposed DGR is at the Bruce site beside the Great Lakes. Thus, ironically the factor most attractive to OPG is exactly why the social license is lacking.

Some nuclear types will fulminate that this is just another instance of “politics” creating opposition to what they believe a good technical solution. This attitude reflects an all too common belief in the industry that the public doesn’t understand the technology and thus, makes wrong decisions based on scientific ignorance implying an educated public would approve all of their actions.  They are mistaken because perception is reality in this case. Most people have a bad gut feeling about storing nuclear waste beside the Great Lakes.  The technical presentations at the hearings could only lay out the physical parameters of the problem but they didn’t convince the public to change its common sense view that the Bruce DGR is dumb.  While some technical idealists may conceive of a perfect world where all decisions are based solely on science, I’m glad I live in a democracy where the politics of public acceptance trumps the opinions of technocrats like me.

I’m afraid that the Bruce DGR may poison the waters for the NWMO’s planned DGR for used nuclear fuel. A negative finding by the Panel on the Bruce DGR or its cancellation by OPG would make it more difficult to secure the social license for the used nuclear DGR sought by NWMO since an inference might be drawn that DGRs in general are undesirable. I would find this distressing since I fully support the need for the used fuel DGR and the process being used by NWMO to find a site for it.

The following statements by Bruce Power chief Duncan Hawthorne quoted in the Kincardine News of February 14, 2013 are worth noting:

“Among them was his belief residents of potential host communities are unable to differentiate between the plans for two DGRs.”You’ve confused the whole community,” Hawthorne said he had written to the NWMO. “We’re looking at something that’s 125 years from now. Go away for a decade.”

He’s got it completely wrong; it’s the Bruce DGR that should go away.

In the last post in this series I’ll discuss the political and economic reasons why the Bruce DGR is unlikely to happen.

 

Reactor Costs – Checking out a bad analogy

The Canadian Nuclear Association has come up with an analogy to address the high capital costs of nuclear plants. It goes something like this:

We could live in a hotel with no upfront capital costs but most of us choose to pay a high initial capital cost to live in a house.

OK so it sounds cute but in my opinion comparing housing options has nothing with do with building nuclear plants. However, it does inspire me to pursue this capital cost argument a bit further.

Consider that a nuclear plant is built for $10 billion overnight cost. The latter means that not only the labour and material costs but also the cost of the funds borrowed during the time it takes to build the plant are all rolled into one overnight cost. The reactor cost quoted is not unreasonable and is probably a good guess for an Enhanced CANDU 6 (EC-6), the most likely candidate for Ontario’s new reactors.

Since we are talking about the housing analogy let’s go to amortization tables and find that the monthly mortgage payment at a 5% discount rate is about $5.34 per $1,000 borrowed in order to pay off the principle and interest in uniform payments over 30 years which was is the amortization period normally used for Ontario reactors. Applying this to the overnight cost we obtain an annual mortgage payment of $641 million.

Let’s assume that the plant is rated at 700 MWe (an EC-6) and it operates at 90% capacity factor. That gives an average annual electricity production of 5.52 billion kWh and thus, to cover the capital cost alone would require a little less than $0.116 per kWh. To this we would have to add O&M, fuel costs, decommissioning and used fuel management allowances and, since we are talking about a CANDU, a provision for refurbishment after 25-30 years.

The wholesale price of electricity in Ontario at periods of normal demand is around $0.02 to $0.04 per kWh. Roughly speaking Ontario Power Generation gets about $0.04 and Bruce Power about $0.06 per kWh wholesale for their generation. The consumer pays about $0.12 per kWh after transmission and distribution costs are added plus subsidies for renewables and debt repayment charges for past reactor construction. The foregoing numbers are a great oversimplification of a complex market structure superimposed over a lot of generally dumb political decisions but they do give us a basis for a rough comparison.

What jumps out at us immediately is that a $10 billion EC-6 doesn’t fit in the current economic framework for electricity in Ontario. Just paying the mortgage means the electricity produced is more than two to three times current wholesale prices before any add-on costs. Of course, there are many ways to play with the assumptions and juggle the numbers. Project finance and accounting experts know a myriad of dodges and tricks to come up with any cost of electricity one might desire. Low balling the initial cost to get the project approved is almost standard in the industry but can be counteracted to some extent by Blackett’s observation that the announced project cost should be multiplied by π to estimate the final project cost.

I like the following quote by David Fessler writing about investing in uranium (Jan 29, 2013)

“With regard to plant construction costs, natural gas is to nuclear as Wal-Mart is to Saks Fifth Avenue.”

This observation is proved yet again in Ontario. To fit current economics it looks like the new reactor capital cost should be in the range of $3-5 billion which won’t happen. (The capital cost of a comparable natural gas plant would be in the order of $1 billion but after that the economics depends on gas prices.) The usual way of getting around paying realistic amortization on the high capital costs of reactors is to have a government as your banker/guarantor which historically has proven to be the only feasible way of building them.

This also explains why refurbishing existing reactors to extend their useful lives is a much more attractive proposition economically than building new ones. In Ontario we’ve already paid for many of the older reactors but I hasten to add that we are still paying on our monthly electricity bills the construction debt for the four Darlington reactors, completed some 20 years ago.

Maybe the “hotel” in the CNA analogy is natural gas although there are comparatively lower capital costs? Strong reasons for building nuclear plants include mitigating climate change and reducing harmful pollution from fossil fuels but attractive economics isn’t one of them. However, in my opinion government subsidizing of nuclear power, as is done for wind and solar energy, is completely justified and necessary.

The house/hotel analogy just draws attention to this reality and in my opinion should shelved by advocates of nuclear power.

Darlington: CNSC Independence?

Several intervenors at the Darlington hearings expressed views that the CNSC was biased toward the nuclear industry. On the few occasions when he elected to acknowledge these claims the President, Michael Binder, countered by harrumphing “prove it”. With all the cards stacked in its favour I feel the onus should be on the CNSC to prove its independence rather than the other way round since its credibility is its most precious possession.
Any regulatory system always faces the difficult problem of the close relationship of the regulated and the regulators. A kind of Stockholm Syndrome comes into play which some called “regulatory capture” (There was a guy from Greenpeace who seemed so much a part of the current and past proceedings that he may be evidence of “intervenor capture” ) This perception is compounded by the federal government’s cost recovery program whereby OPG pays CNSC to be regulated. It seems that about 70% of the CNSC budget is obtained from the regulated. Similarly the location of many CNSC staff at OPG sites including Darlington increases the perception of a too close relationship. It was admitted that there was no personnel rotation system to prevent CNSC staff from being “captured” by OPG. Some of the high paying jobs at Darlington referred to by boosters are in fact CNSC jobs.
Speaking of jobs the CNSC now seems to have a staff numbering about 850; this is double the 1999 staffing level of 425. It’s difficult to see how the CNSC can justify doubling its staff in a decade of declining nuclear activity or is it just a symptom of empire building?
Even the format of the hearings leads to an impression of bias. The CNSC members sit at a long table as a tribunal with the applicants, in this case OPG, on one side before them with Commission staff on the other. Those who come to give their views to the Commission, the intervenors, are placed in a position between OPG and CNSC staff. It’s almost as if the intervenor is the “accused” in a trial. Several intervenors admitted to being nervous and feeling intimidated by this arrangement. On the plus side, there was often applause from the audience in support of their presentations.
The nature of the hearings is such that CNSC staff and OPG almost always tag teamed to reply to the comments of the intervenors because both sides have agreed on the issues raised in various documents negotiated beforehand. Similarly, what can be discussed and what can’t be (i.e. the scope of the hearings) was predetermined by OPG and the CNSC and often as Inspector Clouseau would say “the old beyond the scope ploy” was used to prevent certain subjects being raised. It was no wonder that Intervenors got the feeling they were being ganged up on by Commission staff taking the side of OPG.
At one point an intervenor directly challenged the CNSC’s distribution of literature promoting the nuclear industry. The President claimed that section 9b of the Nuclear Safety and Control Act of 1997 permitted the CNSC to do so. It’s worth quoting the section:
“[an object of the CNSC is] to disseminate objective scientific, technical and regulatory information to the public concerning the activities of the Commission and the effects, on the environment and on the health and safety of persons..”The crux of argument is not whether the CNSC can legally disseminate information but rather whether the promotional material is “objective” and “scientific”. No useful discussion of this point took place because the President simply deflected the issue via a legalistic argument based on 9b.
Another independence issue raised was that according to the biographies on the CNSC website it appears one Commissioner worked for OPG as recently as 2011. The perception of a potential conflict of interest was possible and in fact this was raised by at least two intervenors. Once again this was sidestepped by the President. While I’m not impugning the integrity of this particular individual, I would say that the “optics” was poor and in my opinion recusal would have been more appropriate for an OPG application.
Speaking of optics perhaps the CNSC should report to Parliament through the Minister of the Environment rather than the present arrangement of via the Minister of Natural Resources. That might help position the Commission as more independent in some minds particularly when under new legislation it can conduct full Environmental Assessments.
The cynical might say that the current President might be more disturbed by accusations of being perfectly objective rather than of being biased. The fate of his predecessor, Linda Keen, who apparently was too objective for the government, must always be on his mind. My impression is that the present incumbent doesn’t realize the Commission’s serious credibility problem and it’s a pity he doesn’t seem willing to do obvious things to fix it.

Letters from the CNSC – Fewer would be better

Imagine my dismay this summer when I found in my morning Hamilton Spectator yet another Letter to the Editor from the CNSC rebutting a letter from an anti-nuclear group.  Of course, I don’t agree with the anti-nuclear twaddle in the original letters. Rather my question is why is Canada’s nuclear regulator writing Letters to the Editor defending the nuclear industry?

Let me give you an example. In the Spectator of August 10, Michael Binder supremo of the CNSC responded to a letter from CAPE (Canadian Physicians for the Environment) dated August 7. This in turn provoked a reply from the Green Party August 11 to which Binder replied August 16 starting with the following.

 “Claims made by Hamilton Centre Green Party President Peter Ormond do nothing but perpetuate long‑standing and irrational fears too often associated with nuclear technology.”

There was nothing in CAPE’s letter concerning the CNSC or even nuclear regulation in general that might justify a response from Binder. Ormond’s letter claimed the nuclear industry is secretive not that the CNSC was. On the contrary, this whole exchange appears to be a gratuitous defence of nuclear power on the part of what’s supposed to an arms-length independent agency. Why does the CNSC feel it needs to correct “irrational fears” about nuclear technology or anything else for that matter? Psychotherapy is not in its mandate.

One reason for the CNSC response to Ormond’s letter might be a chance to take a whack at the Green Party. OK, I’m one of the few who still believe that the public service should be independent of politics even though I admit that Trudeau and Mulroney pretty much killed that idea. Read the quote again. Why not just give the guy’s name? Giving his party affiliation is unnecessarily provocative even if that’s the way Ormond signed his original letter.

The irony to me is that the original letter from CAPE that started this off is mainly a defence of wind and a diatribe against fossil fuels with only about 10% being a by-the-way shot at nuclear power – the CNSC isn’t mentioned.

There’s a school of thought in public communications that says it’s generally not a good idea to get into a Letters to the Editor exchange because it keeps a negative issue alive. This is particularly true when the initial letter is a generalized sweeping attack in contrast to one targeted at a named individual or organization.  It would have been much better for the CNSC to merely ignore the CAPE letter.

In fact, the same communications people say that the only positive function that such exchanges serve is to build the morale of those in the industry under attack. In other words it encourages employees to see someone is sticking up for them by rebutting criticism.  However, maintaining morale in the nuclear industry, another exercise in psychotherapy, is also not a CNSC function. Neither is education and hiding behind a “we’re just informing the public” pretext also doesn’t fly.

Another good guideline for organizations is that you don’t have your top banana, in this case Binder, sending Letters to the Editor. A spokesperson is a much better choice. For example, if there is an error or misstatement in the letter, it’s much less embarrassing to retract a letter from a spokesperson compared to one from the big guy. If I know about this PR stuff, it must be pretty elementary.

There are any number of other institutions and individuals in this country who could and perhaps should be responding to anti-nuclear letters and articles, among others the CNA, CNS, university institutes and faculty, consultants and nuclear industry corporations.  I’m not defending any of the anti-nuclear letters; my beef is that responding to these letters is not a role for the CNSC.

A simple answer to my question at the beginning of this piece might be that management at the CNSC, including Binder, have time to waste by penning Letters to the Editor. If so, it would be advisable for the government to look into cutting the apparent overstaffing at the CNSC. Power tripping would be another unattractive answer as would “the boss just likes to see his name in the papers”.

So what’s the big deal? The CNSC must be seen to be unbiased and independent even though in the last few years it has developed a lean toward the nuclear industry (which in my personal opinion is great.) That bias is obvious when you read through the growing file of Letters to the Editor on the CNSC website but why flaunt it? A strong independent regulator is essential for public acceptance of nuclear power. If the public perceives the CNSC is in bed with the nuclear industry then its credibility declines and hence public acceptance of nuclear power is reduced. The public is right. Poor regulation because the regulators were too cozy with the industry was identified as a contributing factor in the Fukushima accident.

In my opinion writing these letters defending the industry is unnecessary, outside its legislated mandate, and has the danger of eroding the public’s confidence in the CNSC’s independence.  This is a dumb thing the CNSC is doing.

A small victory for transparency – public disclosure for NRU

I was heartened to read in the Ottawa Citizen today that AECL has agreed to voluntary public disclosure on its website of any future incidents at NRU. This is a small but worthwhile step in the direction of more transparency and honesty in dealing with the public.

 

It was what they should have been doing all along for good public relations as recommended in my last post. Maybe somebody there actually reads this blog but on the other hand it was the obvious thing to do and I’m sure eventually they would have come up with it on their own.

 

Nuclear Secrecy Corrodes Public Trust

One of the hard lessons that the nuclear community learned in the 70’s and 80’s was that it must be open, transparent and honest with the public. Using this approach the nuclear industry managed to just survive the accidents, bribery scandals and instances of technical ineptitude during those years. The idea was summed up by the media trainers of the day as “Tell the truth even if it hurts”. It worked.

It appears that this lesson been totally forgotten by the current generation of Canadian nuclear managers.

Here’s a partial list of documents that as far as I know the public hasn’t been allowed to see.

  • The McKinsey report on new reactor purchases commissioned by for the Ontario government
  • The report by AECL to the New Brunswick government on the need for new reactors
  • The consultants report to the NB government commenting on the  foregoing AECL report
  • The report by the Alberta nuclear advisory committee set up by the province
  • Any output (?) from the similar Saskatchewan committee on nuclear power  
  • The National Bank report on the future of AECL  

The only feeble explanation I’ve heard is that the reports have to be kept quiet because they could contain propriety material. I’m sure these documents won’t contain instructions on how to weapons or details of anti-terrorist security systems at the present reactors. So what are they hiding – nothing much is my guess.

The so-called proprietary information that must be keep confidential according the industry is probably  their sales pitches: a reactor supplier says it can built one of its reactors for X dollars (not including cost overruns) that will produce electricity at Y dollars (if they can get it to work).  The italics are of course mine intended to reflect the cynicism I feel about the lies salesmen of all kinds tell to move their products. Oh sure, the nuclear types will blame all this secrecy on governments and no doubt the governments will insist that it’s the industry that wants confidentiality. It’s more likely that neither group wants to deal publically with the issues the reports raise but avoiding the issues is a huge mistake.

Fortunately, the usual suspects in the anti-nuclear movement are snoozing through all of this or else frittering away their time on pointless attacks on university research reactors. Even better, anti-nuclear politicians seem to have disappeared off the radar. Public support is the best it’s been in years. These factors are creating an excellent climate for the growth of nuclear power.

So what does the nuclear industry do in face of its great good fortune on finally having a positive climate for the first time in decades?  Well it seems industry executives are reverting to the “father knows best”, “the public is too stupid to understand us” and “don’t bother us, we know best how to spent $10-15 billion of your dollars” attitudes that have proved so detrimental in the past. Personally, I find it depressing that the industry seems intent on squandering the present goodwill by their contempt for the public. They never miss an opportunity to miss an opportunity.

It’s past time that the industry stops hiding behind this pointless secrecy before it erodes the public trust they now enjoy.  

 

What’s happening in the Ontario reactor competition?

I saw an interview with George Smitherman, the Ontario Minister of Energy and Infrastructure, on TVO last night.

As the person in charge of the Ontario reactor competition, he said that Westinghouse was still in the competition in spite of some of his senior officials previously saying it was out. I think the confusion arose because Westinghouse wants to sell its technology rather than constructing and delivering a fully operational reactor itself.  The construction and commissioning would be done by some other firm. This is the pattern Westinghouse seems to be following in their other sales. In China the builders are local electrical utilities that have purchased the AP1000 technology and in the US the constructing partner is the Shaw Power group, at least for the Florida reactors.  

In my opinion this is a very smart way to do business but probably not very attractive to the Ontario government since the only local reactor construction capability resides in Team CANDU, another contestant. Perhaps Bruce Power might attempt constructing an AP1000 with the technology supplied by Westinghouse; they certainly have reactor refurbishment experience but as far as I know they have never built a reactor. OPG no longer has a reactor construction capability and instead concentrates on operations.  In my previous post on the AP1000 I expressed my admiration for this reactor design but I also mentioned rumours that Westinghouse was not all that engaged by the Ontario competition preferring instead to concentrate on the US and Chinese markets.  This may also be true.

The Minister rejected the idea of constructing one each of two of the competing designs which I agree would be impractical. He also talked about announcing the decision “at the end of the spring”. While there may be a decision at that point, for reasons I’ll mention in my next post I don’t believe there will be any significant expenditures until well after the decision.

To me the most interesting thing he had to say was in response to the interviewer’s probing about AECL. Although he acknowledged the advantages of awarding the contract to a domestic company, AECL, he implied that the ball was really in the federal government’s court. He had been looking for indications of federal support for AECL but wasn’t seeing any, or enough of them, to satisfy him.

Federal support is the key for AECL winning the bid, in particular would the feds ante up for the inevitable cost overruns? Probably not in today’s economic climate. Perhaps, the feds are planning some kind of ‘triple play’ whereby, for example, AECL is sold to the winning bidder, Westinghouse or AREVA. The winner would at one stroke obtain a skilled local labour force and the CANDU repair business. AECL would be revitalized as a division of a big multinational with deep pockets and the feds would finally succeed in riding themselves of AECL after all these years.  

By the way, what ever happened to the National Bank report on AECL’s future?