----- Original Message -----
From: Brown, Morgan
Dec. 20, 2001. 07:18 PM
OTTAWA (CP) - The recommended phase-out of British government subsidies to its nuclear power industry hasn't affected a potential multibillion-dollar sale of Canadian reactors to Britain, a spokesman for the buyer says.
"Nothing has changed," said Doug McRoberts of British Energy, which is looking at buying up to 10 Candu reactors from Atomic Energy of Canada Ltd.
"We are very clear that, as far as British Energy is concerned, our intention is to replace our existing UK nuclear power stations with new nuclear power stations when they reach the end of their working lives."
AECL and British Energy have launched a year-long study into start-up costs, economics, risk-sharing and government support for Candu reactors to replace BE's advanced gas-cooled reactors.
AECL spokeswoman Louise Duhamel said the study is only a month old and has not yet addressed financing issues. But no foreign sale of a Candu reactor has ever been made without some form of Canadian government assistance.
"All nuclear power plants in the developing world are financed by export credits," said Duhamel.
Britain is not part of the "developing world" but a spokesman for Canada's Export Development Corp., which provides such financing, said that wouldn't necessarily rule it out in any potential purchase of AECL products.
"If it's an export transaction, export financing would be possible," said Rod Giles, adding he hasn't heard of any overtures yet.
AECL, British Energy, or both, could approach the government agency seeking financing, usually in the form of loans and especially if they're competing with other suppliers, said Giles.
EDC financed two such sales of Bombardier jets in the form of loans to U.S. buyers - Air Wisconsin and Northwest Airlines - this year.
"Presumably, British Energy would be looking for some form of sales financing with a purchase that size and AECL would be normally expected to come to the table with some sort of preliminary financing commitment."
British Energy is familiar with Candus - it is a majority shareholder in Bruce Power, which has leased nuclear generating stations in Ontario for 18 years.
The London Financial Times reported last week that a draft government review of energy policy commissioned by British Prime Minister Tony Blair rules out any further tax breaks or subsidies for new reactors.
The decision would mean private investors would have to pay the full cost of recycling and disposing of waste, as well as eventual decommissioning of old plants and full insurance costs on new ones.
It said the decision means that as the UK's 15 existing reactors reach the end of their lives over the next 20 years, replacement power stations will be effectively priced out of the market.
It estimated that by 2020 nuclear power would be up to three times more expensive than electricity generated from renewable sources or gas-fired stations.
But the report also says "there are good grounds to taking a positive stance to keeping the nuclear option open," McRoberts noted, and British government officials have since repeatedly stated, the need for continued nuclear power.
"We do not believe that this program of new nuclear build will need government subsidy," McRoberts said in an interview. "And we do not expect the UK government ever again to build new nuclear power stations.
"We believe this whole program can be financed in principle from the private sector if the market and political frameworks are right."
The government paper also wants the cost of insuring against accidents and disposing of radioactive waste to be borne by nuclear stations rather than the government, ostensibly making nuclear power prohibitively expensive.
The firm plans to replace existing capacity, not increase it, McRoberts said.
"And with new designs of reactors with inherent safety and reliability characteristics, we believe that in risk terms - both financial and real - that this is a valid and sensible way to proceed."
British Energy has identified two designs it deems suitable - the Candus and the AP1000 by British-based Westinghouse. Its study will also address licensing and regulatory issues associated with the Candu design.
A sale would be AECL's first since it sold two reactors to China in 1996.
The agency receives $100 million a year in federal subsidies and has come under fire from critics who say the return has been minimal.