[cdn-nucl-l] Bruce Power criticized for making profit

["Jerry Cuttler" <jerrycuttler@rogers.com>]

Everyone seems to complain that operating nuclear power plants is a
money-losing proposition.
Bruce Power is demonstrating that this is not the case.
I suppose people will always criticize nuclear, when you do and when you
don't.
We should be grateful that Bruce Power is operating our power plants so
well.
We should regard nuclear plants as important assets that provide vital
electricity at affordable costs instead of "an unfair financial burden". Do
we treat our hospitals and other medical facilities as "unfair financial
burdens"?
Jerry
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Bruce nuclear plant lessees profiting at expense of public

The Kingston Whig-Standard, Thu 20 Nov 2003

Byline: Bill Fisher

The government's announced intention to increase hydro rates in order to
eliminate a tax shortfall of $700 million raises serious questions about the
briefing information the new ministers are receiving on the province's power
system.

Premier Dalton McGuinty made it clear before the provincial election that
the deregulated electrical market is dead, and yet he has obviously been
advised by the Ministry of Energy that in order to eliminate the tax
shortfall caused by the perpetuation of the deregulated market, he should
raise hydro rates. Not only would this leave the spot market intact, with
the $700 million transferred to rate increases, but it would impose an
unfair financial burden on the less fortunate members of our society,
especially a majority of our seniors on fixed incomes.

All of the $700-million shortfall due to capped municipal utility rates is
incurred because the electrical supply system is still deregulated. Most of
this sum goes to the lessees of the Bruce nuclear facility and all of it is
pure profit, as the Ministry of Energy is well aware. The ministry is also
aware that the proposed rate increase ensures that the money will continue
to flow into the hands of the corporate lessees, in spite of the
government's stated intention to abandon the deregulated market. In short,
it has ensured that nothing will change.

Any concerns that this profit is necessary to provide the consortium leasing
Bruce with a legitimate rate of return on its investment can be put to rest
by a simple review of the facts. A Ministry of Energy pamphlet released in
April 2002 - before deregulation - states that the current average
generating cost for municipal utilities is 4.3 cents per kilowatt hour. This
rate has been in place since 1993 and was providing, under Ontario Hydro,
debt servicing and retirement, which was responsible for approximately 35 to
40 per cent of the sum. The government returned to this rate after
deregulation failed, and it still adequately reflects the cost of
generation.

At this rate, the Bruce station - which, with only four generators in
service, provides 15 per cent of the province's power - obtains
approximately $1 billion annually in revenue. Until the property was leased,
between 35 and 40 per cent of this sum was used for debt servicing, debt
retirement and system capital improvements. The lessees are not responsible
for these costs and so, after deducting the annual leasing price of little
more than $100 million, they are left with approximately 200-per-cent
guaranteed annual profit on their investment.

With deregulation and spot pricing in place, the lessees' profit on
investment is increased by almost $700 million from municipal and direct
residential customers alone, without counting profits from industrial
consumer deregulated rates, which are not funded by the government. The
magnitude of cost to the latter consumer group is unknown, but it will
certainly affect its competitive position and will almost certainly result
in job loss.

All of this profit comes from the pockets of consumers and is obtained from
the use of generating plant owned by the consumers and leased out by the
previous government, which cared more about corporate gain than the economic
interests of the public. As icing on the lessees' cake, they are not
required to finance the projected station decommissioning costs of $5 to $7
billion, which, once again, will be debited to Ontario's consumers.

Given the magnitude of these profits - which can, in the most generous
terms, be described only as monstrous - and the stated intentions of the new
government, the ministry should have recommended an immediate elimination of
spot pricing and the imposition of regulated rates on all Ontario
generators, for all consumers. The $700-million deficit would thus be
eliminated, industrial consumers would benefit, and residential
consumer/owners would continue to receive their legitimate relief under the
"price cap" until the power problems created by the last government are
solved - hopefully as soon as possible - by public consultation with
appropriate independent professional assistance.

In view of the outrageous terms of the Bruce lease, which have been publicly
condemned in the media, the ministry should also be recommending a public
inquiry into its initiation and, in particular, its transfer to a second
consortium following the financial failure of the original lessee, for a
possible public repossession of the facility.

The ministry is well aware that without Bruce, the original Ontario Hydro
debt will start to grow once again. With the aid of Bruce's revenues, the
debt can be eliminated with no rate increases. The ministry's duty to the
new government and the public is obvious.

- Bill Fisher is a retired utilities engineer who lives in Kingston.