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FYI
"We are looking at a massive investment of capital
going forward. It's been pegged at somewhere between $30-billion and $40-billion
to redevelop our entire energy
sector.
---------------------------------------------------------------------------- Future is nuclear, OPG told
Manley report embraces atomic energy as the way out of Ontario's power problem By RICHARD MACKIE UPDATED AT 9:18 AM EST Thursday, Mar. 18, 2004 Ontario must base its future power supply on nuclear energy and should start with a $600-million project to rebuild one of three mothballed reactors at Pickering A, according to a major report on the province's controversial electricity utility, Ontario Power Generation, that is to be released today. The report of a three-member commission headed by former deputy prime minister John Manley argues that only nuclear reactors can supply the electricity needed in Ontario, sources who have seen the report say. Rebuilding the three Pickering A units would be the fastest and cheapest way to add badly needed supplies of power, it says. It proposes starting with work on Unit 1 and proceeding with the second and third if the Unit 1 project is not unduly difficult or expensive. Pickering A's Unit 4 was returned to service last September after a rebuilding project that ran into controversial cost overruns and delays. Refitting all three Pickering A units could cost $1.7-billion to $2.7-billion on top of $1.3-billion already spent, projections show. Energy Minister Dwight Duncan will unveil long-term energy plans in a speech in April that should provide an idea of how much total nuclear capacity might be needed. The report rejects natural gas as a source of generating power because it is becoming scarce and expensive. It also says current coal-burning methods are too dirty, and importing power is impractical. The province's main problems with nuclear power have been unreliability and cost overruns. In 1997, seven nuclear units were shut down and massive refurbishment was launched on 12 others that continued to run. Three mothballed units are running again, but that's at least three years behind schedule and at three times the projected costs. Two recent reports blame bad planning and lack of management oversight for the problems. Other proposals in the report call for the government to keep OPG as a publicly owned utility, to allow it to engage in joint ventures with private companies and to revamp its management radically to keep it at arm's length from the government. Strengthening the board of directors and senior executives is the report's strategy for avoiding a repetition of the management failings that led to the nuclear problems. OPG also would be kept as a single company, but would be split into nuclear and non-nuclear operations. The company would move out of its mirrored, 19-storey building overlooking Queen's Park. The two divisions would have separate headquarters closer to their facilities. While much consideration has been given to breaking OPG into two companies, the report argues that this would put too much emphasis on restructuring and cause confusion at a time when the company needs to focus on building new sources of supply and ensuring existing sources are reliable. The report's endorsement of nuclear energy over natural gas and renewable sources implicitly supports reconstructing two mothballed generating stations at the Bruce A power plant. It also opens the way for OPG, the government, Bruce Power and other private companies to consider entirely new nuclear plants. In a break from past practice, the report suggests allowing nuclear companies from other countries to bid on future projects. It says competitive bidding would force performance and price guarantees that have been missing in past projects. Atomic Energy of Canada Ltd. and its Candu technology were given the contracts for the province's existing 20 reactors, in part to foster Canada's nuclear-power industry, most of which is in Ontario. Mr. Duncan said yesterday that the report will play a major role in developing the strategy for the future of Ontario's $12-billion-a-year electricity industry, which he will present to the Liberal cabinet later this month. "We are looking at a massive investment of capital going forward. It's been pegged at somewhere between $30-billion and $40-billion to redevelop our entire energy sector. "Suffice to say it could well be one of the largest peacetime investments in this country," he told a Queen's Park news conference yesterday. Mr. Duncan said Ontario faces higher costs for power, but must not allow its prices to climb above those in surrounding jurisdictions if it is to remain competitive in attracting industry. "My hope is that over the long course, we bring on enough supply so that prices will not only stay where they are, they will go down," he said. And he stressed that current problems at OPG, especially the squeeze on its finances, will not be allowed to continue. "It's not going to go broke. We are going to fix it." Produced over three months, the Manley report gains prestige from the stature of its three authors. In addition to Mr. Manley, the report was written by Peter Godsoe, recently retired chief executive officer of Scotiabank, and Jake Epp, a former Progressive Conservative energy minister who has been serving as interim chairman of OPG after producing a report detailing the problems at Pickering A. The prospect of more nuclear plants was condemned yesterday by the Sierra Club of Canada, which anticipated the report's support for nuclear power. In a comment that signals a likely intense public battle between supporters and opponents of nuclear power, Dave Martin, Sierra Club policy adviser, complained: "Support for the Pickering nuclear fiasco repeats the colossal mistakes of the past. "The Pickering A reactors were built in the 1960s, rebuilt in the 1980s, and we are now paying for them a third time. When will they learn?" The Manley report does back stronger measures to encourage conservation, saying that government money spent to cut back on power use can be as useful as money spent to build new generating capacity. Mr. Duncan says he will ask the cabinet this month to approve a sweeping program for energy conservation to try to save as much power as is produced by a four-unit nuclear station. The report accepts the views common in the electricity industry that the basic power supply cannot rely on generators fired by natural gas, because supplies are becoming scarcer and the price is likely to continue to rise. The plan to close Ontario's five coal-fired generating stations, which produce about one-quarter of the province's electricity, is accepted by the Manley report. The Liberals made this a key election promise and, as a result, the closing is inevitable. But the report does point to the prospect of using cleaner-burning coal plants in the future. This echoes discussions within the Liberal government that the massive 3,000-megawatt plant at Nanticoke could be converted to be a low-emission, coal-fired plant. And the report turns thumbs down on the idea of importing power, something Ontario was regularly forced to do during the past two summers to avoid rotating blackouts. Much of the power imported from the United States is created by burning coal, which creates air pollution that wind currents carry over Ontario. This negates potential benefits from closing coal-fired plants in Ontario, the report says. And bringing power from the Quebec-Labrador border and from Northern Manitoba is impractical because of the huge distances involved and the amount of power that would be lost in transmission, it says. ----------------------------------------- |