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AECL gets cash boost ahead of possible sale

The Globe And Mail: Shawn McCarthy - February 27, 2008

OTTAWA -- The Harper government is making a one-year, $300-million injection into Atomic Energy of Canada Ltd. as it readies the Crown corporation for a possible sale.

Finance Minister Jim Flaherty announced the additional funding in yesterday's budget. It will be used to finance the development of the AECL's new ACR1000 reactor and to improve operations at the Chalk River research facility.

It augments a yearly, $100-million payment that the federal government provides AECL to support research and development. The government has been dogged by controversy over AECL, and is considering either selling the Crown corporation outright, or bringing in private-sector investors as part owners.

But the corporation received a black eye in December after it was forced to shut down its Chalk River research reactor - and halt the delivery of medically critical isotopes - in a safety dispute with the federal regulator.

AECL is also eager to complete design work on its ACR1000 reactor, which it hopes to sell in Ontario, New Brunswick and internationally.

However, it estimates it will need to spend an additional $300-million to complete the design and licensing of the ACR1000. The reactor vendor got a boost earlier this month when the federal nuclear safety regulator - under new leadership - agreed to conduct a prelicensing design review, reversing its policy that required a firm contract before the review could be undertaken.

However, the Canadian Nuclear Safety Commission said AECL would have to pay for the regulatory review.

In its budget documents, the government said nuclear energy is an important source of clean energy.

"Combined with a renewed management team that ensures strong leadership, these investments will help position AECL for success in the growing market for clean energy," the Finance Department said in its budget documents.

In the midst of the Chalk River controversy last December, the government announced a new chief executive officer, Hugh MacDiarmid, for the corporation, which had gone without a top executive for several months and was much criticized for being rudderless.

The additional federal money for AECL is targeted at its two most pressing priorities: to get its new generation reactor ready for market and to clean up the mess at Chalk River, which has long been hungry for cash.

AECL is fighting for its very survival. It must persuade Ontario to purchase the ACR1000 to boost its international marketing effort. And AECL, along with its partner MDS Nordion Inc., must persuade U.S. customers that it remains a secure source of medical isotopes for the United States, where there is growing pressure for a new domestic supply.

Critics have urged Ottawa to cut funding for the nuclear reactor vendor, arguing its technology is out of favour internationally and that subsidies could be better spent in cleaner, safer energy sources.

Greenpeace Canada has calculated that Ottawa has spent more than $20-billion on AECL in its 55-year existence.

Last year, Ottawa has committed more than $100-million annually - $105- million in the current year - to help finance its ongoing research. In the previous two years, it allocated an additional $100-million for the development of the ACR1000 and the company must spend considerably more before the design is approved and ready for the market. It also earmarked $500-million over five years for AECL's decommissioning and waste management plan.

Greenpeace energy campaigner Shawn-Patrick Stensil said the new money for AECL is akin to throwing good money after bad, for a technology that has little appeal in the international marketplace.

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