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Auditor cited reactor upgrade as priority

The Globe And Mail: Gloria Galloway - January 10, 2008

OTTAWA -- "Significant deficiencies" at Atomic Energy of Canada Ltd. have been found by Canada's Auditor-General that will require a investment of more than a billion dollars if the corporation is to continue to be a leading source of nuclear research and sales.

Auditor-General Sheila Fraser completed the report last September, but it was only released yesterday under pressure from the opposition Liberals. One of the challenges identified by the report is the upgrade of the aging reactor at Chalk River, Ont., the source of most of the world's medical isotopes, that was shut down for nearly four weeks this fall over safety concerns.

The shutdown sparked a political uproar with the government criticizing the

federal nuclear regulator that called for the closing, and the regulator and the opposition accusing Natural Resources Minister Gary Lunn of interfering with the independent commission.

"Some of the building infrastructure at [Chalk River] is 50 to 60 years old, well past the end of its originally intended useful life," Ms. Fraser wrote. "AECL has indicated that it will cost $600-million in the next five years [about $850-million over 10 years] to replace or refurbish this infrastructure."

But, over the past five years, the federal government has provided just $34- million to the Crown corporation to address urgent health, safety, security, and environmental issues at the facility, she wrote. And "a source of funding for the other significant costs has not yet been identified."

Ms. Fraser, who did not look at the safety at AECL facilities or its waste management practices, also highlighted two other serious problems uncovered in her investigation.

Specifically, she said, the two reactors that were supposed to replace the Chalk River unit are now eight years behind schedule, and the development of a new generation of reactors has been hampered by market conditions, more stringent licensing requirements, cost increases, and the decision by Canada's nuclear regulator to stop providing pre-licensing assessments.

Ms. Fraser, who did not look at the safety at AECL facilities or its waste management practices, also highlighted two other serious problems uncovered in her investigation.

AECL officials were not available to speak about the report yesterday but they pointed out in a written response to Ms. Fraser's findings that the company is not permitted to obtain commercial credit and government funding is uncertain from year to year.

The regulator, the Canadian Nuclear Safety Commission, has angered the federal government by refusing to approve its restart of the Chalk River reactor because safety upgrades it thought were in place had not been completed by AECL.

It is a fight that prompted Mr. Lunn to threaten to fire CNSC president Linda Keen - and Ms. Keen to respond with accusations that Mr. Lunn was improperly interfering with her commission's independence as a quasi-judicial tribunal.

The closing of the reactor caused the supply of the medical isotopes - which are used to perform a wide variety of critical tests and procedures - to dry up in many places across the continent.

As a result, the National Academy of Science, a scientific advisory group, is now looking at whether the U.S. should consider producing its own. That could have a significant impact on Canada's nuclear industry.

But that's not the end of AECL's problems.

When the cost of the "deficiencies" identified by Ms. Fraser are tallied, it becomes apparent that the corporation, which directly employs more than 4,000 people, is facing significant challenges.

The money required to complete the two new reactors, called Maple 1 and Maple 2, was estimated last year to be about $130-million. But "at the end of March, 2007, the cost estimate was revised and increased significantly," Ms. Fraser wrote - and a number of compliance issues identified by the CNSC had yet to be addressed.

The cost of developing a new breed of reactors for domestic and foreign customers has been revised significantly, she said. By the end of March, 2007, it was estimated it would require $400-million to complete the project.

And then there is the money needed to upgrade the aging Chalk River unit.

The release of the report came after Liberal Leader Stéphane Dion held a press conference early yesterday morning to, among other things, call for the resignation of Mr. Lunn over his handling of the reactor issue and his alleged interference in commission decisions.

Representatives of the AECL, meanwhile, appeared before the nuclear commission yesterday to explain the progress of the demanded safety upgrades that involved connecting backup electrical systems to two water-cooling pumps that would kick in in the case of an earthquake.

Since the reactor was restarted on Dec. 16, said Brian McGee, AECL's senior vice-president and chief nuclear officer for the Chalk River Laboratories, there have been two minor earthquakes in the region.

"Neither had any impact on NRU, which continued to operate safely," Mr. McGee said.

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