Nuclear regulator restores fast-track approvals

Globe and Mail: KAREN HOWLETT & SHAWN MCCARTHY - February 22, 2008

TORONTO, OTTAWA _ Business-friendly approach returns a hometown advantage to Atomic Energy of Canada in the global reactor marketplace.

Canada's nuclear safety regulator is reinstating a fast-track process for approving reactor projects, signalling a new willingness to support the industry, sources say.

The Canadian Nuclear Safety Commission has indicated to industry officials that it plans to get back into the business of prelicensing new reactor designs, removing a major roadblock for the sector, sources familiar with the talks said.

The regulator has also made a specific commitment to Atomic Energy of Canada Ltd. to review the company's proposed ACR-1000 reactor, an industry official said.

The move is enormously important for Crown-owned AECL, because it once again gives the company a hometown advantage as it competes against global rivals to build the first new reactors in Ontario in more than two decades.

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"This is good news for everybody," a nuclear industry executive said. "It will be a welcome change."

The regulator's new, industry-friendly position follows last month's departure of former president Linda Keen. Her difficult relationship with both the industry and the federal government culminated in her ouster.

The Harper government fired Ms. Keen over the controversy surrounding the shutdown of the Chalk River nuclear reactor that produces much of the continent's nuclear isotopes. But relations between Ms. Keen and Natural Resources Minister Gary Lunn began to sour two years ago, when she said she did not have the financial or staff resources to deal with new reactor applications.

In the fall of 2006, Ms. Keen cancelled a 2003 memorandum of understanding with AECL that provided for a preliminary review of the company's ACR-1000 design and modifications to existing Candu 6 reactors. The agreement had provided a process for identifying potential licensing issues and for giving AECL reassurance that the reactors could be licensed. The CNSC had not signed similar accords with other companies.

The cancellation came as a blow to AECL, because it meant the company no longer had a clear advantage over its rivals. It also heightened tensions between Ms. Keen and Mr. Lunn. While he was publicly saying it was imperative that AECL win the contract to build new reactors in Ontario, she was saying the regulator will remain technology-neutral.

Ms. Keen's successor, Michael Binder, has wasted little time indicating that things will be different under his leadership, the sources said.

"He seems to be more willing to work with the industry," said an industry executive.

The prelicensing approval allows companies to get a head start on a regulatory review as the design phase progresses and avoid costly delays on multibillion-dollar projects. It also aligns Canada with other countries where such reviews are standard practice.

AECL plans to hold a news conference in Toronto on Monday to tout the economic benefits of the Ontario government going with its technology, especially at a time when the province is shedding thousands of manufacturing jobs.

The Ontario government plans to make a decision on nuclear technology by year's end. Consulting firm McKinsey & Co. has prepared a report on the pros and cons of each technology, but it stops short of making a recommendation, the sources said. A final report has not been submitted to the government.

McKinsey gives AECL high marks for its skills in managing projects overseas and its highly trained work force, said one source familiar with the report. But McKinsey raises questions about the lack of prelicensing of the ACR-1000 reactor, the source said.

"I think the only thing that was holding [AECL] back was actually the home-team disadvantage, which I think has been straightened out finally," he said.

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