Ont. electricity consumers on hook for Bruce Power cost overruns; critics say

THE CANADIAN PRESS: Leslie & Romina Maurino - April 17th, 2008

TORONTO - Ontario electricity consumers will be the ones stuck with the bill for escalating costs to re-start a Bruce Power nuclear station, which the company now says will cost 24 per cent more than initially expected, critics warned Thursday.

The nuclear electricity generator said Thursday it now estimates the cost of returning two idle reactor units to service at between $3.1 billion and $3.4 billion, up from an original 2005 cost projection of $2.75 billion.

The World Wildlife Fund and Greenpeace said that means Ontario's hydro customers will have to pay $237.5 million as their share of the cost overruns to date.

The deal between Bruce Power and the Ontario government means that half of the cost overruns could have to be paid by ratepayers, up to $3.05 billion, said Shawn Patrick Stensil, an energy expert at Greenpeace. Above that the ratepayer is responsible for 25 per cent.

"(Bruce Power CEO) Duncan Hawthorne said the Bruce restart was a test case to show whether the nuclear industry could be trusted with future projects," he said.

"He failed the test and ratepayers are on the hook."

Stensil said the government should take the delays and costs overruns as a sign it needs to re-think its nuclear megaproject strategy, and start looking instead at investing in energy options that are quicker to deploy - such as conservation, renewables and local generation.

"Is it good public policy to keep throwing good money down a hole over and over again, gambling when you keep losing?" Stensil said.

"The industry, despite 40 years of trying, has not learned its lesson, and still goes over budget and over schedule consistently."

Keith Stewart, an energy expert with WWF-Canada, said the costs to ratepayers dwarfs the $163 million the Liberal government spent on energy conservation programs during its first mandate.

"The key thing here is they're making the alternatives look better every day," he said. "The plan right now is to rebuild all the reactors we could and the cost of this just doesn't make sense."

Ontario energy minister Gerry Phillips said that any overrun was a major concern that gives the province "cause to make sure that we constrain the costs properly."

"Clearly any other refurbishements we're going to want to get the best possible cost containment," Phillips said.

"When we select the proponent for the new construction, a big part of the selection of that proponent will be assurances that they can stay on schedule and on costs and they will pick up any costs overrun."

Ontario still has to make a decision on other reactor life-extension projects for Pickering B, Bruce B and Darlington.

Bruce Power said Thursday that after a "comprehensive review" it was confident that units one and two of the complex on the Lake Huron shore can be returned to service close to the planned dates of 2009 and early 2010, adding 1,500 megawatts to the Ontario power grid.

The project to restart the two units, idle since the mid-1990s, is about 60 per cent complete, stated Hawthorn.

He reported "significant progress" on complex reactor refurbishment work by Atomic Energy of Canada Ltd., which has had to develop new tools and robotic equipment to remove and replace internal components without endangering workers.

"It would be fair to say that this work has been, by its very nature, discovery work since many of the robotic designs had to be tested in place," Hawthorne said.

"As a result, unit two, which is the lead unit, has borne many of the first-of-a-kind risks which has impacted our overall costs for the project. We do, however, see many examples of performance improvements on our second unit."

Steve Cannon, a spokesman for Bruce Power, defended the cost increases, saying the project was subject to the same cost pressures on items like construction materials and labour that every other energy infrastructure project in North America is currently facing.

"It's not just nuclear; we're not unique in that front, we're all in that same boat," Cannon said.

"A lot of the first-of-a-kind challenges, they're now behind us," he said. "I'm not trying to suggest things will be easier, there are challenges ahead, a lot of complex work to do, but we're moving into a phase of the project where a lot of the work that has to be done now is known work."

Bruce Power is Canada's first privately owned nuclear power company and supplies more than 20 per cent of Ontario's electricity.

The Bruce A operations are handled by Bruce Power A Limited Partnership is a partnership among TransCanada Corp. (TSX:TRP), BPC Generation Infrastructure Trust, a trust established by the Ontario Municipal Employees Retirement System, the Power Workers' Union and The Society of Energy Professionals.

Uranium giant Cameco Corp. (TSX:CC) holds a 31.6 per cent stake in the four Bruce B stations but isn't involved with the Bruce A refurbishment project.

In a statement Thursday, TransCanada said its share of the cost will be $1.55 billion to $1.7 billion, up from the originally forecast $1.375 billion.

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