Monday, May 12, 2008

Ontario nuclear competition: which Team Canada will show up?
Atomic Energy Canada Limited (AECL) is, for the first time in its history, in a competitive process to sell nuclear reactors in Ontario. It is competing against two deep-pocketed giants of the international nuclear industry, Areva and Westinghouse.


As the incumbent vendor—all power reactors in Canada are CANDUs—does AECL have the inside track? Yes and no. Yes, in that its machines provide roughly half of Ontario’s electricity on any given day. Without them, we would be powering most of the province with coal. If you think power-sector emissions are high now, consider the alternative.


And no, for the exact same reason. Every glitch in the performance of Ontario’s reactors reflects on AECL. And there have been many glitches.

I don’t envy the bid evaluators, or the provincial Energy Minister who will have to explain the results of their evaluation. This is because there are really two AECLs to consider. There is the Bruce/Pickering AECL—the original sixteen-reactor fleet whose construction began in the 1970s. The Ontario government yanked eight of them out of service in the mid-1990s, well before they were scheduled for decommissioning. The day-to-day performance of the still-operating units in this part of the fleet is a bit spotty, to say the least. Tracking their operation—and their impact on Ontario’s power system and its total emissions—is like watching a young fireball closer throwing heat in the bottom of the ninth. You hope he does well but he makes you nervous.

And then there’s the post-Pickering AECL. This consists of fourteen units in five countries. These include the four at Darlington on Lake Ontario just east of Oshawa.


The performance of this part of the AECL fleet has been good. AECL likes to point to Nuclear Engineering International’s yearly Power Plant Performance rankings, which regularly put three of South Korea’s Wolsong CANDUs in the top ten global performers. Not bad for a technology that represents about seven percent of the world power reactor fleet. Neither Areva nor Westinghouse has a unit on the top-ten list, though the South Korea–developed PWRs at Yonggwang and Ulchin were based in part on Westinghouse technology.

The question for the Ontario bid evaluators, then, is which AECL will show up?


This question becomes positively fascinating when you delve into the reasons for the layups at Bruce and Pickering in the mid-90s. I recently sat down with Steve Paikin, host of The Agenda, to discuss the Ontario nuclear competition. He asked me how our province’s experience with the construction of the Darlington station, which saw cost overruns of around $10 billion, might affect the bid evaluators’ perception of AECL.

Not an easy question to answer. I tried to explain that this wasn’t strictly AECL’s fault, that the huge overrun was a function of the convergence of many factors, including high cost of borrowing, the shifting in regulatory requirements in the wake of Three Mile Island and Chernobyl, etc. By the time I finished my answer, I felt like a political science professor. There are reasons, and there are excuses. The fact remains that AECL was the reactor vendor.

All of which is to say, incumbency is a double-edge sword.




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