‘There’s a lot riding on this’: Ontario begins $26-billion nuclear repair program

And so it begins.

On Friday, Ontario Power Generation, the provincially-owned electricity company, was scheduled to take a nuclear reactor offline at its Darlington generating station, the first of 10 units to be refurbished in the province over the next two decades. The reactors will be shut down, and their key parts replaced and repaired.

The estimated $12.8-billion rebuild of four reactors at Darlington, located 45 minutes east of Toronto, will be done in sync with a projected $13-billion overhaul of the Bruce nuclear generating station on Lake Huron. There is also a $307-million plan to keep OPG’s Pickering nuclear power plant operational until 2024.

Combined, the Bruce and Darlington generating stations produce about 50 per cent of Ontario’s electricity. The megaprojects aim to add 30 years to the lifespan of the power plants.

Referring to his company’s refurbishment program, Bruce Power president and CEO Mike Rencheck told QP Briefing on Thursday agreed that “there’s a lot riding on it.”

But the history of nuclear power in Ontario is an expensive one. No project has ever been finished on budget. At a time when many Ontarians seem near their breaking point over electricity rates, costly nuclear rebuilds may prove perilous for the Liberal government.

Meanwhile, as the province is doubling down on nuclear power, its critics have pointed out that the price of renewable energy is falling. Furthermore, a new home for used nuclear fuel rods hasn't been found yet; a not-for-profit outfit, the Nuclear Waste Management Organization, has been tasked with finding a site.

Ontario's Liberal government announced Thursday it would be taking comments from public on its next long-term energy plan. Greenpeace Canada senior energy analyst Shawn-Patrick Stensil said in a statement that "this energy plan review should be an opportunity for the Wynne government to come clean on the true cost of nuclear power and ensure Ontarians can take advantage of the declining cost of renewable energy."

Stensil also highlighted a report included in OPG's recent rate-setting application to the Ontario Energy Board, wherein the firm doing the analysis found "OPG, with its significant nuclear concentration, a pure generating company business profile, and the magnitude of its capital spending program, to fall towards the upper end of the spectrum of risk profiles established by the proxy companies."

Keith Brooks, programs director at Environmental Defence, said in a statement that wind power prices have already fallen by 66 per cent, with another 50 per cent to be lopped off over the next decade.

"Meanwhile, Ontario Power Generation wants to increase the price it receives for nuclear power by 180 per cent during that same time period," said Brooks. "Solar power prices have come down even more dramatically than wind. In some places, solar power is now the cheapest form of energy available, period."

The government and nuclear industry know this, and have presented an economic case for the refurbishments. In Friday's release, the government boasted the Darlington refurbishment will "contribute a total of $90 billion to Ontario’s GDP and increase employment by an average of 14,200 jobs annually, including over 2,600 jobs onsite."

Both OPG and Bruce Power – which leases eight reactors from the provincially-owned power company – have touted the relatively cheaper cost of electricity produced by their nuclear plants.

Bruce Power is being paid more for its electricity over the course of the rebuild, with an average cost of $77 per megawatt hour of production (after its refurbishment, Darlington is supposed to pump out power at an estimated cost "range" of $72 per MWh and $81 per MWh). As the government itself points out, the average price of electricity in Ontario in 2015 was $92.

Energy Minister Glenn Thibeault was at Darlington Friday to mark the start of the plant’s refurbishment.

"Refurbishment at Darlington will ensure that emissions-free nuclear continues to be Ontario’s single largest source of power,” said the Minister in a statement. “Refurbishment will continue to boost economic activity across Ontario, create jobs and secure a clean supply of reliable electricity for the future."

OPG has gone out of its way to show it is prepared for the rebuild, constructing a mock reactor at the Darlington site to practice on.

"The station has delivered clean, reliable, low-cost power since 1990, and we are ready to deliver on our commitment to complete this project on time and on budget,” said OPG president Jeff Lyash in a release.

Meanwhile, the Bruce Power refurbishment is scheduled to start in 2020 – not 2016, as outlined in Ontario’s 2013 Long-Term Energy Plan, which is a move the government says will save $1.7 billion – and conclude in 2033. Six reactors will be overhauled at the Bruce plant, at an estimated cost of $13 billion.

Like OPG, Bruce Power will bear the cost of the refurbishment project, covering its expenses through the price it charges the province for the electricity the company produces. The difference is that Bruce Power is a private-sector entity, a consortium whose majority owners are the OMERS pension plan and TransCanada Corp.

Rencheck said Bruce Power is going to second several of its employees to OPG during its refurbishment to learn any lessons. Rencheck also said he and OPG president Jeff Lyash have a longstanding relationship that will continue throughout the refurbishment period.

“If we have an overrun, Bruce Power is responsible for that overrun,” added Rencheck. “It’s not the ratepayers, it’s not the government. We have to do this well to stay in business”

To contact the reporter on this story:
gzochodne@qpbriefing.com
416-212-5913
Twitter: @geoffzochodne