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Published in the Energy Mix, March 29, 2024, the New Brunswick Media Co-op, March 30, 3024.
By Susan O’Donnell and Mark Winfield
Two lonely nuclear dinosaurs finding each other in the Jurassic forest: perhaps an appropriate image for a planned partnership between NB Power and Ontario Power Generation (OPG).
Each is stuck in the past, the only two utilities left in Canada operating nuclear power reactors. Both have rejected modern, efficient, decentralized, nimble, distributed energy systems powered by low-cost renewable energy in favour of keeping their aging CANDU reactors alive. Together, the two lumbering public utilities plan to bring forth a revitalized New Brunswick Point Lepreau reactor, hoping their new progeny will reverse its previous ailing fortunes.
From NB Power’s perspective, it’s a pairing made in uranium heaven. The utility is carrying a $3.6 billion nuclear debt from the original 1975-1983 Lepreau reactor build that cost triple the original estimate and then the 2008-2012 refurbishment that was a billion dollars over budget. Both projects ran years behind schedule.
Since the refurbishment, the poor performance of the Lepreau reactor is the primary reason NB Power loses money almost every year. By shedding the reactor off to a new entity co-owned with OPG, NB Power can move its debts and potential future losses off its books, and onto those of OPG and NB Power’s new creation.
OPG has already established a three-year, $2 million/year contract to supply staff to manage the Lepreau facility. This is an expensive arrangement for NB Power, at double the cost of the American manager OPG has replaced. Presumably this is a loss leader for NB Power to help cement its budding relationship with OPG.
What would then happen with the Lepreau reactor’s debt, representing about three-quarters of NB Power’s liabilities? Maybe the new partnership would use Ontario’s approach to making the nuclear debt disappear. More than 25 years ago the effectively bankrupt provincial utility Ontario Hydro was split up (chs 5&6). A new Crown corporation (OPG) inherited Ontario Hydro’s hydro, coal and nuclear plants. With them would have come $20 billion stranded debt, largely left over from the nuclear construction program that was instrumental to Ontario Hydro’s demise. But servicing that debt would have left OPG economically unviable, so the $20 billion was hived off to Ontario taxpayers and then electricity ratepayers via a ‘debt retirement charge’ on their bills.
It is important to recall that between 2002 and 2016, OPG’s rates rose by 60 percent, largely to pay for the refurbishment of two reactors at the Pickering A plant (two other attempted refurbishments at the plant were write-offs), contributing to a political crisis over electricity rates that ultimately led to the defeat of Kathleen Wynn’s Liberal government in 2018. New Brunswick’s much smaller population with a lower household income is likely to be even less accepting of increased rates to service OPG’s nuclear ambitions.
Why would OPG, whose mandate to undertake out-of-province business activities is at best unclear, and which is deeply engaged in its own reactor refurbishment megaprojects at the Darlington and Pickering B plants, want to take on a money loser like the Lepreau reactor in the long term?
The refurbishments of the eight reactors at Darlington and Pickering B, both on the Lake Ontario shoreline just east of Toronto, will cost more than $25 billion. Along with the refurbishment of six reactors at the Bruce facility on Lake Huron, these projects will stretch the industry’s capacity to the limit. Why take on another reactor needing an expensive rebuild on the Bay of Fundy?
Perhaps the partnership with NB Power simply offers the Ontario utility the promise of new horizons, expanding from its dominant position in Ontario to another province. But how would this serve the interests of Ontario ratepayers and taxpayers? OPG’s nuclear liabilities are ultimately underwritten by Ontario taxpayers. Could Ontario taxpayers and ratepayers end up on the hook for NB Power’s nuclear debts and liabilities as a result of OPG’s extra-provincial activities?
OPG may have its eyes on another prize – an opportunity to expand its ambition to develop small nuclear reactors. OPG has plans for four such reactors at Darlington. So far the Canada Infrastructure Bank is the project’s only investor, which has yet to receive any regulatory approvals and whose technical and economic viability has been the subject of many serious questions. Undeterred, OPG is heavily promoting the concept to potential customers across Canada and in Europe. NB Power has backed two different small reactor designs, but both have failed to secure adequate financing for development after six years of trying. OPG may see New Brunswick as a potential demonstrator host for its small reactor ambitions.
In both provinces the lumbering provincial utilities have ignored developments aggressively pursued by other jurisdictions in North America and around the world: converging and mutually reinforcing technological revolutions in energy efficiency and productivity, demand management and response; renewable energy and energy storage; distributed energy resources; and electricity grid management and integration (smart grids). These innovations offer the potential for lower-cost, lower-risk, faster and more flexible pathways for providing decarbonized electricity than large centralized nuclear systems.
Instead of pursuing these options, the new NB Power and OPG partnership would be doubling down on approaches to energy supply and planning stuck decades into the past. Ratepayers and taxpayers in both provinces would do well to ask hard questions about their looming Jurassic-scale coupling, and its implications for their futures.
Susan O’Donnell is Adjunct Research Professor in the Environment and Society Program and lead researcher of the CEDAR project at St. Thomas University in Fredericton. Mark Winfield is Professor in the Faculty of Environmental and Urban Change and co-chair of the Faculty's Sustainable Energy Initiative at York University in Toronto.