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It’s Time for Ontario to Get Out of Nuclear Power

Investing any more in nuclear power would be a mistake, argues Jeff Rubin, when Quebec can supply all the electricity Ontario needs, with virtually no carbon emissions

June 10, 2015

Ontario could potentially squander billions on refurbishing aging nuclear stations in a futile bid to preserve what is left of its shrinking nuclear industry

Ontario could potentially squander billions on refurbishing aging nuclear stations in a futile bid to preserve what is left of its shrinking nuclear industry, says Jeff Rubin

 
In his new book, The Carbon Bubble, author Jeff Rubin (BA 1977 Innis) argues that Canada should abandon its dream of becoming an “energy superpower” and focus on more sustainable routes to growth. Here, he contends that Ontario should look to its provincial neighbour to the east to meet its clean-energy needs, rather than nuclear power.

 

While hydro power seems an obvious replacement for either coal- or gas-fired power in an emissions-constrained world, further growth in hydro power in Canada is more likely to come at the expense of nuclear. In part, that is because coal and gas play a much smaller role in power generation in Canada than they do in the United States, so there is much less to replace. Moreover, spare hydro capacity isn’t always located near where hydrocarbons are being burnt to generate power.

But nuclear is a whole other story. Ontario, home to all but one of the country’s aging nuclear power plants, has wisely put plans to refurbish them on hold. Over the next 15 years, though, the province will have to overhaul some 8,500 megawatts (roughly one-third of its peak power demand) of nuclear capacity at a staggering cost. The Darlington nuclear power plant just outside Toronto will require a minimum of $13 billion in capital spending if it’s going to continue to operate past 2020. And costs of past nuclear projects in Ontario have come in, on average, at two-and-a-half times their original estimate, leaving ratepayers on the hook for stranded debt charges tacked on to their hydro bills.

Instead of committing billions of dollars to refurbishing reactors that no other country in the world has bought in two decades, Ontario premier Kathleen Wynne has wisely chosen to contemplate what no previous Ontario premier has ever been willing to consider: importing surplus hydro power from Quebec.

You might think that option would be a natural one for neighbouring provinces, but Quebec and Ontario have long operated as two solitudes when it comes to coordinating power generation. Quebec, given its natural water resources and topography, has championed hydro while Ontario, home to the CANDU reactor, went nuclear.

Cheap and reliable power was considered key to the broader industrial strategies of both provinces. Quebec used its comparative advantage in generating hydro power to attract power-intensive industries like aluminum to its economy. Ontario used the power supplied by Niagara Falls, and later the power from a massive expansion of nuclear energy, to attract industries like auto assembly.

If there was one common denominator between the provinces’ power utilities, it was that both Hydro-Québec and Ontario Hydro were permeated with an engineering culture that had only one imperative: build—and do it with little regard for economics. In Ontario, that resulted in too many costly nuclear power plants, based on forecasted power demand growth that never materialized. In Quebec, that same engineering culture resulted in an overbuild of hydro capacity. But economics always finds a way of reasserting itself over time, and at least in Ontario, power costs have risen hand in hand with Ontario’s aging nuclear-powered grid.

Instead of producing the “too cheap to meter” power once promised, Ontario’s nuclear plants have left Ontario residents paying some of the highest power costs in the country. Premier Wynne’s recent overtures to Quebec signal a long-overdue realization that Ontario’s traditional pursuit of energy self-sufficiency is a mug’s game, at best. What matters today to Ontario households and businesses is the cost of power, not its province of origin. Ontario has already squandered billions of taxpayers’ dollars on natural gas–fired power plants that were never built, and the province could potentially squander many more billions on refurbishing aging nuclear stations in a futile bid to preserve what is left of the province’s shrinking nuclear industry.

Premier Wynne would be wise to follow Ottawa’s lead on the CANDU reactor. The federal government severed its life-support line to the industry back in 2011 when the Atomic Energy Corporation of Canada (a Crown company) sold its CANDU reactor business to SNC-Lavalin for the princely sum of $15 million. Of course, the real motivation for the sale was to get the taxpayer off the hook for subsidizing an ailing nuclear division that had racked up over a billion dollars in losses over the previous five years.

Quebec has sufficient surplus capacity to provide Ontario with almost the entire power output of the Darlington nuclear plant. And it can supply that power for about a third less than the best-cost estimate from a refurbished Darlington.

A deficit-strapped Ontario shouldn’t be handing out any more blank cheques to its homegrown nuclear industry. Even the industry’s low-ball estimate of $13 billion for the refurbishment of Darlington is more than the province can afford, never mind the inevitable cost overruns. That money would be better earmarked for Premier Wynne’s stated priority of funding desperately needed new public transit to redress the now-permanent state of gridlock on roads around the Greater Toronto Area — home to roughly five million people. Fortunately, she doesn’t have to pour billions more of taxpayers’ dollars into the province’s nuclear sinkhole. Some estimate a cost as low as $500 million to put in place the transmission system upgrades needed for the province to take full advantage of Quebec’s power. That’s less than four per cent of the cost of rebuilding Darlington (again, based on optimistic estimates of the rebuild cost). The investment would pay for itself in less than one year. The Ontario government is not expected to make a final decision on refurbishing the reactors until the first quarter of 2016, following the tabling of final cost estimates for the project.

Excerpted from The Carbon Bubble. Copyright © 2015 Jeff Rubin. Published by Random House Canada, a division of Random House of Canada Limited a Penguin Random House Company. Reproduced by arrangement with the Publisher. All rights reserved.


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