The massive task of refurbishing 10 nuclear reactors – at a cost of $25 billion – is the crucial issue for keeping electricity rates under control in Ontario, says a CIBC investment banker.
“Getting refurbishment right is critical,” David Hay told the Association of Power Producers of Ontario Tuesday. Hay is vice chairman of CIBC World Markets.
“Everybody in this room knows that history has not been kind to Candu refurbishments,” Hay said, running through a list of projects that have missed deadlines and gone hugely over budget. Candu is the technology used by Canadian reactors.
The province now faces the prospect of carrying out mid-life overhauls for six nuclear reactors operated by Bruce Power, and four by Ontario Power Generation (OPG).
Plans also call for permanent closure of the Pickering nuclear station in 2020, while the refurbishments are about half done.
Hay noted that the refurbishments are risky – a point underlined by former TD Bank chairman Ed Clark and his council, appointed by the province to squeeze more value from provincial assets.
“Let us stand together and hold hands and understand that we are standing on the edge of a 15-year, $25 billion refurbishment program for six reactors at Bruce, four reactors at OPG, representing more than one-third of the electrons that flow in our system,” he said.
“That is where our focus needs to be to continue to keep ratepayers in their present position.”
Hay is former chief executive of New Brunswick Power, which began its refurbishment of the Point LePreau nuclear reactor under his tenure.
He noted that Clark advised a “laser focus” on getting the refurbishments done right.
“Wise advice,” Hay said. “But frankly, I don’t know of any refurbishment team that thought they had anything less.”
If the refurbishments go well, Hay said, they’ll produce power at about 8 cents a kilowatt hour – competitive with natural gas-fired generators.
There are some bright spots, he said. With multiple units being worked on in succession, the refurbishment teams should be able to work more efficiently with each unit.
“The projects will likely get better, unit by unit,” he said.
Hay noted that while refurbishments are risky, not proceeding with them is also costly. The units were designed to last for 60 years. Not giving them a mid-life refit means the big, up-front construction costs can’t be amortized over the planned life of the reactors.
Funds set aside for plant decommissioning will also not have matured as planned if the plants are shut down early, he said.
Elsewhere, a federal panel reviewing OPG’s plans to bury low and intermediate-level nuclear waste at the Bruce nuclear station formally closed its record Tuesday.
The panel says its report to the environment minister recommending whether or not the project should proceed will be filed by May 6.