The nuclear failure

National Post
National Post
December 6, 2003

For four decades, in three provinces, under Liberal, Conservative and NDP governments alike, nuclear power has brought Canadians nothing but grief.

In New Brunswick, nuclear power has all but bankrupted NB Power. The utility now has negative net worth and an insecure supply of power, all because its big gamble in building its one nuclear plant – which accounts for 30% of that small province’s production when operating – didn’t pay off.

In Quebec, nuclear power was less of a disaster, but only because the province recognized its error and pulled the plug early on. One of the two plants built in Quebec was mothballed as soon as it was built; the other produces expensive power. Hydro Quebec remains solvent only because of the huge hydro-electric reserves to which it has access.

In Ontario, nuclear power effectively bankrupted Crown-owned Ontario Hydro in 1997, leading to its breakup and reorganization. Of the 21 nuclear plants built in Ontario, only 14 are operating today. The province’s vast supplies of hydro-electric power from Niagara Falls and other water plants, though they produce inexpensive power, cannot counteract the huge costs the power system must bear from its nuclear system. Even the nuclear plants that do work are financial albatrosses. Darlington, Hydro’s last nuclear plant, came in at $14.4-billion, almost three times its initial estimate and 10 years late. It produces the most expensive power in Canada, raising rates for all and encouraging industries to locate elsewhere. This week’s news, that refurbishing the Pickering reactors is now estimated at $4-billion, or more than five times its initial estimate, is true to form.

Federal taxpayers have likewise been hit: Atomic Energy of Canada Limited, a federal Crown corporation, has bled red ink from the get-go and needs annual transfusions in federal support – the tab to date: more than $20-billion.

Neither are Canadians alone in being disappointed by nuclear power. In the late 1980s, the United Kingdom decided to shut down much of its nuclear fleet, and cancel its nuclear expansion program, when the privatization of its power sector revealed that the country’s Crown-owned utility had been providing parliament with wildly fraudulent financial accounts. The balance of the U.K.’s nuclear fleet, privatized as British Energy in the 1990s, went bankrupt earlier this year, despite generous subsidies designed to keep it afloat.

The story is little different in Germany, Sweden, the United States and every other Western nation, with the possible exception of Finland. Elsewhere, nuclear power remains popular only in nations such as China, Iran, India, Pakistan and North Korea – countries with nuclear weapons programs.

Nuclear power can only survive in a monopoly system, where governments can force society to subsidize its operations. When countries turn to competitive markets to meet their power needs – as has happened in the U.K., New Zealand, and parts of Australia, Canada and the United States – no private sector player has ever built a nuclear power plant.

The U.K. was the first country to turn to competition, at the same time that it privatized its non-nuclear plants in 1989. Almost immediately, the private companies that now had access to the marketplace went on a building spree – the largest the country had ever seen. They soon flooded the U.K. with a vast new supply of inexpensive and clean power, most of it from the modern, high-efficiency natural gas generating plants that the private sector always preferred, but also from some wind power and renewable energy. Rates dropped for residential and small business consumers first, then for big business. The U.K.’s power prices are now a remarkable 30% lower than they were prior to privatization.

In the United States, competition came more slowly, and state by state. Some states, like California, badly botched their attempt at opening up their market, and paid dearly as a result. But most states deregulated sensibly, leading to a flood of inexpensive power in the United States, too. In some U.S. states, power companies have the ability to generate almost twice as much power as they will need on the coldest and hottest days of the year. Since 1999 alone, deregulation has increased the U.S. power supply by 24%, creating an immense surplus. Ontario now depends on this surplus from the United States to get by, and New Brunswick may soon, too.

Ontario, Quebec and New Brunswick are now all reassessing their power systems, wondering whether to pour more good money after bad in an attempt to refurbish their ailing nuclear reactors. If they do, they can count on more of the same – cost overruns, followed by high-priced power if the plants work and no power if the plants don’t.

If they decide to stop their nuclear bailouts, they have a ready alternative in open markets. Small power producers – once they become confident that governments won’t change the rules of the game on them after they had invested millions – will soon flood Canadian power markets with inexpensive and clean power. Power shortages will give way to power surpluses. After four decades of careening from one crisis to another, politicians can move on to other fields.

Lawrence Solomon is executive director of Urban Renaissance Institute and Consumer Policy Institutes, divisions of Energy Probe Research Foundation. E-mail: LawrenceSolomon@nextcity.com.

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