| Think Ontario Energy Prices are
Out of Control? The Jolt from Nuclear Waste costs is Yet to Come. By Normand de la Chevrotiere BRUCE CENTRE IR #17 - Sunday, November 17 INVERHURON, Ontario While Premier Ernie Eves wrestles a lid onto the price of Ontario’s electricity, another energy cost time bomb may be poised to explode. While some funds have been put aside to cover the cost of permanent disposal of nuclear waste, their adequacy has to be questioned in light of recent international estimates and Ontario Hydro’s past accounting practices. Where did the money go? Simply put, how would you feel on your retirement day if, after a lifetime of hard work and pension plan contributions, your pension trustee said: “I’m sorry, I spent the money on something else.” That’s basically what’s happened with Ontario Hydro and their obligation to fund disposal of the most dangerous industrial by-product on the earth: nuclear waste. The old Ontario Hydro has contributed the lion’s share of Canada’s nuclear waste, as past owners of 20 of Canada’s 22 nuclear reactors. Under the philosophy of “polluter pays,” Hydro was also responsible for the lion’s share of the funding required to permanently dispose of this toxic, deadly waste. From 1982 to 1998, they billed Ontario’s energy consumers for this purpose. The problem: Hydro “temporarily” spent this money to pay down debt. Ontario’s nuclear mess means more taxpayer money! In 1999, as part of restructuring Ontario’s electricity market, Ontario Power Generation (OPG) was formed. OPG suddenly “recognized in full” its obligations for cleaning up its nuclear mess, more than doubling the previous debt estimate to $7 billion. And the province, on behalf of taxpayers, generously picked up the tab for $2.5 billion of this liability. Under the new “Ontario Nuclear Funds Agreement” between OPG and the Province of Ontario, OPG has also been granted limits on how much it must pay for nuclear waste disposal. The province has guaranteed to regulators that sufficient funds will be available should OPG not have enough money to pay for its ever-growing piles of nuclear waste. And when it comes to generating nuclear waste, Ontario’s reactors take a back seat to no one. Current estimates have some 38,000 tons of high level waste sitting either in cooling pools at reactor buildings or on-site, above-ground concrete containers. OPG projects this total to rise to 77,000 tons over the reactors’ lifetimes. To put this in perspective, the entire United States currently has 47,000 tons of high level nuclear waste, perhaps destined for centralized storage at the controversial Yucca Mountain site in Nevada. Yucca Mountain, coincidentally, is designed to store 77,000 tons of high level waste. The estimated cost: over $21 billion U.S. ($33 billion Cdn). Recently, the U.K. revised upward the estimate for its nuclear clean-up to $23 billion pounds ($58 billion Cdn). So what does OPG know that other countries don’t? Why does OPG think it can dispose of its waste for $7 billion Cdn? Lowball estimates, inflated expectations Despite the lower estimate, OPG is still trying to play catch-up in funding its nuclear waste obligations. It now has roughly $1.5 billion saved, and boasts of contributions to a new segregated fund of some $400 million a year. But how long will OPG have the wherewithal to play catch-up? Given OPG’s new mandate to shrink from a near monopoly to no more than a 35% share of Ontario’s electricity market in 10 years, its revenues will be greatly reduced. OPG had hoped to offset this decrease by upping its electricity exports to the U.S. This now seems a distant prospect based on Ontario’s electricity shortage, coupled with OPG’s billion dollar cost overrun and delays in restarting its four laid-up Pickering reactors. U.S. concerns and Canada’s new nuclear waste law Meanwhile, Michigan State Senators Levin and Stabenow have written to U.S. Secretary of State Colin Powell expressing concern about the build-up of nuclear waste at the Bruce nuclear complex on the Lake Huron shoreline. Can New York Senators be far behind asking questions about Pickering and Darlington on Lake Ontario? U.S. safety and security concerns threaten to turn our lack of a nuclear waste solution into a transborder issue of concern for the 36 million people who live in the Great Lakes basin. Enter the new law. With little fanfare, Natural Resources Canada (NRCan) announced that Canada’s new nuclear waste law “An Act Respecting the Long Term Management of Nuclear Fuel Waste” has officially come into force on Nov. 15. This new law has created an organization comprised of industry representatives that has three years to make their recommendations for permanent disposal of nuclear waste. Canada’s new waste law also requires that utilities set up a trust fund to finance long term waste disposal. In OPG’s case, this represents an initial payment of $500 million, with annual contributions of $100 million for three years thereafter. NRCan notes these amounts are “in keeping with the Government of Canada’s ‘polluter pays’ principle,” boldly predicting that “this will ensure that Canadian taxpayers do not shoulder this financial burden, now or over the long term.” Don’t bet on it. Clearly, we face a national crisis. This is not science fiction. This is our modern energy nightmare, and the real price for energy once billed as “too cheap to meter.” Normand de la Chevrotiere is an actuary and research consultant for the Bruce Centre for Energy Research and Information, a non-profit organization created to promote and study energy issues. For verification of sources of facts and figures in this Bruce Centre report, or for more information, please call Normand de la Chevrotiere at (519) 742-0730, contact the Bruce Centre at info@friendsofbruce.ca or visit our web site at www.friendsofbruce.ca |