TORONTO - A $2-billion cost overrun to refurbish two mothballed nuclear reactors at Bruce Power on Lake Huron will be covered by the private energy company, not by electricity ratepayers or Ontario taxpayers, says Energy Minister Brad Duguid.
However, critics warn the cost overruns may mean higher bills for electricity ratepayers, and say they should at least make the Liberal government rethink Ontario's nuclear future.
TransCanada Corp. reported last week that refurbishing two units of the Bruce A nuclear plant has cost $3.8 billion so far, with the final cost now expected to hit $4.8 billion. The original cost estimate when the project was announced in 2005 was $2.75 billion.
"We were fortunate this was done in a way that doesn't leave taxpayers or ratepayers on the hook," said Duguid.
"Fortunately for us, Bruce will have to ultimately eat whatever losses may occur as a result of these overruns. This would probably come out of their profits at the end of the day."
However, ratepayers are in fact on the hook for 50 per cent of the first $300 million of the Bruce refurbishment costs, and 25 per cent of the costs between $300 million and $3.4 billion. Everything above $3.4 billion will be paid by Bruce Power, which operates the nuclear plant near Kincardine, Ont., on a lease from the province.
The two reactors, which were mothballed in 1997, were supposed to be back online by the end of 2009, but are now scheduled to go into commercial operation in 2012.
The Progressive Conservatives, who like the governing Liberals support nuclear power, said they aren't convinced by Duguid's assurances about the contract with Bruce protecting taxpayers and ratepayers from the huge cost overruns.
"I'm not sure if I'm always going to take the energy minister's word at face value," said Opposition Leader Tim Hudak.
"After all, Dalton McGuinty said that smart meters can save you money, and they've been turned into tax machines. I do worry about the impact this is going to be ultimately on ratepayers."
The New Democrats, who oppose nuclear power, worry ratepayers could be left holding the bag for the cost overruns at Bruce.
The province signed a deal giving Bruce Power $57.5 million a year for energy that may not even be produced, complained NDP energy critic Peter Tabuns.
"I don't think it's clear yet whether the ratepayers are going to be hit or not," said Tabuns.
"What is clear is that, as of today, Bruce Power is getting money from people who are paying for power as a way of cushioning the impact of cost (overruns)."
Nuclear power plants regularly come in over budget and behind schedule, added Tabuns.
Early estimates from Ontario Power Generation indicate refurbishment of Darlington's four nuclear reactors at Darlington will cost up to $10 billion. The province plans to refurbish 12 reactors in all and build at least two new ones, so that nuclear power continues to make up about 50 per cent of the electricity supply mix.
However, the delays and overruns that characterize every nuclear project -- combined with declining demand for electricity -- should prompt Ontario to rethink its nuclear future, said Shawn-Patrick Stensil of Greenpeace Canada.
"We know that nuclear costs are going up, as we've seen with Bruce A, but we also know that green energy costs are doing down over time," said Stensil.
"So commitments to lock into these large nuclear projects today, just as we did with Darlington in 1974, could lock us into higher electricity prices for decades."
Darlington was supposed to cost $3.9 billion but ended up costing more than three times that amount, $14.4 billion, and is largely responsible for the 'stranded debt retirement' charge still levied on electricity bills.
The industry vowed in 2005 that it had tackled the delays and cost overrun problems with nuclear projects, but the Bruce refurbishment is proof that's not true, added Stensil.
"It would be cheaper to use a portfolio of green energy options than new reactors at Darlington, but both Hudak and McGuinty refuse to look at that option."
Last week, Greenpeace protesters erected a huge banner outside OPG's offices in downtown Toronto demanding McGuinty and Hudak 'Stop Darlington Nuclear -- protect consumers.'
Greenpeace said politicians know they'll be long gone from office by the time any new nuclear plants they commission today come online.
"Darlington was $10 billion over budget ... so (former premier) Bill Davis was nowhere around at that time," said Stensil.
The energy minister mocked the New Democrats in the legislature when they asked for an independent assessment of nuclear cost estimates and green energy alternatives.
"The (NDP) still believe that somehow an energy fairy is going to come down and provide us with the base-load capacity that we need to provide the backbone of our energy system," said Duguid.
The cost overruns at Bruce will hurt TransCanada's bottom line just after the Ontario government cancelled a $1-billion agreement with the company to build a natural gas plant in Oakville.
The province is negotiating compensation with TransCanada as well as talking about future projects, so taxpayers won't be hit with a penalty, said Duguid.
