Monday, April 09, 2007

Nuclear P3 Meltdown

Ah the joy of Private Public partnerships. The irony here is that the Bruce Plant is also owned by public pensions funds, private interests and the Power Workers Union. Originally mothballed by the Harris government, it was sold to a consortium of public private interests to pay for the expensive repairs Bruce needed to get it back online.

Robin Jeffrey’s determination created the opportunity that spawned Bruce Power and has led to a revitalization of nuclear power in Canada. The Bruce Power transaction received a Gold Award from the Canadian Council for Public Private Partnerships for “Excellence and Innovation in Infrastructure” and received the Financial Times Global Energy Award for “Successful Investment Decision of the Year” of 2001.

Local support wasn't a given for Hawthorne when he first came to the Bruce station, in 2000, as part of a team of experts imported by British Energy, a U.K. utility that leased the plant from the Ontario government that year. The 1970s-era station — which consists of eight Canadian-made Candu nuclear reactors — had languished and faltered under public-sector management. The provincial government had decided to see if private managers could do a better job running a major part of the nuclear fleet that supplies almost half of Ontario's electricity. To lure experienced nuclear managers to the province, Ontario's Conservative finance minister at the time, Jim Flaherty, offered British Energy a 17-year lease on terms critics considered too sweet for an asset the public borrowed billions to build.

Financial concerns involving its operations outside of Canada led British Energy PLC to withdraw from Bruce Power in 2003. As a result, the Cameco Corporation increased its share of Bruce Power to 31.6%, while new partners TransCanada PipeLines and BPC Generation Infrastructure Trust (a trust owned by the Ontario Municipal Employees Retirement System [OMERS]) each acquired a 31.6% share. The facility’s two primary unions retained their original 5.2% share.

With the McGuinty government promise to eliminate coal fired plants, Bruce coming back online at 'any cost' was a priority. And the cost was of course to the taxpayers of Ontario.

Ontarians would have saved $1.5 billion on their hydro bills over the next 25 years had the government negotiated a smarter deal to refurbish the Bruce Power nuclear station, the provincial auditor general says.

Electricity generated by refurbished reactors at a privately operated nuclear station will cost hydro consumers in Ontario 44 per cent more than the going market rate as a result of the government's failure to drive the best deal possible, the province's auditor says.

Auditor-General Jim McCarter said in a report released yesterday he recognizes that the province was not in a strong bargaining position when it cut the 2005 deal with Bruce Power, the privately owned consortium that operates the nuclear station on Lake Huron.

As a result, his report suggests, the government made too many financial concessions at the expense of electricity consumers.

The government will pay Bruce Power 7.1 cents a kilowatt hour for electricity produced from reactors the company plans to refurbish. This is significantly higher than the average market price of 4.9 cents consumers have paid over the past five years and experts' projections of future prices, the report says.


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1 comment:

janfromthebruce said...

Eugine, the govt negotiated actually knew they had made a mistake in their calculations two days before they signed the deal, but decided not to change it because they noticed other miscalculations that they originally thought would make a wash here. They were wrong. Those were small in comparison to this.

As to the Harris regime, they brought an American company that wrote the draft reports - banning the public operations - and than hired these guys to fix it. No incentive there to paint the bleakest picture and than come in and fix it.
Think about the idea of starving the public sector of funds to break it, and ask the the private sector to come in and fix it.
Anyway, i digress, Harris, of the same family presently ruling in Ottawa, saw the private sector and selling of public goods as the end all. Hence, they couldn't actually sell nuclear power plants, so the next best thing was to lease for ever.
Bruce Power is making hands over fist, and the workers are relatively happier, than under the American run people.
In terms of this deal and in relationship to the environment, the McGuinty govt prefers large managed projects than a whole bunch of co-generated small ones. Less headaches, but a mixed system takes a back bench, and conservation of energy gets basically a snooze job.