I was very pleased to see this report in the papers today. I have always been a proponent of nuclear power and despite what some naysayers have said, I think the province can make a lot of cash off of the U.S. energy demand which cannot be met with either pollution or nuclear plants both of which are unacceptable to the sensibilities of those who will consume the power. Thus we build the plant, they get power and everybody wins.
The report indicates that New Brunswick still has a chance to be the first one to build the next generation of CANDU, something I thought we had lost when Lord was dithering on the subject over the last years. I suspect that AECL will be eager to give us a bit of a discount if we are the pilot.
UPDATE: This has now been officially announced.
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- nbpolitico
- A New Brunswicker passionate about his province and about politics writes his random, non-partisan thoughts on New Brunswick, Canadian and world politics.
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9 comments:
I agree. This is good news for NB.
So, how are we paying for this plant? Is NB Power going to go further into debt in the hopes of hitting the jackpot in the US Northeast? Before we all jump on the nuclear bandwagon, perhaps we should get our financial house in order. 10 billion dollars are owed by the provincial government, and nearly 4 billion by our public utility.
Before this decision is greenlighted, we should see payback
periods, construction costs and projected energy generation costs. Although AECL may give us a discount, building a prototype isn't usually a cheap thing to do. When you're the first to build something, you're the first to encounter the inevitable bugs in the design. Point Lepreau 1 went 300% over budget. Can we really afford another over budget energy project?
We also should determine who else will be in the market by the time Point Lepreau 2 is online. Both Quebec and Newfoundland and Labrador are planning massive hydro expansion, and private concerns are building power plants in New England as we speak. Although a market opportunity exists today, will such an opportunity still be present when our very expensive nuclear reactor is ready to go?
Energy speculation in the US Northeast should not be the domain of a public utility. Private corporations are much better suited to take on the risks inherent in such a market. We should not put the ratepayers of NB Power at risk of an overbudget power plant which sells less than analyst estimates.
rob - that is why they are conducting a feasability study whose stated purpose is to answer all of the questions you are asking.
The problem that some people have in understanding the economics of nuclear power is that is costs a lot more to build a nuclear power plant than any other sort of power generation. However, after construction, the costs are virtually nil for maintenance and fuel. Other plants are cheaper to build, but can cost much, much more over the long run because of expensive fuel required to run the plant.
Regardless however, we are not going in to this with our eyes shut. Despite the fact that the experts seem to agree there would be a huge market for this power, AECL is conducting a $3 million study to answer your questions for the province and to ensure it is not biased, the province will have that study peer reviewed.
NBP- The people writing the study are those who will ultimately sell us the plant. Don't you find that arrangement foolish? Do you ask General Motors to study the feasibility of buying a fully loaded Cadillac?
Perhaps we should cut out AECL, and simply have the experts determine whether or not we should drop a bil or two on a second reactor. Point Lepreau 1 cost 1.4 billion dollars, and those dollars were 1970s and 1980s dollars. How many shiny 2010 dollars should we budget?
I also disagree with your statement that nuclear power is virtually maintenance free, and operating costs are nil after initial construction. Just to shut down Point Lepreau 1 would have cost somewhere near 500 million dollars. Point Lepreau 1 was also supposed to have lasted us 45 years, it barely scraped together 25.
Building a power plant may be a good idea, and it may be a bad idea. It seems as though everyone from the Tories to the Grits to the media is very much onboard the nuclear bandwagon. We need a real debate about this issue. Saddling NB Power with another few billion dollars of red ink may finally sink the troubled ship.
Richard Hatfield claimed that energy generated at Point Lepreau would be "too cheap to meter". Why should we believe Shawn Graham when he says energy generated at Point Lepreau 2 will make us billions of dollars in profit?
Which part of the peer review did you miss?
Obviously we can't have the builders do the study and take them at their word. However, the builders will do the study - with a $3 million price tag - for free. Then we can pay infinitely less to have the experts review it and make sure it is on the level.
Was Lepreau over budget? Hell yes, but it has still been worth it. And the cost of $500 million you cite proves it - that is how much it costs us to buy the power that Lepreau produces, ie a lot.
You'll note I didn't ignore the peer review comment. I just believe a peer reviewed study produced by industry remains just that - a study produced by industry. Would you trust a peer reviewed journal article by ExxonMobil regarding global warming? I'd rather pay independent advisors thrice what we'll pay AECL. We can have a peer reviewed independent report just as easily as an industry-friendly report; it all depends from whom you wish to receive your advice.
Rather than asking AECL whether or not buying a reactor from them is a good idea, we should ask economists whether market conditions in New England will be favourable in 8 to 10 years, when the plant is complete. We should ask others who have built prototype reactors what kind of construction delays and budget overrruns they have experienced. We should ask ourselves how much Point Lepreau 1 went over budget, and why it took 4 years more than projected to build.
500 million dollars is not the total cost of Point Lepreau electricity. It is simply the cost of shutting the place down. Here's a list of a few of the costs so far: 1.4 billion to build (budgeted for 300 mil), 850 million to refurbish, 120 million annual maintenance costs (2004), and nearly 400 million for storing a couple dozen tonnes of radioactive waste.
In all, according to NB Power, the average lifetime price to produce electricty at Lepreau is about 11c/kWh. We sell electricity to residential consumers for 8 to 10 c/kWh, and to industrial consumers for much less. Selling power for less than what it costs to produce it is a neat trick, only possible by government subsidized crown corporations.
In my opinion, building a second nuclear reactor in New Brunswick strictly for energy speculation purposes is not sound public policy. There is too much risk to the taxpayer. If a private concern is willing to take the risk, and reap the rewards/consequences, our regulatory system should be structured to allow them to do so. Plunging our public utility and our province further into debt is not the way to self-sufficiency.
I'll add my voice to Robs. There are lots of things to consider, there was an excellent op ed letter that crunched many of the numbers and the fact is, by the time a nuclear reactor went online it would be in direct competition with dozens of energy providers for the market.
It's a pretty tough sell when most of the current debt is from the nuclear plant to say 'yes, let's build another'.
Rob said the stuff about the review himself. Fact is just the same as with oil refineries and soil cleaners, if the province wants it, the data will show its all lovely. Simply put, whether the reactor makes money depends on future markets, and if you know anything about futures, you know that nobody knows what the hell will happen.
They may be 'peers' but they won't know how fast solar technology may advance. The current findings have solar cells at the nanotechnology level,these can literally be painted on a surface (your car exterior could literally be a power provider for its engine, the exterior of your house and roof can be energy providers for your appliances).
Already we are at the point where IF we paid energy at the market rate solar would be cheapest (it has no distribution costs and no debt charges).
For 15 grand you can already set up your house and pretty much forget NBPower (depending on your lifestyle). If it lasted 15 years thats 1000 a year, which I bet lots of people would look seriously at if they had the up front money.
That doesn't even include the whole issue of uranium. There's a reason every mining company is running around looking everywhere they can for uranium. Its a small cost, but its a necessity, and there are currently very few mines (uranium mines have about a 20 year turnaround).
I suspect its a done deal not even for the power but for the same reason every other political decision is made...it will provide jobs. The St. John energy hub is virtually the only thing the liberals can hang their hat onto. I got a kick out of the line in the Telegraph "if its good for Saint John, its good for New Brunswick". Well, only in the way that industry in ontario is good for New Brunswick because its in the same country.
It is all a matter of semantics. You say most of the NB Power debt is because of Lepreau. I say, most of the NB Power debt is because for years the province has sold power for less than it costs to produce for political reasons.
If I buy a car for $20,000 and I pay rent of $1000/month ($12,000) and I spend $4000/year on food and $5000/year on travel and end up with a debt of $20,000 at the end of the year I could blame it all on the car, or I could argue I should stop travelling and live in a cheaper place and get a slightly cheaper car.
Similarly just because NB Power's debt is similar to what it cost to build and operate Lepreau, you can't say with authority that that is the reason for all of the debt. There are other expenditures that could have been cut and there were revenue sources that could have been tapped. And if Lepreau hadn't been built, we would have had to produce or buy the power another way at a cost. You can't just say Lepreau cost X dollars, so if we didn't build Lepreau we would have X dollars less debt because it is not that simple. If not Lepreau, we would have had to spend the money on something else.
There was a good article in the Telegraph the other day which you can find here. It quotes a senior American academic who specializes in physics who says that the Americans are being "stupid" in not building the capacity because they don't want to pollute and nuclear is politically unpopular.
Obviously the province shouldn't be pooring cash into the futures market, but that is not what is being proposed. First we are doing a general feasability study, then we should negotiate deals with states and U.S. power companies and sign contracts up front for the power we will produce for them five years down the road. If we can't get contracts signed, I don't think we should build, but if we can build and produce power at around 11c/kwh and have the Americans sign a contract to buy it at around 20, how is that a bad idea?
That's true its semantics, but when you say that 'NBPower debt is about the same as the cost of Lepreau' then it's pretty hard to make the above case when most of the energy from Lepreau is SOLD to the US at market prices. Hydro power from the saint john river doesn't cover exportable energy, neither does coleson cove. The only reason NBPower posted a profit the last year was because the market rewarded them by having a hurricane temporarily wipe out power sources in the US.
It's true that IF NB weren't a power exporting province then it would be different. However, that much power wouldn't be that necessary, and other alternatives would have been looked at. The decision is not whether to have a nuclear reactor, but whether to have TWO.
That argument that IF some people will enter into a long term contract where 'we' will make lots of money how can it be bad is a little like my idea to buy a 'baby shoe bronzing' kit-after all, IF people will pay me lots of money then its a great idea.
I sincerely doubt that you will find somebody who will sign a long term contract before a government even decides to build a reactor. And keep in mind, Quebec is still loooking at enhancements to hydro power, which is even cheaper.
So to agree with the familiar refrain of mr. taxpayer, when government starts telling you about the grand possibilities of selling power so long as we pay for it, then thats something altogether different.
Nobody has ever talked about the possibilities of simply providing cheap power for New Brunswick as a way to enhance industrial development. With wind turbines, solar cells, hydro and Lepreau NB could have long term dirt cheap power. Instead they are talking about getting government into the 'market' of selling power. Those are two very different issues, and nobody is even talking about them.
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