Thursday, August 02, 2007

Nuclear part deux

After a good debate on the announcement over the past few days, there are two very good and informative news articles in the Telegraph-Journal today, I will quote from them...

When it came online in 1983 Lepreau's Candu 6 reactor was three years behind schedule and, at $1.4 billion, nearly $700 million over budget. This deal shields New Brunswick taxpayers from cost overruns.

Patrick Lamarre, president of SNC-Lavalin Nuclear, said the private companies will generate project financing by tapping different companies and pension funds, should the project proceed. The New Brunswick government will have the ability to opt into as much risk as it believes it and NB Power can sustain.

"If the study is favourable, the funding for the project will be organized by Team Candu and by private investors and not by New Brunswick taxpayers," Lamarre said.

Duane Bratt is a policy studies professor at Mount Royal College in Calgary with expertise in the Canadian nuclear industry. He doesn't see a downside for the province, considering the private sector's lead role. Alberta has been examining a similar financial arrangement.

"This should address many of the critics that have been out there about cost overruns and delays, that nuclear power is uneconomic," Bratt said. "This is very significant. This is the most significant aspect of this deal."


Mount Royal's nuclear expert said getting out early is giving New Brunswick the potential for a serious economic jolt.

"They are ahead of everybody," Bratt said. "In the case of Alberta they haven't even made their site selection yet." Keir called Wednesday's announcement a "no-brainer." The difficult decisions will come after examining the business case.

Also up for negotiation is the involvement of NB Power. David Hay, NB Power's president and chief executive officer, said it makes sense for his nuclear division to be the operator. But Keir said if NB Power balks at signing on, there is a possibility Atomic Energy and its partners could solicit an outside operator.

Atomic Energy would not disclose how much a new generation reactor would cost. Outside estimates place the cost at more than $3 billion. Graham floated a $5-billion total value of such a project, pointing out the second reactor would create 4,000 jobs in trades, engineering and information technology over six years, 500 permanent jobs at the reactor, and roughly 300 jobs at the two centres of excellence.

"It is time to bring our New Brunswickers back," Graham said at the news conference.

the $2.5-million feasibility study must demonstrate a solid business case. In the coming months, Atomic Energy will be pushing interested U.S.-based utilities to sign statements of intent, the first step toward buying power generated from a future reactor.
In the comments on the earlier thread, the main concerns seemed to be the viability of markets and risk for the province. According to this, there is no committment now. If we do decide to go ahead we will have a cutting edge centre of excellence in New Brunswick, the builders will take on as much risk as we want (including the potential to take all of it on and we would not get cash to pay down debt but would get 800 good, permanent jobs) and so on and so on.

Now, can't we all just get along? Agree this is worth a look and celebrate a bit of innovative thinking and forward moving direction coming from our government for the first time in a long time?


Jack Keir said...

Looks like you were right in your debate with the other folks on nuclear NB Politico. Somebody give me a good reason why we shouldnt go done this road. No risk if we dont want any, decide after the feasibility study is completed if we want an equity position. With respect to the arguement that Team Candu is paying for the study and will make sure the study shows we need anuclear reactor? Keep in mind that SNC Lavilin, General Electric, B & W, Hitachi are also in on the cost of the study. They will want true facts on whether there is a need and a profitable opportunity to build a second reactor. After all, it will be their money on the table for capital costs for construction and maybe operation. Be pretty foolish of these blue chip companies to produce a feasibility study with false assumptions and then base there decision on whether they will invest or not on that report? This is a great opportunity for all of New Brunswick. We find out for free if the business case works. If it does, we get in for some equity and reap some of the profit to pay down NB Power debt. If the business case doesnt work, we walk away. Thanks for discussing this great opportunity NBP!

nbpolitico said...

Thanks for stopping by Jack, I've got to say, I am really proud to see you and the government moving ahead on this one!

Rob said...

I still feel Team CANDU NB has a vested interest in producing a report that puts Point Lepreau 2 in a favourable light, as they would likely be looking for government involvement in this process. Every member of the team would benefit from this project even if the province was buying the reactor outright. I therefore see the feasibility study as nothing more than a sales brochure. Sales brochures are valuable sources of information, but are definitely not impartial.

Any time government is preparing to invest anywhere near the amount of cash this reactor will take, I feel a generous amount of skepticism is required. Take, as an example, the beatification of Mother Teresa. While she is viewed around the world as the closest thing to a saint the Earth has seen in a while, the Vatican still hired Christopher Hitchens to act as a devil's advocate. The man came into the Holy See, and told the Pope and the Princes of the Church what an awful woman that Agnes Bojaxhiu was.

With AECL and Team CANDU writing a pro-nuclear report, what is the harm in the province contracting a con view of the project? I would imagine that we should look at both sides of a potential investment equally before cutting a cheque with 9 zeroes.

It seems as everyone, from the Cabinet, the media, the blogosphere, and industry, are treating this opportunity as the greatest thing since sliced bread, and perhaps better. We definitely need a healthy debate in the coming months about this issue. Point Lepreau 1 was not on budget, not on schedule, did not last as long as was advertised, and required much more maintenance than first thought. With that history in mind, industry produced reports about the feasibility of Point Lepreau 2 must be taken with a generous helping of salt.

In short, I see this entire province jumping on the nuclear bandwagon. I hope somebody at least is willing to listen to the devil's advocate.

nbpolitico said...

Rob - the province is hiring a consultant to track the study as it goes along and to play devil's advocate. If you read the stories I linked above, you'll find that NB Power is not that keen on owning the project so it is very premature to suggest the province will be handing over any kind of cheque let alone one with nin zeroes. Based on the talk I've seen in the papers and from the minister responsible right here on this blog, I would assume that the odds right now are against the province being the biggest share holder in this deal.

Jack Keir said...

NBP. You are right. We are hiring third party independant cosultants to give us recommnedations on the final report. Comparing this to Mother Teresa?Little bit of a reach there Rob but i appreciate the comments.

Rob said...

While others may find comparing Point Lepreau 2 to the trials of Mother Teresa may be considered a reach, I find the prospect of a second nuclear plant has been covered by the New Brunswick media as bigger than the Second Coming. I expect to see a headline in the Telegraph Journal reporting a joint presser with Jesus and Muhammad expressing Their divine support for a second reactor project.

I don't feel a consultant expressing recommendations on a pro-industry report is a devils advocate role. Perhaps if the province made $2.5 million available to a noted opponent of nuclear power, say the Conservation Council, I would feel both sides of the argument were being heard in Cabinet. For such a large decision, one must see both sides of the coin to make a proper decision.

My only concern with this entire process is the lack of debate. As I said earlier, the Telegraph Journal, and likely Brunswick News, have staked a large piece of real estate on the Lepreau Bandwagon. How will debate take place when the leading anglophone media outlet has already professed its undying support for the idea?

We also have an Official Opposition which is in a leadership limbo the likes of which haven't been seen since the heady days of Gerald Ford. That leaves the NDP to oppose this plan in the legislature. Of course, the NDP is purely a theoretical beast, along the lines of lygers, or unicorns.

I think, NBP, that you, I, and the minister are on the same side of the argument when it comes to the safety and applicability of nuclear power. We just differ on how it should be financed, and by whom it should be sold.

Jack Keir said...


We can't even differ on who should own it and finance it because that decision hasn't even been made yet. We are wide open to who should own it and finance it. It maybe us totally, partially or not at all depending on the business case. See Rob, we don't disagree at all! :)