Want to buy a used reactor company from Canada?

Harper government offers AECL to the highest bidder

After a series of public setbacks, Atomic Energy Limited Canada (AECL) has come to the end of the road. This week the government of Canada put the crown corporation up for sale to the highest bidder. The question is whether anyone will buy it.

Lisa Raitt,, the natural resources minister in the Harper government, said that only the reactor division is being sold. The research division, which includes the troubled Chalk River medical isotope reactor, will be retained by the government.

For her part, Ms. Raitt chirped happily to the news media about AECL needing “strategic investors” while reducing the “financial risk” to Canada’s taxpayers. News media reports put the price of the sale at an estimated $300 million.

The government has characterized ACEL, metaphorically speaking, like a high mileage car with serious maintenance issues. By offering it for sale positioned as a "beater," the politicians in Otawa set up a self-fulfilling prophecy of "see I told you it wasn't worth anything." In fact, the government repeatedly undercut AECL by failing to pump for domestic deals, and the jobs that would come with them, and by not intervening early on in high profile projects that showed signs of heading south.

No go in Ontario

In 2009 AECL lost any shred of having a viable future when it could not close a deal on its home ground of Ontario for new reactors at Darlington. The provincial government dithered endlessly over cost issues of its own making, and then indefinitely postponed a decision on the $20 billion plus deal. AECL’s prospects did not improve as other provinces expressed a distinct lack of enthusiasm for new, large reactor projects.

What’s mind boggling about Canada’s mishandling the AECL is that it flies in the face of the nation’s need for carbon emission free energy technologies. In a conservative political rush to depend on the “free market” to supply solutions, the Harper government has simply signaled denial of its obligation to respond to the threat of global warming. The government has confused the necessity of resolving mismanagement at AECL with its accountability to deal with a much larger problem. Instead, it is literally throwing the baby out with the bath water.

Port Lepreau project still underwater

Another black eye for AECL, which falls in the “mismanagement” column, is the enormous cost overrun being racked up in New Brunswick at the Port Lepreau reactor project. AECL has reportedly told provincial energy officials the $1.4 billion (CDN) project, which was supposed to be done in October 2009, could increase in cost by as much as 50% and will be delayed by six months to a year.

Utility spokesman Jack Keir told the Canadian Press Sept 27, AECL was “unprepared for the complexity of the job.” He also said it is costing the utility $1 million (CDN)/day to buy replacement power while the reactor is offline. New Brunswick provincial officials have repeatedly petitioned the federal government to make good on AECL’s cost overrun. Minister Raitt has not yet responded officially to their claim for compensation.

Discussions about a new reactor there have been put on hold. Once the Port Lepreau reactor refurbishment is done, New Brunswick will sell the power station to Hydro-Quebec for $4.4 billion (CDN). However, Hydro-Quebec will not assume the debt, or cost over runs, from the current AECL refurbishment. Instead, the plant will become a subsidiary and retain its own set of business books.

No play in the western provinces

Saskatchewan, which is a world leader in export of uranium, is also thinly populated, and said recently it would not be proceeding with a nuclear reactor project. Alberta, which has a looming energy deficit of over 9 GWe, said it could take or leave a new reactor project despite continuing interest by Bruce Power to build twin AECL 1,100 MW ACR1000 reactors in the tar sands region.

The idea of using a nuclear reactor to produce steam and electricity in the tar sands region (map right) has been batted about since the 1980s. In 2007 oil companies operating in northern Alberta dismissed proposals for a reactor there saying the time frame for building one was too far in the future to be meaningful.

End of the line for CANDU?

AECL’s CANDU reactor technology is unique, and is unlikely to be carried on by any firm purchasing the company. The potential bidders all have their own reactor technologies. Areva has a 1,600 MW EPR. GDE-Hitachi has both the 1,350 MW ABWR and the 1,520 MW ESBWR, and Westinghouse has the 1,150 MW AP1000.

Any of these firms buying AECL would likely have the idea in mind of getting the CANDU technology off the market as a potential competitive in India, China, and other developing countries interested in new reactors.

On the other hand, nuclear engineers working for AECL might find new job opportunities if they are interested in reactor projects in China, India, Finland, and France.

It is a sad end for the reactor company and a sobering signal about the role of government in developing and sustaining the nuclear energy industry either on its own ground or for export.

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