Bruce Power and the Ontario government have signed an agreement that will keep the company’s nuclear plant running at least until 2064. The price tag? According to everyone involved, $13 billion from private capital and none from the Ontario taxpayer or hydro customer.
Privately-run Bruce Power, on the eastern shore of Lake Huron, will shoulder any cost overruns—a real risk given Ontario’s spotty history with nuclear power.
Unsurprisingly given the subject, the full 300-page agreement contains lots of details and complexity. Here are five key facts about the deal:
By the standards of nuclear power, it’s cheap…
For $13 billion of private capital, Ontario will get 6,300 megawatts of nuclear power capacity for 50 years. That’s coming as the province refurbishes its reactors at Darlington and shuts down its reactors at Pickering. While $13 billion is a lot of money, it’s much less than the cost of new nuclear reactors: in 2009 the government walked away from a plan to build two reactors at a reported cost of $26 billion.
Bruce Power will recoup its investment by selling power for 7.7 cents per kilowatt hour, which is less than the Ontario average rate for electricity.
…But prices are still going up
Bruce’s guarantee of 7.7 cents per kilowatt hour of electricity is lower than the Ontario average, but it’s higher than what they’ve charged in the past. Furthermore, while the government insists Bruce is on the hook for cost overruns, the cost of electricity could go up for other reasons.
For example, if the government decides that it doesn’t need to refurbish all six Bruce reactors, it can opt out of some work—say, if a sluggish economy or new technology means that Ontario’s electricity demand isn’t as high as projected. But Bruce Power would be compensated, in that case, with higher prices.
Despite all this, the government says household hydro bills are going to be slightly lower than projected in the 2013 long-term energy plan.
Nuclear’s role in Ontario is shrinking
According to government projections, the proportion of electricity generated by nuclear is going to shrink from approximately 61 per cent of total generation today to 41 per cent in 2025. That’s largely due to the shutdown of the Pickering reactors and growth from renewables (hydroelectric power, wind, and solar) as well as natural gas.
While Bruce Power has limited ability to adjust its production to follow the province’s electricity demand, natural gas plants can be turned on and off more easily than nuclear reactors and provide power at peak times. The glut of natural gas from the U.S. has also made natural gas more attractive for all-day, or “baseload” generation.
Greenhouse gas emissions from electricity are expected to increase
Unexpectedly for a source of power that’s frequently touted as carbon-free, the greenhouse gas emissions from Ontario’s electricity sector are going to increase as a result of the refurbishment process—but not from the nuclear power itself.
Because rebuilding these reactors will take them offline, the government will ramp up Ontario’s natural gas plants to make up the difference. The result? Greenhouse gas emissions from the electricity sector are expected to increase from approximately 5 megatonnes per year to 7 megatonnes per year. Premier Kathleen Wynne can still boast about the Liberal record on emissions: it’s a far cry from 2005 before Ontario began phasing out coal-fired generation, when the electricity sector was responsible for 35 megatonnes in one year.
Ontario has a surplus power problem it still needs to manage
Despite shutting down the Pickering nuclear plant, provincial regulators will need to keep an eye on Ontario’s electricity production. Yesterday, the auditor general’s report noted that Ontario pays hundreds of millions of dollars for power that is not used.
Regulators said Thursday that the province has other options if the electricity surplus persists: natural gas plants will start coming up for contract renewal in the 2020s and could be shut down, and the government may opt not to refurbish all of the Bruce nuclear reactors.
Image courtesy of Bruce Power
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