Proceedings of the Standing Senate Committee on

Energy, the Environment and Natural Resources

Issue 7 – Evidence – June 1, 2010

OTTAWA, Tuesday, June 1, 2010
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 5:10 p.m. to study the current state and future of Canada’s energy sector (including alternative energy).
Senator W. David Angus (Chair) in the chair.

Testimony of Duncan Hawthorne CEO of Bruce Power, questioned by Senator Mitchell, follows.

Background: Bruce Power is AECL’s largest customer, with AECL operating under a $4 billion contract for Bruce A refurbishment. The project now behind schedule and over budget. From federal government budget allocations, it is clear that Bruce Power is obtaining AECL’s services at significantly less than cost. The Ontario new nuclear bid process referred to in the following exchange required the bidders to assume the risk of cost overruns, similar to the way renewable developers are responsible for cost overruns.

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Senator Mitchell: That is excellent.
You have made an impassioned plea on behalf of CANDU reactor technology, and it makes a great deal of sense. There is some suggestion that the new ARC-1000 reactor technology has certain problems and may not be accepted in Ontario. Can you comment on that?

Mr. Hawthorne: Yes. I will explain that in two points. First, I was part of the bid process in Ontario because I was on the steering committee. Every one of the bids was ugly. They were all significantly higher than anyone expected, but they were also all significantly higher than any bid anyone has seen anywhere in the world for a new nuclear plant to date. We had to ask what type of questions we had asked. I think we asked the bidders to price in many risks that they would not normally take, and they added a significant premium, so we ended up with very high bids from all the bidders.

On the ACR-1000, the only compliant bid we received came from AECL, but it was still far too high. The reality is that the design for the advanced CANDU reactor is not complete. There is a question mark as to how much it will cost to complete and, when it is completed, what the market will be for it. As we talked about earlier, an attractive feature of the current CANDU design is that it does not use enriched fuel. The ACR-1000 does. We have now perhaps lost one of our attributes in order to get into another market.

I personally do not think that is the right strategy. We do not have to compete head to head with people we cannot beat. My personal feeling is that we have to offer a product that they do not have.