THE POWER PLAYERS
Energy: Liberals say success in energy game is crucial but there are many unanswered questions
Kâte LeBlanc/Telegraph-Journal
ROB LINKE
Telegraph-Journal
Published Saturday April 19th, 2008
Appeared on page 1
OTTAWA - The corridors of the Westin Hotel are lined with corporate booths displaying the bright shining promise of technology, and behind smiling company reps, images of electrons zoom like comets across a giant panel.
In the ballroom, middle-aged men and women in crisp dark suits settle down to hear the next speaker, Energy Minister Jack Keir.
These are the power brokers.
It is the annual gathering of Canada's nuclear industry association, which brings together the members of an influential cadre of corporate executives, scientists and engineers and their clients, the key decision-makers in provincial energy utilities.
Keir is at the front, a portrait of harnessed energy, as he waits to be introduced. Some rows back sits NB Power president and CEO David Hay.
To one side are representatives of Atomic Energy of Canada Ltd., the federal Crown corporation that built Atlantic Canada's only nuclear reactor at Point Lepreau.
AECL is busy these days in New Brunswick, where it is leading the world's first total refurbishment of a Candu 6 reactor. The $1.4 billion project is meant to keep Lepreau running safely for another 25 years.
Also gathered in the ballroom are executives from the Canadian companies SNC-Lavalin Nuclear, General Electric-Hitachi Nuclear Energy Canada and Babcock & Wilcox Canada, most of which are subsidiaries of some of the world's biggest engineering and electronics firms.
Together with AECL, this group - known as Team Candu New Brunswick - is so eager to build a second reactor at Lepreau they have offered to find private investors to finance the roughly $4- to $5-billion cost of construction.
In return, they would own it - not NB Power.
Over the decades the plant would produce electricity, Team Candu would sell the power for profit, both within and outside of New Brunswick.
NB Power staff would operate the reactor.
This so-called "merchant model" of financing and ownership has been used for natural gas plants in the U.S., but would be the first public-private arrangement for a nuclear plant in Canada.
Lepreau 2, as it's called, would also be the world's first advanced Candu reactor, or ACR-1000 for short. It would pump out 1,100 megawatts of electricity, nearly twice as much as the existing plant.
Building Lepreau 2 is estimated to create 4,000 jobs at the peak of what could be eight years of construction; running the reactor would create 500 permanent high-paying jobs.
Together, the refurbished reactor and Lepreau 2 could anchor an economic cluster that exports nuclear expertise or fabricates components to be shipped overseas.
The reactors would contribute a major share of the $44 billion in economic activity a recent analysis predicts is coming, driven by Saint John's energy sector.
The Benefits Blueprint, a report funded by the provincial and federal governments and Irving Oil, also forecasts 33,000 jobs and $14.2 billion in tax revenue over 10 years from the energy projects.
A separate breakdown detailing Lepreau 2's economic spinoffs has not been made public yet.
But even if the New Brunswick government - as expected - goes ahead with Lepreau 2, it is far from certain all the high hopes this project promises will become reality.
And the uncertainties are not the familiar ones about public safety, raised by nuclear power's opponents. Rather, the uncertainty is rooted in the business case being made for Lepreau 2, and in the serious challenges Canada's entire nuclear industry is facing.
They are made worse by AECL's strong foreign competition becoming even fiercer and entering AECL's home turf: now the battleground is in Alberta's oil sands and in Ontario.
Canada's nuclear industry is in a sell-or-die battle. It will determine which of a handful of international companies builds most of the next generation of reactors.
The survivors will make billions; the losers may not survive, or may have to shift their operations from building new plants to keeping old ones going until they are mothballed.
By pursuing Lepreau 2, the New Brunswick government has linked its economic and political ambitions to this titanic global struggle.
On this worldwide stage, the province is a small player at the mercy of decisions others take.
The Graham government's opportunity for jobs, investment and prestige is tied to being the first jurisdiction to go ahead with AECL's new ACR-1000 model.
"The only reason for us to get in the game is the economic development opportunity we see," said Keir.
Last year, Premier Shawn Graham said Lepreau 2 is crucial to New Brunswick posting the economic growth it needs to reach his goal of no longer needing equalization handouts by 2026.
The Graham government is expected to decide whether it will go ahead with Lepreau 2 in May or June.
Keir's department has been reviewing the feasibility study AECL and its Team Candu partners produced on Lepreau 2 - a study that the government says contains too much commercially sensitive information to be made public.
Keir's staff is also poring over a separate study by MZ Consulting on Lepreau 2, made public in response to an access to information request filed by the Telegraph-Journal.
This work is the necessary due diligence, Keir says.
At this stage, New Brunswick can still go ahead with Lepreau 2 or walk away, says Keir, but he is open about his eagerness to proceed.
As early adopters of a new technology, Keir and Graham maximize their leverage with corporate giants from whom they hope to wring as many jobs and as much investment as they can.
But the risk, as Opposition leader Jeannot Volpe puts it, is that they could saddle New Brunswick with a reactor model the rest of the world doesn't buy.
Should Ontario and the rest of the world opt for reactors built by nuclear conglomerate Areva SA of France, AECL's leading competitor, or rival Japanese firms, many of New Brunswick's hopes for spinoffs from Lepreau 2 would be undermined or dashed.
Officials in Ontario - in the market for four new reactors - see these uncertainties, as does Keir.
But how they're dealing with them differs greatly.
Just now in the Ottawa hotel ballroom, Peter Wallace, the bright, boyish-looking deputy minister of energy for Ontario, has left the stage.
He explained why his wealthy province, home to 16 operating Canadian-built reactors, will wait until the end of 2008 before choosing AECL's reactors or those built by a foreign rival.
"Here in Ontario, the government needs to make careful, thoughtful decisions about which nuclear technology to choose," says Wallace.
Then Keir speaks.
New Brunswick, he says to applause, is "bullish" on nuclear.
"My vision is one that sees New Brunswick growing the energy hub concept to its full potential," says Keir. "We intend to explore, to the fullest, every avenue we can to make our province stronger."
He lays out how eager he is to work with AECL and Team Candu on Lepreau 2, thanking by name each of the executives he has come to know.
Right after Keir's speech, a reporter approaches. He has in his hand a report from Keir's own hired advisers, MZ Consulting, the Toronto-based firm. They suggested New Brunswick wait to see what reactor type Ontario chooses.
The big question is: Should Keir accept the advice to wait until Ontario decides?
The energy minister shakes his head.
"I reject that position," he says emphatically.
Keir argues that since the private sector is going to finance and build Lepreau 2, then New Brunswick and NB Power are not taking on the debt.
"The financial risk is all with the private sector," he said.
But are there other risks in proceeding?
Nuclear industry experts and Keir's own advisers, MZ Consulting, answer yes.
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