Ontario unveils $12.8B Darlington nuclear refurbishment

Ontario Power Generation (OPG) is working to ensure nuclear power is part of the province's future with approved plans for a $12.8-billion refurbishment of four nuclear reactors at the Darlington generating station, just east of Toronto.

• Bruce Power to spend $13B to refurbish 6 nuclear units

• Refurbishing Darlington could cost $10B

In a news release, the province says nuclear refurbishment at Darlington will add $15 billion to Ontario's gross domestic product and will create up to 11,800 jobs annually. The project includingall four reactors will involve roughly 30 million hours of work over a decade with the involvement of more than 180 companies, the statement said.

"Proceeding with the refurbishment atDarlingtonwill ensure that nuclear continues to be Ontario's single largest source of power," said Energy Minister BobChiarelli.

The refurbishment is slated to begin this October and will provide 3,500 megawatts of emission-free power, according to the province. All four units are scheduledto be completelyrefurbished by 2026.

OPG will have to come back to the government for approval of eachsubsequent reactor refurbishment project, a move the government says will protect consumers.

"Refurbishing Darlington is an investment in Ontario," said OPG president and chief executive officer Jeffrey Lyash. "It's good for the customers, it's good for the economy and it's good for the environment. We're confident we have done the work and have the people in place to deliver this project safely, on schedule and on budget."

Sources familiar with the announcement say the final budgetincludes a $1.7-billion contingency fund in case of cost-overruns onthe $4.5 billion portion of the project done inside the reactoritself the nuclear science work deemed as "subject to executionrisk" versus the fixed contracts for the majority of the supportinginfrastructure.

OPG estimates it would need between 7.2 cents-to-8.1-cents-per-kilowatt-hour to recover the total cost of therefurbishment, below current averages of 9.2 cents-per-kwh, but morethan privately-owned Bruce Power will be paid under a new contract.

Bruce Power refurbishmentplans

Bruce Power announced plans last month to spend $13 billion torefurbish six nuclear reactors at the generating station it operatesunder contract in Kincardine, on Lake Huron. It will be paid between6.57-to-7.7-cents-a-kwh for the power generated by the refurbishedreactors.

The Liberal government wants to extend the scheduled lifespan ofthe reactors at both generating stations, which would normally endaround 2020, by about another 30 years.

OPG was "limiting risk by including contractual provisions thatkeep contractors and subcontractors accountable for any delays oroverruns," on the Darlington refurbishment, said one source.

Bruce Power assumed all risks of cost overruns for its nuclearrebuild project, which will start in 2020, four years later thanoriginally planned.

Pickeringmay operate until 2024

Ontario's only other nuclear generating station, in Pickering, isalso scheduled to be decommissioned in 2020, but the province has approved OPG's plan to continue operation until 2024, protecting 4,500 jobs. OPG will be in talks with the Canadian Nuclear Safety Commission and the Ontario Energy Board to obtain the necessary approvals to extend operations, according to the province.

"The plan to refurbish the Darlington nuclear units and to keep Pickering in operation longer during the refurbishment period is a cost effective way to meet our future power needs," said Bruce Campbell, president and chief executive officer of the Independent Electricity System Operator.

OPG president and CEO Jeff Lyash touted the benefits of theDarlington refurbishment in a recent speech, citing a ConferenceBoard of Canada report showing it would generate $14.9 billion ineconomic benefits to Ontario and create 11,800 jobs a year duringthe peak of construction.

Premier Kathleen Wynne wants to keep generating about 50 per centof Ontario's electricity from nuclear power, and points out that hergovernment cancelled plans to build a new nuclear generatingstation, which would have cost at least $15 billion.

Ontario's opposition parties say the Liberals have made a mess ofthe electricity sector and have driven rates so high they areforcing companies to leave the province for cheaper-power inneighbouring provinces and states.

Anti-nuclear activists such as the Ontario Clean Air Alliance saynuclear projects always run over budgetand they want OPG toabandon the refurbishment plans and instead import more electricityfrom Quebec.

Greenpeace Canada is concerned about possible accidents atnuclear generating stations and says refurbishing the agingreactors at Darlington is not worth the risk.