British Energy fiasco could cost us millions

St. Catharines Standard - September 9, 2002

Actually, catastrophe is a better word.

The latest development in a long line of incompetent management decisions on the part of Ontario Hydro's Ontario Power Group is that it signed a lousy deal to lease the power plants to a British corporation that last Thursday announced it was broke.

British Energy, which was worth $9.7 billion Cdn in 1998, "may have to take appropriate insolvency proceedings," it told the London Stock Exchange. The company lost $1 billion last year and now needs a bailout from the British government.

What's going on with the Bruce nuclear stations is bound to cost Ontario taxpayers multi-millions -- if not billions -- in unexpected costs because of the bungling, blind trust and incompetence of the people who negotiated the deal to lease the plant for 18 years for approximately half the cost being paid for U.S. nuclear power plants.

That raises some practical concerns. The Canadian Nuclear Safety Commission wants to know if Bruce Power has the $222-million reserve to cover the cost of shutting down the plant in case of an emergency. The commission has given the utility until Sept. 10 to prove its case. But what happens if Bruce Power doesn't have the money?

And what if British Energy cannot continue to meet its lease payments for the two nuclear plants? That amount is estimated to be $150 million for this year.

With British Energy close to collapse and no indication so far from the U.K. government that it is going to bail out the private company, things look grim for Ontario taxpayers.

For their part, the British are bewildered by the rapid collapse of the energy corporation. Even their bankers are shocked by the company's announcement that it was on the skids.

Because of the sweetheart deal British Energy negotiated with Ontario Power Group, the Bruce A and B plants generated $102 million in profit last year. That's not enough to save the corporation, so Ontario should take the facilities back and end the deal if British Energy cannot meet its financial obligations.

We would not like to see the nuclear stations continue running under provincial direction; they cost far more to run than the energy they produce, and that has continually been Ontario Hydro's problem.

If British Energy is to be saved, that will require billions in public money from British taxpayers. If, in turn, the company's deal with the Bruce Power stations continues, that will cost Ontario taxpayers millions in additional costs.

Eves should get to the bottom of this mess, and find the least painful way to get the Ontario taxpayer out of this no-win situation.

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