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Energie sans Frontieres: Gas & Electricity Converge Along the U.S.-Canadian Border

Fortnightly Magazine - April 1 1998

with the Ontario Electricity Generation Corp. plus an independent market operator.

While pointing a finger to "ongoing problems" with nuclear plant management and worker training, the report also finds no problems with power reliability or nuclear safety: "The Atomic Energy Control Board and other independent experts have confirmed that the nuclear system is being operated safely."

William Farlinger, Ontario Hydro's chairman and then-interim president and CEO, stressed the same point in an earlier speech to the Canadian Club: "[O]ur nuclear units¼ are safe, or we would not run them. What I am saying is that when operating performance worsens, safety will eventually be affected if actions are not taken."

Three weeks after the White Paper was made public, Ontario Hydro released its first in a series of monthly report cards to benchmark the nuclear division, plus individual stations, against industry standards for production, safety and environmental compliance. John Earl, a spokesman for the company, emphasizes the reports are a "long-term trending device¼ based on two-year rolling averages." He warns not to look for "instant gratification or negatives." Ontario Hydro has set "stringent targets for itself, the optimums of where we'd really like to be."

Five of Ontario Hydro's 19 nuclear generating units were "laid up" recently, and more were scheduled for lay up in late March or early April. "We've stopped applying band aids," said Farlinger. "Our plan is to concentrate our resources on improving the performance of our 12 newest nuclear reactors.

Ultimately, the fate of those laid-up units will be decided by the company's board of directors; a business plan will be presented to them in 1999. The Ontario government already has decided, however, to keep Ontario Hydro's generating assets intact, in order to keep it a strong player once competition becomes a reality. Rumors of the possibility of private-public partnerships or the outright sale of some nuclear plants to other interested parties had circulated since The Macdonald Report in 1996 had recommended dividing up and privatizing some of the company's generating assets.

This mothballing, Hydro asserts, should not have a negative impact on fuel supply. "We have enough capacity via our fossil plants to make up the difference," according to spokesman Al Manchee.

Nonetheless, the company is looking at other fuel sources, if only to "see what is out there that's better than what we have," says Ontario-Hydro's director of communications, Terry Young.

The company imports "a small amount" of fuel from the U.S., Manchee says, and some American companies have responded to this RFP.

Price is, of course, an important consideration. Wholesale electricity prices are under a rate freeze that began in 1994 and runs through the end of 2000. As Farlinger told the Canadian Club, the company would like to keep two of its Bruce A station units operating, but only so long as the units can be safely run, and only if continued operation of the units is a "cost-effective decision for all our customers." Ontario Hydro is also busy improving the efficiency of its operations, according to Farlinger, and encouraging demand-side reductions, "where this is