Ontario and the federal government are heading for a showdown over the fate of Atomic of Energy of Canada Ltd. as the province tries to rein in the cost of its proposed new reactors and the Harper government attempts to sell the Crown corporation to the highest bidder.
Federal briefing documents – stamped “secret” and mistakenly left at CTV's parliamentary office – suggest Ottawa believes AECL has been selected to build Ontario's new reactor, but that the province considers the price too high and wants it reduced.
“While Ontario would be likely to ask AECL to lower its price, the government would need to ensure that the project is commercial to preserve AECL's value as it is restructured, and to avoid [federal taxpayers] subsidizing Ontario ratepayers,” says a briefing note contained in the lost binder.
It added that AECL as currently structured would be hard-pressed to mount a successful Ontario project, saying it needs international “strategic partners” to succeed with that, as well as in the global marketplace.
Natural Resources Minister Lisa Raitt – or a staff member – lost the documents at the CTV office. The subsequent release of commercially sensitive information on AECL's Ontario bid has prompted calls for Ms. Raitt's firing and forced her communications director, Jasmine MacDonnell, to resign.
The Globe and Mail reported last month that the Ontario government has selected AECL as the leading bidder to build new reactors, and that Premier Dalton McGuinty instructed the head of the province's infrastructure agency to begin bilateral negotiations with the Harper government.
George Smitherman, Ontario's Deputy Premier in charge of infrastructure and energy, dismissed the story, saying at a committee hearing on May 27 that it “lacked a factual foundation.”
Ms. Raitt's documents, dated May 26, confirm that Ottawa was expecting to enter into negotiations with the province on the bid, and that she was offering assurances that the planned privatization of the Crown corporation would not jeopardize the project.
On May 28, the minister announced that Ottawa would seek buyers for the commercial division of AECL – which builds, maintains and refurbishes reactors – while maintaining its ownership of the Chalk River research facilities.
Amy Tang, a spokeswoman for Mr. Smitherman, said in an e-mail response to questions yesterday that the provincial government's knowledge about the contents of the binder is based solely on media reports, and therefore it could not comment. AECL refused to comment on the release of the sensitive material, noting the provincial bidding process prohibits the company from talking about its proposal.
The Ontario government had promised to announce the winning bidder by June 21, but the deadline, which already has been extended twice, has been pushed back again.
Ms. Raitt's briefing documents reveal that Ottawa imposed strict financial conditions on AECL's bid – including that it must earn a rate of return that would be acceptable to private investors.
Those federal conditions, combined with Ontario's insistence that AECL assume the financial risks of cost overruns, “have resulted in the AECL consortium submitting a highly priced bid,” the documents say. They add that “Ontario would likely be asking AECL to lower its price.”
The Harper government clearly believes that AECL, as currently structured, represents a growing drain on taxpayers, given the consolidation of global the nuclear industry that left the Canadian vendor essentially isolated as a “niche” player.
“A CANDU new build in Ontario holds the potential of significant benefits for both Ontario and Canada,” the briefing notes say.
“For the project and the industry to be successful, however, we would need to enhance [AECL's] new-build execution and better access global potential through strategic alliances that increase the capacity of AECL and the industry to deliver this and future new builds, at home and abroad.”
Possible bidders for AECL include France's Areva Group, and Toshiba Corp.'s Westinghouse – the Crown corporation's two rivals in the Ontario project – as well as GE-Hitachi, which is a partner with AECL in its CANDU business.
Ms. Raitt has also said provincial governments, notably Ontario, may be willing to take an ownership stake.
Liberal environment critic David McGuinty said the latest revelations underscore his concern that Ms. Raitt has damaged AECL at a critical time.
“In one fell swoop, this minister – the government – has seriously undermined its own nuclear power company. It's massively commercially sensitive,” he said.
Mr. McGuinty is the Premier's brother; he said he had no knowledge of the province's bid process.
