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Ontario Power Generation Inc. has decided not to refurbish units 2 and 3 at Pickering's A nuclear station, saying the job would cost too much even though the province is grappling with power shortages.

"We don't see a sound business case for returning units 2 and 3 to service," OPG chief executive Jim Hankinson said in a Friday release, adding that the move should "not be seen as a lack of confidence in nuclear power."

The OPG said it would have cost more than $2-billion to repair the two units. Additional funds would have been needed to keep them running, although the OPG said their life span was expected to last only seven to 10 years.

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Instead of repairing the two units, the province's electricity generating agency said, it will "devote its resources and expertise to maximizing the performance" of its 10 existing nuclear units.

The decision not to restart the two units at the Pickering nuclear station comes at a time when the province is facing  a shortage of capacity and soaring energy prices. At the same time, demand is projected to keep rising as the province's population grows and construction of new buildings keeps booming.

The Ontario government, meantime, has a long-standing pledge to shut down its coal-fired generating stations.

On a high-demand day, the province consumes 25,000 megawatts of electricity, while on off-peak days it uses between 16,000 and 18,000 megawatts, a senior OPG official said. When they were running, the official said, Pickering's units 2 and 3, produced a combined 1,000 megawatts of power.

The advantage of rebuilding the two Pickering units, about 30 kilometres east of downtown Toronto, is that they could have been producing power within three years, the official said.

OPG's nuclear units produced almost 30 per cent of the power used by the province last year, the company said. In addition to Pickering, the company operates a nuclear power station at Darlington, 70 kilometres east of Toronto.

Ted Gruetzner, spokeman for the Ontario Energy Ministry, said the province is building two natural gas plants near Sarnia, as well as three natural gas plants in Mississauga. When they start operating, between 2007 and 2009, they will supply 2,200 megawatts a year.

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Still, "supply is potentially tight over the next few years," Mr. Gruetzner said. Over the next few summers, people "will have to be more conscious and conserve power."

OPG said it has been studying the economics of returning units 2 and 3 - which have been idle since December, 1997 - to service for several months. OPG said Friday it found that while it was "technically feasible" and they could be run safely for several years, their physical condition would make them too expensive to repair.

"OPG's decision on units 2 and 3 is financially prudent and reflects our objective of keeping our costs as low as possible," Mr. Hankinson said.

In late 2003, the government fired the top three executives of publicly owned Ontario Power Generation for botching the restoration of the Unit 4 reactor at the Pickering A station, which was years late and millions of dollars over budget.

The OPG's Mr. Hankinson stressed Friday that the province is not turning away from nuclear power, saying "we are supporters" of nuclear stations for the province. "At this point, we are going to look carefully at life extension for the Pickering B units and for the Darlington Units," he said, not at building new nuclear units.

The company's board has advised the Ontario government of its decision.

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The publicly owned utility returned the Pickering A unit 4 to service in 2003 and the refurbished unit 1 is expected to be in service in October at a projected cost of about $1-billion.

Units 2 and 3 have been maintained in a safe shutdown state since 1997, OPG said. Over the next two years the fuel and heavy water will be removed from the two units, which will be put into a long-term layup state.

Separately, OPG also reported that it earned $63-million or 25 cents in the three months ended June 30, compared with a loss of $41-million or 16 cents a share a year ago.

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