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Ontario’s Costly Nuclear Folly

  May 12, 2025  •  David Robertson, https://socialistproject.ca/2025/05/ontarios-costly-nuclear-folly/#more

The last time the nuclear industry got its way in the province, Ontario Hydro spent over two decades building 20 nuclear reactors. It was a mash-up of missed deadlines, cost overruns, and a troubling pattern of declining nuclear performance.

Even more troubling, the last generation of nuclear reactors forced Ontario Hydro to the edge of bankruptcy. And it saddled us with a mountain of nuclear debt that we are still paying off.

The Conservative government of Doug Ford is now repeating those costly mistakes in the largest expansion of the nuclear industry in Canada’s history. A nuclear blunder on steroids.

Part 1: Past Debt Due

In 1999, Ontario Hydro collapsed under the staggering weight of its nuclear debt. When the account books were opened, the reality hit home. At the time, Hydro’s assets were valued at $17.2-billion but its debt amounted to $38.1-billion. The government was faced with a stranded debt of $20.9-billion.

In response, the government of the day split Ontario Hydro into five separate organizations. Ontario Power Generation took over the generating facilities (hydro, coal, gas, nuclear) and Hydro One, later privatized, inherited the transmission grid. Neither of these organizations would survive if they had to carry the debt. The government was aware that any future hopes of privatizing the successors of Ontario Hydro would be scuttled if investors had to absorb the debt. The debt was transferred to Ontario families through special charges on electricity bills (until 2018), regular electricity bills, and the tax system. It was the world’s largest nuclear bailout, one we are still paying.

The Ontario Electrical Financial Corporation is one of the five Ontario Hydro successor entities. It was set up to manage and service the long-term debt of the former Ontario Hydro. According to its 2024 Annual Report, the total debt, twenty-five years later, is still $12.1-billion. In 2024, OEFC paid $626-million in interest charges alone, an amount that is recouped from taxpayers and ratepayers. In its financial statements the organization notes that its longest-term debt issue matures on December 2, 2050. In 2050, Ontario will still be paying the debt of the failed nuclear program of the 1970s and 80s.

Part 2: Repeating Past Mistakes

Ontario Power Generation (OPG) is owned by the government of Ontario. OPG is leading Ontario’s nuclear resurrection. It is aided and abetted by the IESO (Independent Electricity System Operator) another surviving offshoot of the collapse of Ontario Hydro. And it is directed by a series of government policy announcements and legislative initiatives. These directives put nuclear on the fast track while shouldering aside clean, cost-effective, and safe renewables.

It is an astonishing nuclear industry coup. Without putting up their own money, without bearing the financial risks, the nuclear industry has captured Ontario’s energy policy and turned crown agencies into nuclear cheerleaders.

Even a few years ago this would have seemed impossible. The nuclear industry was on the ropes. Catastrophic nuclear accidents at Three Mile Isle in the US, Chernobyl in Ukraine, and Fukushima in Japan had severely tarnished the nuclear safety image. All around the world, the cost overruns and lengthy build times of nuclear plants had chilled utility and government interest in more nuclear plants. In Europe, only one nuclear plant has been built and come on line since 2000.

In Ontario, the last nuclear reactor went into operation in 1993. Nuclear plants that had been forecast to operate for 40 years showed major signs of early ageing after about ten years. Most of the existing nuclear fleet was rapidly reaching its best before dates. Safety and operational issues plagued the industry. The four units at Pickering had been shutdown because of safety reasons. And shut down again. By 1993, Bruce A’s performance, as a result of ‘fretting’ pressure tubes, had drastically declined. In 1997, Ontario Hydro announced that it would temporarily shut down its oldest seven reactors. By that time, the escalating costs of the newest reactors at the Darlington site were already a cautionary tale. Originally billed in 1978 at $3.9-billion, the final cost in 1993 had more than tripled to $14.4-billion (1993 dollars).

The first generation of nuclear plants had clearly demonstrated the failure of the nuclear industry to deliver electricity on time and on budget. It also demonstrated that nuclear reactors couldn’t provide affordable electricity. In fact, Ontario Hydro’s last public cost comparison (1999) revealed the cost of nuclear energy to be more than six times the cost of hydro electricity. (7.72 c/kWh vs $1.09)

Part 3: The Nuclear Resurrection

It seems that all those ‘hard lessons’ learned have been willfully forgotten. The Ford government has now launched a multipoint nuclear power offensive. It has passed legislation to ensure that nuclear is Ontario’s energy priority. It has made commitments to build untested and costly small modular reactors (SMRs). It has decided to refurbish antiquated nuclear plants (Pickering) when there is no business case to do so. It has announced as the centrepiece of its energy policy the irrational goal of becoming a nuclear energy superpower. And it has opened the public purse to the appetite of the nuclear industry.

It is a power play with some revealing features.

3a. A Propaganda Push

In 2023, OPG launched a series of propaganda ads. The ads, in bus shelters and transit, print, and television, were designed to overcome public skepticism and convince us that a new generation of nuclear was safe, reliable, and clean. The company behind the pubic relations campaign made the following claim: “For years, popular culture has distorted perceptions about nuclear power with false narratives that served to stoke fear.” They go on: “The campaign is intended to recast nuclear power as a “true hero” of the province’s clean energy mix.”

Some of the ads focused on Gen Z and Tik Tok with the cartoon character “Pelly the uranium pellet.” Others were tailored to older generations who were well aware of the problems with the nuclear industry and there were ads which simply made outrageous claims. For example, the ad for Small Modular Reactors declared that “SMRs are clean and reliable.” Quite the claim since none have been built.

The ad campaign effectively echoed the industry’s talking points, talking points that have become the mantra of the Ford government. Nuclear energy is now described by Ontario’s energy minister as “clean,” “non-emitting,” “reliable,” and “fundamental to our future.”

3b. A revolving door between the government and the industry

Back in June 2024, former Energy Minister Todd Smith left the government, after spending billions on the nuclear industry and promising billions more. Upon his departure, Todd Smith landed a job as a VP of CANDU Energy Inc. CANDU Energy Inc was created when SNC-Lavalin purchased the commercial reactor division of Atomic Energy of Canada Limited from the federal government in 2011. In an effort to distance itself from its scandal ridden past, SNC-Lavalin has since changed its name to AtkinsRealis. The company is heavily involved in the refurbishment of Ontario nuclear plants and the plans for new builds.

3c. The technological hype of SMRs

Small Modular Reactors (SMRs) are not small and they are not that modular. And they are not that new. The designs, of which there are about 54, have been kicking around for a long time. It’s just that no one wanted to build them, and investors were loathe to put up their own money. The fate of SMRs changed when the nuclear industry convinced governments in Canada to develop what it called the “SMR Roadmap.” The “Roadmap,” largely produced by the industry, was all hype and little substance, but it was enough to convince the Ford government to join the parade.

The World Nuclear Industry Status Review is an annual independent assessment of the global nuclear industry. In its 2022 review, it concluded:

“Small modular (nuclear) reactors or SMRs continue to hog the headlines in many countries, even though all the evidence so far shows that they will likely face major economic challenges and not be competitive on the electricity market. Despite this evidence, nuclear advocates argue that these untested reactor designs are the solution to the nuclear industry’s woes.”

In the 2024 edition of the review, the analysts note: “The gap between hype about Small Modular Reactors (SMRs) and reality continues to grow. The nuclear industry and multiple governments are doubling down on their investments into SMRs, both in monetary and political terms.”

3d. Over-the-top visioning and ideological straw men

Stephen Lecce became the Minister of Energy in June 2024. Shortly afterwards, he travelled to the US where he made a pitch to western leaders and industry movers and shakers. He told them that Ontario is building a blueprint for a nuclear energy future.

A CP wire story put it this way: “Ontario is selling itself as the nuclear North Star to guide the direction of American power.”

Speaking to a largely American audience, he said it’s time to “rid our economies of any dependence on these foreign states that … do not share our democratic embrace,” (Oops).

The minister’s early charm offensive turned more aggressive back home when he criticized those who support renewable energy as” ideologues” who want to “romanticize certain resources.” As he told the National Post, “We are seeing forces on the left, the illiberal left, who cannot come to terms with the fact that in order to decarbonize we’re going to need nuclear.”

The commitment to nuclear was further baked into Ontario’s future when the Ford government released its energy vision in October 2024. The document ironically entitled “Ontario’s Affordable Energy Future” sets the stage for a massive build out of nuclear power.

It also makes it clear that Ontario has set its sights on becoming a nuclear energy superpower in the hopes of selling expensive nuclear electricity to the US and costly nuclear technology to the world.

Reflecting the grandiose aspirations of a would-be energy superpower the Minister declared that “this was Ontario’s moment.”

3e. The legislative lock-in

In December 2024, the government passed the misnamed “Affordable Energy Act” (Bill 214) The legislation has many troubling aspects. Various sections of the act restrict public consultation, further erode the independence of regulatory tribunals, and shifts more decision making to the government. But most alarming is how the government has used the Act to give preference and priority to nuclear power. Section 25.29 (2) of the Act refers to, “the prioritization of nuclear power generation to meet future increases in the demand for electricity …”

3f. The commitment to underwrite the costs of nuclear

The government is bankrolling the nuclear expansion with public money because investors don’t want their own money at risk. The costs of nuclear power have driven private investors away. Even with massive subsidies from governments, investors are reluctant to ante up.

A spokesperson for the government-owned Ontario Power Generation made the point very clear when commenting on small modular reactors.

Kim Lauritsen is a senior OPG vice-president. She told a Global Business conference audience that the crown corporation was willing to take the “first-mover risk.”

As she put it: “Because they (small modular reactors) take too long and the industry needs to see that these things can be built successfully, to give investors the confidence and really get the ball rolling for other jurisdictions.”

Because investors are nervous and because Ontario wants to show the way for other jurisdictions, the Ford government is prepared to saddle Ontario families and future generations with the exorbitant costs of nuclear power.

Part 4: The nuclear three-prong plug: Refurbishments, SMRs and New Large Scale Reactors

Refurbishments

The Ontario government is spending billions to refurbish old nuclear plants. Fourteen reactors are scheduled to be rejuvenated – 6 at Bruce, 4 at Darlington, and 4 at Pickering. The repair schedule for existing nuclear plants stretches out for decades. While these reactors are off line, the government plans to make up the electricity shortfall with more climate wrecking, fossil-gas generating plants.

The cost of the refurbishments will be in excess of $40-billion. That forty billion and the millions more in interest charges will find its way onto our electricity bills.

As our electricity bills go up, so does political pressure and when that pressure reaches a tipping point, the government steps in with subsidies to help reduce electricity bills. It is a repeated pattern in Ontario.

A recent report from the Government’s Financial Accountability Office (FAO) projected the cost of current electricity subsidies to be $118-billion over the next 20 years. These are not all nuclear electricity subsidies. But as we spend more on nuclear and nuclear increases the cost of electricity and governments are pressured to reduce the cost of electricity, there will be even more subsidies to shift the costs from our electricity bills to our taxes.

Small Modular Reactors (SMRs)

In addition to the massive refurbishment program the Ford government has announced a series of nuclear new builds.

There will be four new small modular reactors (SMRs) built at the Darlington nuclear location. Site preparation work is already underway on the first one. OPG has convinced the Canadian Nuclear Safety Commission to forego an environmental impact assessment, relying instead on an assessment that had been done years ago on the site for a different project.

The government has selected the GE-Hitachi BWRX-300 design. This is based on a design that has been kicking around for about 20 years and has had to be redesigned about ten times. It still has never been built. The engineering designs for Darlington have again been changed, making the small modular reactor less small and even less modular.

OPG has not released a cost estimate for the reactors. But there are some indications of the probable magnitude. In the US, the only SMR project that had been approved by the US federal government was NuScale in the mid-west. The project was cancelled because of escalating costs. Originally estimated at $3-billion (US), it was terminated in 2024 when the projected costs reached $9.3-billion (US).

The Tennessee Valley Authority, a large power utility in the US, has partnered with the OPG to promote the GE-Hitachi SMR. The TVA recently provided some estimates of the costs of building the SMR in the US. It indicated that the cost of the first reactor could be about $5.4-billion (US). It hoped the costs could be reduced to about $3.7-billion (US) if more were built. These costs do not include any interest charges, cost overruns, or missed deadlines.

If we assume the lower cost and convert to Canadian dollars, the price tag for the four SMRs at Darlington would be about $20-billion before things go wrong. In 2019, the company’s indicated the costs would have to be below $1-billion (US).

New Large Scale Nuclear Reactors

The Bruce C Project

In July 2023, the Ontario government announced its support to expand the capacity of the Bruce nuclear power plant near Kincardine. The Bruce nuclear generating station is owned by OPG but operated by Bruce Power, a private consortium. Bruce Power is planning a major expansion of the site’s generating capacity. At present, six of the eight reactors are being refurbished. This new development, if it goes ahead, will add an additional 4800 MW, which would require building four or five new reactors. Admittedly, it is early days, and no costs have been provided.

Port Hope

In January 2025, the Ontario government announced that it was in the preliminary stages of a massive new nuclear plant that could be built at the OPG site in Wesleyville, near Port Hope. Officials have suggested the plant could have a capacity of 8,000 to 10,000 megawatts and be in operation by the 2040s. Achieving that generating capacity would require building eight or more nuclear reactors.

Part 5: Calculating the Costs

May 15, 2025 Posted by Christina Macpherson | Canada, politics, Small Modular Nuclear Reactors, spinbuster | Leave a comment