In Ontario this month the Canadian Nuclear Safety Commission (CNSC) is holding public hearings on an application by Ontario Power Generation (OPG, the public generator), “for a licence to construct one BWRX-300 reactor at the Darlington New Nuclear Project Site (DNNP).” Regulator hearings are an income opportunity for groups permitted to act as intervenors. The anti-nuclear Ontario Clean Air Alliance (OCAA) is one such intervenor, and it is from their presentation at the hearing relayed to Australia as “simple fact.”
Many online quickly observed an issue with this table in its disregard of real values in adjusting currency values for time. I will explore that after checking the data sources noted in footnotes.
Having been at this for some time, one thing that has amused me is reviewing footnoted sources in OCAA work – especially their 2016 estimates on the cost of refurbishing the Darlington Nuclear Power Station (DNGS) , and alleged alternatives. I mocked their work at the time through sourcing their claims, and now all can now mock their past work simply with hindsight. For this table they seem to have found the oldest instance of a cost in Ontario Hydro reporting: Pickering A’s cost is from 1967; Bruce A’s from 1969, and the remaining 3 stations are from 1975. There is no reference to real and nominal values in the reports the estimates are lifted from. Adding in real values by adjusting the estimates, and so-called “actual cost”, is instructive: estimates are assumed to be the value in the year of the annual report it’s taken from, and the built cost is considered as being from the year the final reactor was constructed.
The ’over budget’ disappears for all but Darlington using this approach – not that we know for certain the approach was being used in estimates. Ontario Hydro (and its predecessor, the Hydro-Electric Power Commission of Ontario) had a power-at-cost mandate. Only after the asset was built would it enter the rate base on a cost-recovery basis. While it was being built it would need to be financed, so there was a need to know the borrowing – but it wasn’t until later we'd get published, clearly communicated expectations of future costs.
If the intent was to provide an honest analysis, they might have jumped to Ontario Hydro's 1981 Annual Report to get a better understanding on estimated costs for Pickering B, Bruce B and Darlington. This report included both costs incurred through 1981 and estimated remaining costs to completion “(Including Escalation)”. A perspective from that report, “These estimates include cost escalation which is forecast to range between 10.5% and 12.7% per year in the period 1982 to 1990. Interest is also added to the cost of construction in progress at rates which average 16.1 % per year over this period.”
Assuming the Pickering B estimate from 1975, of $1.8 billion, was in 1975 $CDN, it would be a real value of $3.9 billion in 1985 $CDN (using the Consumer Price Index for Canada, 2002=100, which rose to 63 in 1985 from 29 in 1975). There is minimal difference between the 1975 figure and the 1981 figure if one assumes the initial estimates were valued in the currency of the day – and the only reason I can think of not to do that is to craft an anti-nuclear narrative.
Moving on to what the OCAA called “actual cost” in the initial graphic of this post, their sourcing is all letters (which were a thing once upon a time). That is not to say the numbers can’t be sourced. Wikipedia is useful here, as it currently has informative entries on each of the 3 Ontario nuclear generating stations, all seemingly well sourced. But you can find essentially the same figures in many anti-nuclear works from Ontario over the years. As examples, Table 5 in Greenpeace’s 2008, “Better Never Than Late: The Climate Fallout of Ontario’s Nuclear Electricity Plan”, and similar numbers in the text of Appendix 2 from Pembina’s 2004, “Power for the Future: Towards a Sustainable electricity System for Ontario.” These similar numbers mostly cite two sources for the figures they report: response from Ontario Hydro at a 1991 “Demand Supply Plan Hearing Interrogatory No. 9.7.62” (I did not locate that), and a likely source of the responses at that time, Ontario Hydro’s 1988, “A Journalist’s Guide to Nuclear Power.”
The 1988 work includes a set of figures for each nuclear generating station. Tables for each site are on different pages so I’ve brought them together in this table.
It’s important to understand the terminology for measurements in the Ontario Hydro document. It defines, “Cost ($ of Year)**” -unlike the documents that cited the costs for the Pickering and Bruce stations: “Dollars-of-the-year costs are the total of each year's costs during the construction period. There is no provision for inflation. This total is the most frequently used number when speaking of the cost of building a generating station.” Seems to be just adding up receipts! The final column is, in the original document, “Cost (Constants)***”. The footnote states: “Constant dollars costs factor in inflation, to indicate what it would cost to build the plant now. based on the purchasing power of a dollar on December 31.1987.” I am not certain this provides a simple way to compare costs over time, but at least it attempts to. Inflation over the time of Pickering A’s construction was quite tame, and then it was wild. My interpretation of the cost given in “constant $’s” is essentially it represents the overnight costs of the generating station if built all at once at the end of 1987. This method ignores building Pickering A before inflation's spike as there was a benefit to building when interest rates were lower, but it provides information indicating that’s why the costs were lower and closer to the estimate shared by the the OCAA. It’s negligent to look at nominal cost increases through the 1970’s and 1980’s and conclude it makes a statement about the costs of building nuclear while ignoring the high general inflation of that period.
It should be noted the build cost discussion is far from a value discussion. Pickering A needed expensive replacements of parts in the 1980’s, and the 2 reactors that were kept operating until 2024 more extensive work in the 2000’s. ln terms of operation costs, a 2009 Benchmarking study of Ontario Power Generation (OPG) stations showed Pickering A with Total Generating Costs (TGC) above 9 cents/kWh, while the B units were under 6 cents and Darlington slightly above 3 cents/kWh. There’s no doubt nuclear stations increased in construction cost, but there’s also little doubt the newer stations were far more valuable.
It is at least 44 years since the public utility produced a budget estimating “future costs to completion (including escalation)” – and it is 37 years since the utility published a guide rationalizing the costs of constructing each station to a valuation in constant 1987 dollars. It is clear the OCAA, like Greenpeace and Pembina before them, picks poorly defined values to craft anti-nuclear narratives. It is not clear to me how an honest, curious, person would consider the cherry-picked numbers as “simple facts” – but I defer to others’ expertise in simple.
No comments:
Post a Comment