By: Joe Castaldo

The Ontario government just threw the future of Atomic Energy of Canada Ltd. into further doubt yesterday when energy minister George Smitherman announced the province will not proceed with the purchase of new nuclear reactors, at least for the time being.

The fate of AECL has been a big question mark for a while now. The federal government wants to spin off the Crown corporation’s nuclear division, and it’s never been clear who would want to buy it. AECL needs a firm order for a reactor to increase its attractiveness to potential bidders, and Ontario seemed to be the likeliest customer. But now we’re in a kind of chicken-and-egg scenario: Ontario won’t purchase a reactor until it gets more clarity about AECL’s future ownership.

AECL, and by extension Ottawa, could always give Ontario a better price for its reactor to encourage the province to buy, as Smitherman indicated yesterday, telling reporters the corporation’s proposal was billions more than what the province will pay. But the Stephen Harper government doesn’t seem to be a big fan of AECL. Remember that a couple of weeks ago Harper’s communication director Kory Teneycke called it “one of the largest sinkholes of government money probably in the history of the government of Canada.”

AECL’s last reactor in Canada was completed in the early ’90s in Ontario, and it was years late and billions over budget. The corporation has been waiting for years for a chance to build its newest design, the ACR-1000. The reactor is classified as a Generation III+, which denotes the latest technological, safety and operation standards as defined by the International Atomic Energy Agency. French company Areva is building the first of this new breed of reactors in Finland, but the budget has skyrocketed and the project is so behind schedule that Areva is no longer willing to make predictions about when it will be competed, according to the New York Times. Ken Petrunik, AECL’s former chief operating officer, told me in an interview a couple of years ago the design of the ACR-1000 wasn’t radically different from previous reactors, and he didn’t expect major problems in construction. But given the experience with Areva in Finland (and AECL’s history), that likely doesn’t give potential customers much assurance.

So where could an order come from? Internationally, companies like Areva, Westinghouse, and Babcock & Wilcox dominate, which really only leaves the Canadian market for AECL. Saskatchewan premier Brad Wall expressed enthusiasm for nuclear power last year (the province is home to a big chunk of the world’s uranium) and New Brunswick premier Shawn Graham is a supporter, as well. That province is already home to one reactor, and AECL and its industry partners conducted a $2.5-million feasibility study two years ago to examine the possibility of building another reactor. There has been little action since then. In fact, New Brunswick and AECL are still grappling with a refurbishment of the existing Point Lepreau reactor, which is months behind schedule. It was supposed to be completed in September, but that’s been pushed back to sometime in 2010, according to a spokesperson for New Brunswick Power. And there’s always the chance of nuclear in the oilsands. The Canadian Energy Research Institute released a study in April providing an overview of the possibilities, although it seems like a distant prospect.

Some environmentalists, meanwhile, are encouraged by Ontario’s decision to delay. The Pembina Institute is hoping the government will allow time for its newly passed Green Energy Act to spur development of renewable energy in the province, and forgo spending on nuclear power. That would mean a significant build-out of renewable energy, of course. A single ACR-1000 can produce 1,200 megawatts of electricity—slightly more than all of Ontario’s currently installed wind power capacity.