Resource Packages

Canadian Fiscal Policy – Issues and Options Canadian Defence Policy – Issues and Options Accountability of Canada’s Governing Institutions – Issues and Options University of Guelph-Humber Course: Ethics & Values in Business (BADM2050), Winter 2004 Semester

Week 6: Corporations in the Community: Circle of Virtue, or Circle of Vice?
Lecture Tuesday, February 10, 2004

Days of Reckoning, John Wood, editor (Breakout Educational Network - Dundurn Press, 2003) pp. 72-74

LARRY SOLOMON

Ontario Hydro was the last company to abandon nuclear power in the Western world. The last reactors to be completed were ordered in 1976. It took until the 1990s for those plants to be finished.

But Ontario Hydro has learned from its mistakes. It’s not planning to build any more nuclear plants. The problem is that it learned its mistake after accumulating a $35-billion debt. The Darlington complex, which opened in 1990 and which was initially estimated to cost between $3 billion and $3.5 billion, ultimately cost $15 billion. Hydro built Darlington, and cost overruns were something in the order of $12 billion. But nobody lost his job, nobody was demoted.

How efficient is Ontario Hydro’s use of fuel?

IAN BAINES

Ontario Hydro operates at about 33 percent efficiency. In other words, one-third of the uranium or coal or oil that’s used to make the electricity actually turns into electricity. The other two-thirds is wasted. It’s eventually dumped into the lake. I’m sure the fish in Lake Ontario appreciate it but it doesn’t do any economic good.

By using cogeneration, which uses natural gas instead, your efficiency would go from 33 percent to 90 percent just like that. Natural gas produces the least amount of greenhouse gas and carbon dioxide of any of the fossil fuels. It doesn’t make smoke, it doesn’t make soot, it doesn’t make sulphur dioxide. Private power producers have to meet the 1994 environmental requirements. Ontario Hydro doesn’t meet any of them.

None of the Hydro power-generating plants meets any of the current regulations. When Hydro built their coal plants, there were only minimum, if any environmental regulations. And now every year the regulations get tougher and tougher. The only reason Hydro doesn’t have to meet them is that it built the plants 20 or 30 years ago and there’s no money in the pot for Hydro to go out and retrofit these plants. Ontario Hydro is one of the largest polluters in the province because these plants produce very large volumes of sulphurous and nitrous oxides.

LARRY SOLOMON

If legislation like the Environmental Assessment Act (1976) comes along and gets in Hydro’s way, Hydro lobbies for exemptions, and because it’s so close to government, it gets those exemptions.

ELIZABETH BRUBAKER

If there’s an accident at Darlington and your property is damaged, you can’t sue Hydro. An accident at Darlington is covered by a law called the Nuclear Liability Act, which was passed by the federal government in 1976 and proclaimed in 1980. If there’s an accident with costs over $75 million dollars, Ontario Hydro is not responsible. The act was passed because no insurance company could take on the responsibility for a nuclear accident, which is a pretty good sign that nuclear accidents might result in the kinds of costs that are simply unacceptable to society.

LARRY SOLOMON

This act also states that if there is an accident at a nuclear plant in Canada, and if that accident is caused by a faulty part supplied by General Electric or Westinghouse or anyone else, no matter how much damage that accident causes (and it could wipe out the City of Toronto), GE shareholders wouldn’t have to put up a nickel in compensation. GE has to stand behind its toaster ovens, but it doesn’t have to stand behind its nuclear parts. These companies realized that nuclear technology was far too dangerous for them to stand behind their products. So they said to Hydro, “Look, if we have to be liable for the parts we produce for you, we’ll refuse to supply you.” And Hydro said, “Don’t worry. We can take care of the problem.” They went to the federal government and this law was the result.

The Nuclear Liability Act was not a contentious issue when it was passed. Nuclear technology was not questioned by anyone. There really were very few people to question the technology, apart form some citizens’ groups.

Industry saw a cash cow. It had guaranteed profits. And there was no one there to question the wisdom of removing liability for the most dangerous technology that has ever been developed.

NOTES (p. 75-76)

1. The Energy Competition Act was passed by the Ontario government in October 1998 to allow for competition in the marketplace, and it went into effect in 2000. Ontario Hydro was divided into five successor companies in 1999.

2. 1995 figures. In 2002 Ontario Hydro’s liabilities amounted to $38.1 billion. This figure includes the cost of decommissioning nuclear power stations and disposing of atomic waste. Ontario Hydro’s successor companies share responsibility for $17.2 billion of this total, and $13.1 billion will be covered by “dedicated revenue streams,” i.e., energy taxes. The remaining $7.8 billion is considered stranded debt and is being managed by one of the successor companies: the Ontario Electricity Financial Corporation (OEFC).

3. On April 1, 1999, Ontario Hydro was divided into five successor companies. On May 1, 2002, the industry was deregulated. Two of the five successor companies (Ontario Power Generation Inc. and Hydro One) are private companies, another two (the Independent Electricity Market Operator and the Electrical Safety Authority) are not-for-profit organizations, and one (Ontario Electricity Financial Corporation) is a Crown Corporation.

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