AECL bidder backs out
The Conservative government’s efforts to sell off Canada’s nuclear power agency secretly collapsed this week after the most likely buyer walked away from the negotiating table.
The government has spent almost two years trying to sell the commercial divisions of Atomic Energy of Canada Ltd. (AECL) that build and maintain nuclear power reactors.
But the agency hasn’t made a reactor sale in more than a decade and the breakdown of talks to sell off AECL leaves taxpayers on the hook for the Crown corporation that last year ran up more than $800 million in red ink.
The government’s failure to reach a deal not only puts the future of AECL in doubt, but also leaves the Canadian nuclear industry and up to 30,000 jobs in limbo.
Sources close to the negotiations tell CBC News that one of the key shareholders of Bruce Power Corp., the only company officially left in the running as of Jan. 1, was opposed to buying AECL.
The board of Bruce Power made its decision on the proposed deal at a meeting this week.
According to a Canadian Press report, Bruce Power's CEO told staff Friday that the firm had dropped out of the bidding process.
A spokesman for Natural Resources Minister Christian Paradis, who is responsible for Atomic Energy and its sale, refused to comment on the collapse of talks, saying, "the process is still underway."
If so, it is not clear who is still involved in that process.
Sources familiar with the highly secretive negotiations say that after the Harper government put AECL on the auction block in 2009, only two companies submitted formal bids.
One was Bruce Power, the Ontario company that already operates a nuclear power plant on the shores of Lake Huron.
The other was the Quebec-based giant engineering firm SNC-Lavalin Group, which has partnered with AECL in the past to bid on reactor construction projects.
The companies were given until June 2010, to submit formal, final and binding bids.
While the entire process has been shrouded in secrecy from the outset, insiders say both companies submitted bids that were essentially agreements to take the most promising operations of AECL off the government’s hands.
Taxpayers would be left with all the high risks and money-losing operations.
At that point, the government changed its strategy, and asked for more modest general submissions as a basis for negotiation.
Bruce was 'preferred'
Sources say that last fall, Bruce Power was chosen as the "preferred bidder" to proceed into formal negotiations to acquire some of AECL’s commercial reactor assets.
"Bruce [Power] was preferred in large part because it had indicated a commitment to keep on more [AECL] employees than had SNC-Lavalin," a source told CBC News.
Bruce Power is in the business of operating and maintaining power generators, and its main interest in Atomic Energy was potentially huge contracts for refurbishing older nuclear reactors.
"Bruce naturally wanted a lot of [AECL’s] engineers and scientists for that work."
The deadline for completing those negotiations was the end of this month, with a final deal to be signed by March 31.
But a deal was not to be done.
For one thing, AECL is not the commercial prize it may have been in its commercial heyday of building its famous Candu nuclear reactors around the world.
The agency has not sold a reactor since the 1990s, and had none on its books when the Harper government decided to sell the whole thing.
Over budget, behind schedule
AECL's current refurbishment of reactors in Ontario and New Brunswick are both so far over budget and behind schedule that Canadian taxpayers are facing hundreds of millions of dollars in contract penalties.
Sources close to the failed negotiations with Bruce Power say no matter who finally ends up with AECL, the government will remain on the hook for the billions of dollars in outstanding liabilities for reactor refurbishments and nuclear waste disposal.
Finally, AECL earned an international black eye from the roughly $600 million it wasted building two new medical-isotope reactors that don't work, and likely will never be put into operation.
Sources also told CBC News that behind the scenes, the Ontario government has been complicating any possible deal-making with onerous demands of its own.
Ontario indeed looms large over the entire Canadian nuclear industry, having already committed to building at least two new reactors worth billions of dollars.
But the Ontario government has so far refused to give the contracts to Atomic Energy unless Ottawa agrees to cover any cost overruns and other risks.
No one seems to know where the AECL sale will go from here, only that the longer the uncertainty surrounds the country’s atomic agency, the less it will ultimately be worth to anyone.