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Energy Minister George Smitherman says Ontario is shelving plans to build two new nuclear reactors at the Darlington power station. ((Nathan Denette/Canadian Press) )

Citing ballooning costs and its responsibility to the taxpayers of the province, the Ontario government says it is indefinitely mothballing plans to build two new nuclear reactors at the Darlington power station.

"We still believe that in our energy supply mix to have new nuclear units to replace some of our aging fleet is very prudent for Ontario. But we will not purchase any such units at any cost. The cost must be right for the people of Ontario," said Energy Minister George Smitherman on Monday morning.

The province's Liberal government said three years ago it would spend about $26.5 billion to build the new reactors. 

Three companies were competing for the contract: Areva from France, the U.S. company Westinghouse, and Atomic Energy of Canada Ltd.

Smitherman told a news conference at Queen's Park that only AECL submitted a bid fully compliant with the request that it assume much of the risk for delays and cost overruns.

"However, concern about pricing and uncertainty regarding the company's future prevented Ontario from continuing with the procurement at this time," said a statement from the ministry. 

Smitherman said the price was too high, though he refused to say by how much.

"I will answer your question this way — substantially. Certainly by a measure of many billions [of dollars]. We'll know the right price when we see it — and we ain't seen it yet."

Smitherman said the ball is now in the federal government's court. Ottawa, he said, has to clarify its plans to privatize AECL's reactor division, and then get the price down.

According to NDP energy critic Peter Tabuns, "what the minister is asking for essentially is a massive bailout of AECL by the federal government, so that it has a price that's acceptable for Ontario."

The Organization of CANDU Industries said it is "extremely concerned" about how the move would affect more than 30,000 workers in the industry, many of them in Ontario.

"The member companies of OCI have invested heavily in this process, and this delay will cause some of them considerable financial difficulty, possibly even bankruptcy," president Neil Alexander said in a statement.

Steve Outhouse, a spokesman for federal Natural Resources Minister Lisa Raitt, said Monday any discussions about costs rested with AECL, adding there was nothing that would push Ottawa to get involved at this stage.

There are currently three nuclear plants operating in Ontario: Pickering and Darlington east of Toronto, and Bruce on the shore of Lake Huron.

The nuclear reactor decision will have no effect on Ontario's plans to get rid of coal-fired plants by 2014, nor will it change the energy mix in the province or the reliability of electricity, Smitherman said.

Smitherman would not say when the government would take a second look at building new nuclear reactors, but it's not expected until at least after the next provincial election in 2011.

With files from The Canadian Press