June 29, 2009 / 5:56 PM / 8 years ago

Ontario puts new nuclear reactor program on hold

TORONTO (Reuters) - The Canadian province of Ontario said on Monday it is suspending a multibillion-dollar plan to build two new nuclear reactors because of concerns about the future of the favored bidder and cost overruns.

Ontario said a proposal from Atomic Energy Corp Ltd, which is owned by the Canadian government, was the only one to meet its requirements for building two new reactors by 2018 at its Darlington nuclear power plant site, east of Toronto.

Other proposals to build the reactors came from French group Areva SA and Westinghouse Electric Co, which is owned by Toshiba Corp and Shaw Group Inc.

"Concern about pricing and uncertainty regarding (AECL's) future prevented Ontario from continuing with the procurement at this time," the provincial government said in a release.

In late May, Canada's federal government said it planned to seek buyers for AECL as part of an asset sale to wrestle down the government's record budget deficit.

A spokesman from AECL was not available for comment.

The Ontario government launched a procurement process in March 2008 to build a two-unit nuclear power plant at Darlington. Nuclear power now accounts for about 50 percent of Ontario's electricity supply.

DANGEROUS POWER PULSES

The Canadian nuclear power industry was also hit on Monday by a report in the Globe and Mail newspaper that said safety regulators have underestimated a feature at the country's electricity-producing Candu reactors, all designed by AECL, that might cause them to experience dangerous power pulses during a major accident.

According to an internal Canadian Nuclear Safety Commission document obtained by the newspaper, the nuclear stations have a feature known as "positive reactivity feedback," in which their atomic chain reactions automatically speed up if the water pumped into the reactors to cool them leaks. The Globe said that a water leak is one of the worst accidents possible at a nuclear station.

If the reactors aren't immediately shut down during such an incident, positive reactivity leads to a snowballing in the pace of nuclear reactions, which could cause damaging overheating, the newspaper said.

The Globe also said the utilities that operate the reactors -- Ontario Power Generation, NB Power, and Hydro-Quebec -- will likely have to spend "considerable resources" to deal with the safety issue.

Reporting by Scott Anderson and Frank Pingue; editing by Peter Galloway

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