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Science Forum Index » Energy Forum » Ontario Nuclear Power still a financial joke
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| A. Nonnee Moss |
 Posted: Tue Dec 16, 2003 7:26 pm |
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Nuclear chiefs axed for refit bungle
Pickering project mismanaged, report says
Province faces decision on completing work
STAFF REPORTERS
The three most senior executives of Ontario's electrical utility were fired
yesterday after a report found them responsible for mismanaging the
restoration of the Pickering nuclear plant.
Energy Minister Dwight Duncan announced the resignations of the three men
while releasing a report by former federal energy minister Jake Epp on the
cost of refurbishing the four nuclear reactors at the plant, which rose from
$780 million in 1997 to a projected $4 billion.
As well, only one of the four units at the Pickering A plant is running and
it could take until 2008 to return all units to service, six years later
than the initial target of 2002.
Fired by the new Liberal government were Ontario Power Generation board
chair Bill Farlinger, chief executive officer and president Ron Osborne and
chief operating officer Graham Brown.
Richard Dicerni, currently OPG's executive vice-president and corporate
secretary, will be the interim CEO.
He was not available for comment.
OPG was created by the former Tory government in 1999.
Its principal business is the generation and sale of electricity to Ontario
and other markets.
"As the sole shareholder of OPG, it is ... the job of the McGuinty
government to hold the board and senior management of OPG accountable for
the management of a project that has resulted in alarming cost overruns and
inexcusable delays," Duncan told a news conference yesterday.
He added that the make-up of the board of directors will soon change.
He promised that Tory political appointees won't simply be replaced by
partisan Liberals.
Asked by a reporter if heads rolled at OPG, Duncan said: "Yes, they did."
As well, for the time being, the board is prohibited from making major
decisions without government approval.
Osborne said yesterday the buck stopped with him, adding that the directors
on the board were only as good as the information he gave them.
"The general conclusion that OPG mismanaged the project is fair,
undoubtedly," Osborne said in an interview. "I've said that many times."
Osborne earned a salary of $850,000, but at his own request did not get a
bonus last year. He said he views the termination as a retirement, and
expects the terms of his contract to apply. His contract says if he's
terminated without cause, he receives a year's salary.
Duncan said lawyers would examine the obligations to Osborne, Brown and
Farlinger.
Duncan said the government is now left with making a decision on whether to
go ahead with fixing the remaining three units at Pickering A. Epp,
co-author of the report, blamed the situation on a "culture" of letting
deadlines and budgets slide. The completion date was changed 13 times and
the project cost amended 11 times over four years.
"It is my view that there are people in management who accepted sliding
deadlines, accepted excuses ... it's that type of culture which does not
take responsibility and which is not accountable, which I believe needs to
be changed," he said.
OPG management failed to write up a project execution plan to allow managers
to make good decisions about how to proceed with the job, and to keep an eye
on any areas where progress was lagging.
The problems at the top resulted in waste and inefficiency from top to
bottom on the project, Epp said.
Former Tory energy minister John Baird said yesterday: "I accept ... the
thrust of the report."
He noted that he was the one who asked for the independent inquiry into the
situation at Pickering.
NDP Leader Howard Hampton said the problem is far more serious than
incompetence, suggesting that it points to malfeasance. But Duncan said
there is no evidence of that.
"To have this kind of cost overrun suggests to me that there must have been
virtual negligence on the job or possibly misappropriation of funding on the
job, which I think calls for a deeper investigation of what went on here,"
Hampton said.
OPG and its main contractors had trouble with the simplest tasks.
"Even such fundamental things as access to the plant," Epp said. "We found
examples of where people stood in line for up to three hours to get into the
plant."
Disorganization got to the point where engineering and construction was
going on at the same time, which meant the contractors on the site had no
clear planning direction.
He said there was friction between Atomic Energy of Canada Ltd., which
designed the plant, and OPG, which was in over-all charge of building it
through much of the project's life.
Whatever was going on at Pickering, OPG's sole shareholder, the government,
was fully aware of the difficulties.
"It is the panel's view the shareholder was informed regularly about
developments at Pickering A," Epp said.
The Epp report echoes the analysis of an internal report by mid-level
managers prepared more than 2 1/2 years ago, which was first detailed in
the Star a year ago.
Duncan said the cost overruns and delays are an "affront to the people of
Ontario" and he blamed the former Tory government for letting it happen.
The project to retrofit unit 4 of the 30-year-old Pickering plant cost $1.25
billion or triple the projected cost and is more than four years behind
schedule.
Epp said the "seriously flawed" project has affected the cost and supply of
power.
"These facts are alarming but they are not the only price paid," the report
said.
"The delay in the return to service of Pickering A has adversely affected
Ontario's electricity sector and pushed up prices for residential and
business consumers.
"The costs and delays of the project have also reduced OPG's revenues,
capital resources and corporate value. But perhaps most seriously, faith has
been compromised in the affordability and certainty of the supply of
electricity vital to Ontario's citizens and businesses."
OPG planners initially thought the Pickering refit would be a relatively
short-term tune-up, Osborne said.
"I wasn't smart enough to realize that this wasn't just an outage, it was a
hell of a lot more than that, and it took me two or three years to realize
the magnitude of the task we'd taken on. I accept that."
Premier Dalton McGuinty, in Charlottetown last night for a premiers'
meeting, said blame for the fiasco rests with the previous government, the
Star's Robert Benzie reports.
"What this confirms for me is not only were the Tories fiscally
irresponsible and managerially incompetent, but they failed to exercise
their responsibilities."
The three most senior executives of Ontario's electrical utility were fired
yesterday after a report found them responsible for mismanaging the
restoration of the Pickering nuclear plant.
Energy Minister Dwight Duncan announced the resignations of the three men
while releasing a report by former federal energy minister Jake Epp on the
cost of refurbishing the four nuclear reactors at the plant, which rose from
$780 million in 1997 to a projected $4 billion.
As well, only one of the four units at the Pickering A plant is running and
it could take until 2008 to return all units to service, six years later
than the initial target of 2002.
Fired by the new Liberal government were Ontario Power Generation board
chair Bill Farlinger, chief executive officer and president Ron Osborne and
chief operating officer Graham Brown.
Richard Dicerni, currently OPG's executive vice-president and corporate
secretary, will be the interim CEO.
He was not available for comment.
OPG was created by the former Tory government in 1999.
Its principal business is the generation and sale of electricity to Ontario
and other markets.
"As the sole shareholder of OPG, it is ... the job of the McGuinty
government to hold the board and senior management of OPG accountable for
the management of a project that has resulted in alarming cost overruns and
inexcusable delays," Duncan told a news conference yesterday.
He added that the make-up of the board of directors will soon change.
He promised that Tory political appointees won't simply be replaced by
partisan Liberals.
Asked by a reporter if heads rolled at OPG, Duncan said: "Yes, they did."
As well, for the time being, the board is prohibited from making major
decisions without government approval.
Osborne said yesterday the buck stopped with him, adding that the directors
on the board were only as good as the information he gave them.
"The general conclusion that OPG mismanaged the project is fair,
undoubtedly," Osborne said in an interview. "I've said that many times."
Osborne earned a salary of $850,000, but at his own request did not get a
bonus last year. He said he views the termination as a retirement, and
expects the terms of his contract to apply. His contract says if he's
terminated without cause, he receives a year's salary.
Duncan said lawyers would examine the obligations to Osborne, Brown and
Farlinger.
Duncan said the government is now left with making a decision on whether to
go ahead with fixing the remaining three units at Pickering A. Epp,
co-author of the report, blamed the situation on a "culture" of letting
deadlines and budgets slide. The completion date was changed 13 times and
the project cost amended 11 times over four years.
"It is my view that there are people in management who accepted sliding
deadlines, accepted excuses ... it's that type of culture which does not
take responsibility and which is not accountable, which I believe needs to
be changed," he said.
OPG management failed to write up a project execution plan to allow managers
to make good decisions about how to proceed with the job, and to keep an eye
on any areas where progress was lagging.
The problems at the top resulted in waste and inefficiency from top to
bottom on the project, Epp said.
Former Tory energy minister John Baird said yesterday: "I accept ... the
thrust of the report."
He noted that he was the one who asked for the independent inquiry into the
situation at Pickering.
NDP Leader Howard Hampton said the problem is far more serious than
incompetence, suggesting that it points to malfeasance. But Duncan said
there is no evidence of that.
"To have this kind of cost overrun suggests to me that there must have been
virtual negligence on the job or possibly misappropriation of funding on the
job, which I think calls for a deeper investigation of what went on here,"
Hampton said.
OPG and its main contractors had trouble with the simplest tasks.
"Even such fundamental things as access to the plant," Epp said. "We found
examples of where people stood in line for up to three hours to get into the
plant."
Disorganization got to the point where engineering and construction was
going on at the same time, which meant the contractors on the site had no
clear planning direction.
He said there was friction between Atomic Energy of Canada Ltd., which
designed the plant, and OPG, which was in over-all charge of building it
through much of the project's life.
Whatever was going on at Pickering, OPG's sole shareholder, the government,
was fully aware of the difficulties.
"It is the panel's view the shareholder was informed regularly about
developments at Pickering A," Epp said.
The Epp report echoes the analysis of an internal report by mid-level
managers prepared more than 2 1/2 years ago, which was first detailed in
the Star a year ago.
Duncan said the cost overruns and delays are an "affront to the people of
Ontario" and he blamed the former Tory government for letting it happen.
The project to retrofit unit 4 of the 30-year-old Pickering plant cost $1.25
billion or triple the projected cost and is more than four years behind
schedule.
Epp said the "seriously flawed" project has affected the cost and supply of
power.
"These facts are alarming but they are not the only price paid," the report
said.
"The delay in the return to service of Pickering A has adversely affected
Ontario's electricity sector and pushed up prices for residential and
business consumers.
"The costs and delays of the project have also reduced OPG's revenues,
capital resources and corporate value. But perhaps most seriously, faith has
been compromised in the affordability and certainty of the supply of
electricity vital to Ontario's citizens and businesses."
OPG planners initially thought the Pickering refit would be a relatively
short-term tune-up, Osborne said.
"I wasn't smart enough to realize that this wasn't just an outage, it was a
hell of a lot more than that, and it took me two or three years to realize
the magnitude of the task we'd taken on. I accept that."
Premier Dalton McGuinty, in Charlottetown last night for a premiers'
meeting, said blame for the fiasco rests with the previous government, the
Star's Robert Benzie reports.
"What this confirms for me is not only were the Tories fiscally
irresponsible and managerially incompetent, but they failed to exercise
their responsibilities." |
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