Future of AECL will become clear as feds push ahead with GoCo implementation

New reactor still undetermined

The fate of nuclear research in Canada and the future role of Atomic Energy of Canada Ltd (AECL) will be decided as early as 2014 during a process to transform the crown corporation into a government-owned, company-operated (GoCo) organization. The competitive procurement process for seeking a contractor to operate the nuclear laboratories marks the second phase of AECL's restructuring, following a 2009 decision to overhaul the storied organization and the 2011 sale of the CANDU business to SNL Lavalin (R$, August 9/11).

The government is eager to attract private sector interest in AECL both as a customer and a potential operator. It is far less forthcoming when it comes to replacing the 56-year-old National Research Universal (NRU) reactor at AECL's Chalk River Laboratories. The aging, multi-purpose workhorse is far past its original due date and has been kept in operation via numerous overhauls and upgrades. Its current operating licence is due to expire 2016 and although a notice has been filed with the Canadian Nuclear Safety Commission to extend that to 2021, its future will be determined well before then.

"The government didn't say no or yes on the NRU. It's willing to entertain a cost-shared approach. A number of intriguing proposals were put forward on how the NRU could be built and funded and that is intended to interface with this process (for selecting a new operator)," says Dr Robert Walker, AECL's president and CEO. "The government has said there are requirements to fulfill its role in the sector via science and technology. It will invest accordingly … The future is an open question."

Despite the sale of its CANDU operation, AECL remains a formidable research facility employing more than 3,000 people and commanding an annual budget of $690 million this year, with more than 83% or $520 million provided by the federal government. The decision to pursue a GoCo model was launched into gear earlier this year (R$, March 14/13) and was the focus of an Industry Day gathering more of than 100 participants (including 50 companies) in late June to inform interested parties of the process.

"The government wants to use the process to get industry input around a cost-shared innovation agenda, including the NRU … It expects the labs to be able to offer its services to the private sector. It's a progressive policy," says Walker, noting that the NRU is currently used for a wide range of research and commercial purposes from neutron scattering research and medical iostope generation to materials research and irradiation services.

When Natural Resources minister Joe Oliver announced the GoCo model last February, he outlined three mandates (see chart) but he also hinted at a fourth which was repeated by a senior AECL official June 4th before the Senate Committee on National Finance. AECL VP finance and CFO Steve Halpenny said the "potential fourth mandate" referenced by Oliver is "linked to the restructuring exercise".

"Specifically, the government will examine the value to Canada of investing in longer-term nuclear innovation. The government will assess the potential business case for a forward-looking, industry-driven, cost-shared nuclear innovation agenda. It will also be seeking independent advice from experts," stated Halpenny.

Halpenny also stressed that the process leading to a GoCo operation is being led by Natural Resources Canada and Public Works and Government Services Canada: "AECL is riding shotgun to a certain extent. We are advising and supporting, but it should be very clear that this is not an AECL initiative".

Walker says that AECL's pursuit of a GoCo structure for future operations marks the first time such a model has been attempted at this scale in Canada, although it is common in the UK and the US, particularly labs overseen by the Department of Energy (DOE). The labs within the DOE are primarily operated by university consortia.

"It addresses a weakness which is to bring science into a jobs and innovation agenda," he says. "As for the fourth mandate as it relates to the research reactor, the government has not ruled on it yet. It will determine this during the engagement process. How much should the government invest as a funder and is it prepared to do so? It will be decided in 2014 and it would become one of the pillars going forward."

One possible obstacle to adding the innovation mandate to a future AECL is the government's pursuit of a cost-sharing model for future operations. If the government is expecting the private sector to share in the cost of replacing the NRU, it could find there are few takers. Walker says a public-private partnerships could be among the options being examined for building and operating a new reactor should the fourth mandate be added, although he acknowledges that none of the GoCos operating in either the US or UK require the operator to assume any share of capital costs.

Dr Nigel Lockyer, outgoing director of the TRIUMF laboratory for particle and nuclear physics is familiar with the GoCo experience in the US. He is about to head one of the biggest when he takes over as director of the Fermi National Accelerator Laboratory near Chicago (see page 7).

Lockyer says the motivation behind the university consortia operating DOE labs is to monitor lab activities with a view to commercialization possibilities. He says that if the government wants to transform AECL into a GoCo, it should ensure there is close interaction with universities to provide a steady flow of graduate students and post docs, adding that university consortia are superior to government operation of big labs. Yet, even under GoCo arrangements, governments set performance indicators that allow them to micromanage operations.

"For whoever gets chosen (to operate AECL), the big question will be, is Canada going to be a force in the world in nuclear power. Is AECL going to be in that business?," asks Lockyer. "I would think that the government will choose the company that will achieve their goals. I just don't know what those goals are. The isotope question has been settled so the research question is, if you build a reactor will you get the company to help build it? That won't work."

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