The report, on future Ontario power needs, said Ontario Power Generation, the debt-ridden, provincially owned power producer, should be broken up into a nuclear unit and one that handles electricity from hydro and fossil-fuel sources.
The study warned that Ontario, Canada's most populous province, could face a severe power shortage by 2007 if new capacity does not come on board.
The report was commissioned by the provincial government and drawn up by John Manley, Canada's former deputy prime minister. It said Ontario Power should sell non-core assets like solar and wind power to strengthen its focus.
The emphasis on nuclear power comes at a time of serious concerns about Ontario's existing reactors, some of which are mothballed or running well below capacity, or have seen massive cost overruns for refurbishment.
But Manley insisted that nuclear, which generates about half of Ontario's power, would prevent the need for costly electricity imports during peak periods.
"There is nothing inherent in Canadian companies that says they can't run nuclear (reactors), when the Finns, the French, the Americans and the Koreans can," Manley said. "Let's get our act together because we do not have a lot of other choices."
Noting that Canadian-designed nuclear plants are being build on budget and on schedule in China, he added: "If we can do it in China, surely to goodness we can do it in Ontario."
Ontario's Liberal government, elected in October, wants to shut its polluting coal-fired plants by 2007 -- and Manley's report backed that position.
But analysts have criticized the move and questioned how Ontario can quickly replace electricity generated from coal, which makes up about a quarter of current supply.
"Coal-fired plants can be much cleaner, and ultimately be replaced by clean coal technology, as one of the arrows in a new supply picture for Ontario," said Rob McLeese, president of Access Capital Corp., which helps power companies build generating plants.
Dwight Duncan, Ontario's energy minister, plans to create 2,800 megawatts of new power by 2007 through a combination of conservation and new, cleaner plants, but that is well below the 6,240 megawatts that will be lost by shutting coal plants.
Manley's report comes days after an independent audit of showed Ontario Power was on the verge of financial collapse if its path does not change.
That report said that by the end of September 2003, only one of four shuttered units at Pickering nuclear power station had returned to service, at cost of C$1.25 billion -- triple the original estimate for just that one unit and two years behind schedule.
"You cannot allow another Pickering fiasco to occur," Manley said. "If you do, the credibility of the nuclear sector (in Ontario) will probably be irretrievably damaged."
Manley said Ontario Power, which produces about 70 percent of the province's electricity, should remain in public hands, but governments must stop interfering in its operations.
The previous Conservative government deregulated Ontario's electricity sector but then froze prices to appease voters after a public outcry. Analysts say the flip-flop on policy choked any hopes of private investment in power plants in Ontario.
($1=$1.33 Canadian)
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