TORONTO — The Ontario government has offered Crown corporation Atomic Energy of Canada first crack at building new nuclear reactors for the province if Ottawa assumes responsibility for any cost overruns, sources say.

In unveiling today its long-awaited plan to address the province’s looming electricity crisis, Ontario will include measures to protect consumers from cost overruns associated with building new reactors.

As part of that plan, government officials have been in talks with the federal government about having AECL build the reactors for a fixed price and by a fixed date, government and industry sources said. The contract would include penalties for not meeting these performance guarantees.

The federal government has been involved in the talks because it would ultimately be on the hook for providing the guarantees as the sole shareholder of AECL, the government sources said.

Premier Dalton McGuinty’s government is looking at the so-called turnkey operations in the hopes of avoiding the mistakes of past nuclear projects, which saddled Ontarians with billions of dollars in debts, the sources said.

AECL has joined forces with four other companies, including GE Canada and SNC-Lavalin Nuclear, to create Team CANDU and has pitched a business model to the Ontario government that the group has used in other markets around the world. The model includes delivering new nuclear power plants on a turnkey, fixed-price basis, according to a backgrounder prepared by the group.

Team CANDU says it has delivered six reactor projects on time and on budget over the past decade.

Mr. McGuinty told reporters yesterday that the province faces a severe energy shortfall over the next decade because previous governments avoided making difficult decisions to address the widening gap between supply and demand.

“We will not duck this issue,” he said. “Governments have done that in the past and I refuse to do that.”

In an interview last month with The Globe and Mail’s editorial board, Mr. McGuinty would not say whether AECL will get the nod if his government decides to build new nuclear reactors.

“But I can tell you that if we were to go with nuclear, we would be looking at a turnkey operation,” he said. “Don’t come to us with cost overruns. Been there. Done that.”

It is no secret that new nuclear reactors are part of the government’s plan to address the province’s urgent need for new sources of electricity. In fact, Mr. McGuinty has signalled repeatedly in recent months that his government will accept the advice of the Ontario Power Authority and commit to a multibillion-dollar nuclear program.

His government’s formal response to the OPA’s advice includes refurbishing some of the province’s existing fleet of reactors that were built in the 1970s and 1980s as well as building new ones, the sources said. The Darlington nuclear station, east of Toronto, looks to be an ideal site because it has plenty of room for more reactors, they said.

“I am told I am going to be very happy,” John Mutton, mayor of Clarington, the location of Darlington, said in an e-mail message yesterday.

But memories of the province’s earlier ventures with nuclear power, including the $20-billion debt from cost overruns and reactor breakdowns are still fresh in many people’s memories.

The last time a new nuclear plant went on line in the province was 1992. In 1997, Ontario Power Generation took seven of its 19 reactors off line because they weren’t up to standard.

In late 2003, the government fired the top three executives of OPG for botching the restoration of the Unit 4 nuclear reactor at the Pickering A station, which was years late and millions of dollars over budget when it came back on line in September of 2003.

Then last August, OPG scrapped plans to restart two other mothballed reactors at the Pickering A station, saying it wasn’t economically viable to spend $2-billion refurbishing Units 2 and 3.

New Democratic Party Leader Howard Hampton and environmentalists warned yesterday that the McGuinty government is going down the wrong path by pursuing nuclear energy instead of more conservation measures. Shawn-Patrick Stensil of Greenpeace Canada said Ontarians are still paying debt retirement charges on their bills for the earlier cost overruns.

“There is no reason to believe the nuclear industry’s promise that it won’t happen again,” Mr. Stensil said.