Ontario Power Generation reports 2007 third quarter financial results



    TORONTO, Nov. 16 /CNW/ - Ontario Power Generation Inc. ("OPG" or the
"Company") today reported its financial and operating results for the third
quarter and nine months ended September 30, 2007. Net income for the
three months ended September 30, 2007 was $113 million compared to net income
of $167 million for the same period in 2006. For the nine months ended
September 30, 2007, net income was $409 million compared to $509 million for
the same period last year.
    "Over the first nine months of 2007, performance, in terms of production
and reliability of OPG's fossil and hydroelectric stations as well as the
Darlington nuclear station, has continued to improve. The Pickering A and B
stations have experienced a number of operational and technical issues that
have unfavourably affected their performance. Our financial results are
somewhat lower than in 2006 as a result of lower generation at the Pickering A
station, and higher planned maintenance expenditures on the nuclear and fossil
stations," said President and CEO Jim Hankinson.
    "Under the system established by the Ontario government for setting the
prices received for electricity production from OPG's regulated assets, the
Company plans to submit a rate application to the Ontario Energy Board during
the fourth quarter of 2007," said Mr. Hankinson. OPG's regulated assets
include its nuclear stations, and the hydroelectric stations on the Niagara
and St. Lawrence rivers.
    During the third quarter of 2007, OPG received an average price of
4.7 cents/kilowatt hour ("kWh") for the output from all of its generating
stations. This was lower than the weighted average Ontario spot market
electricity price of 5.1 cents/kWh during the quarter. In comparison, during
the third quarter of 2006, OPG received an average price of 4.7 cents/kWh
compared to the weighted average Ontario spot market electricity price of
4.9 cents/kWh. OPG's average price reflects regulated prices for production
from its nuclear and baseload hydroelectric generating assets, as well as spot
market prices, subject to a revenue limit, for the majority of its remaining
production.
    Electricity generation of 26.2 terawatt hours ("TWh") in the third
quarter of 2007 was marginally lower than third quarter 2006 production of
27.0 TWh. Nuclear production of 10.8 TWh was lower than third quarter 2006
production of 12.9 TWh mainly due to unplanned outages at the Pickering A
station. Hydroelectric production of 7.2 TWh was marginally higher than
production of 6.8 TWh in 2006. Production from OPG's fossil stations of
8.2 TWh in the third quarter of 2007 reflected an increase over third quarter
2006 production of 7.3 TWh. For the nine months ended September 30, 2007,
total production from OPG's generating stations was 80.4 TWh compared to
80.9 TWh for the same period in 2006.
    Availability factors at OPG's fossil and hydroelectric stations and the
Darlington nuclear station remain near historically high levels. As a result
of unplanned outages at the Pickering A and B nuclear stations, availability
factors for the third quarter and nine months ended September 30, 2007 were
lower than the same periods in 2006.
    Earnings during the three months ended September 30, 2007 were primarily
affected by lower generation from OPG's Pickering A nuclear station, and
higher nuclear and fossil maintenance expenses. This reduction was partly
offset by higher fossil and unregulated hydroelectric generation, and an
increase in non-electricity generation revenue.
    Earnings during the nine months ended September 30, 2007 were mainly
affected by lower generation from OPG's Pickering nuclear stations, and higher
nuclear and fossil maintenance expenses. This effect was partly offset by an
increase in earnings from the nuclear waste management funds, an increase in
non-electricity generation revenue, higher fossil generation, and lower
depreciation expense primarily due to the extension of the service lives of
the coal-fired generating stations for accounting purposes.

    
    During the third quarter of 2007, OPG continued to progress the following
electricity generation projects aimed at increasing Ontario's long-term
electricity supply:

    -   The 10.4 kilometre Niagara tunnel will increase the amount of water
        flowing to existing turbines at the Sir Adam Beck generating stations
        in Niagara Falls. At September 30, 2007, the tunnel boring machine
        had advanced 1,028 metres. Progress of the tunnel boring machine
        through a fractured rock formation has been slower than expected.
        Uncertainty remains with respect to the schedule until the tunnel
        boring machine advances sufficiently beyond the St. David's Gorge (to
        approximately 2,300 metres) and establishes consistent tunneling
        performance. The project is still expected to be completed within the
        budgeted cost estimate of $985 million;
    -   Construction of a new 12.5 megawatt ("MW") Lac Seul hydroelectric
        generating station on the English River which has been delayed as a
        result of various difficulties including the replacement of a major
        sub-contractor. Project completion is now expected to be in the
        second quarter of 2008. Total project costs are still expected to be
        within the budgeted cost estimate of $47 million;
    -   Construction of the Portlands Energy Centre ("PEC"), a limited
        partnership between OPG and TransCanada Energy Ltd is progressing
        well. The project remains on schedule and the station is expected to
        be operating in a simple cycle mode with a capacity of up to 340 MW
        beginning June 1, 2008, and providing up to 550 MW of power in a
        combined cycle mode in the second quarter of 2009;
    -   OPG is undertaking a business case examination for the potential
        refurbishment and life extension of its Pickering B nuclear station.
        This examination includes a plant condition assessment, an
        Environmental Assessment, and an integrated safety review. OPG plans
        to make a recommendation on the feasibility of this project to its
        Board of Directors. Work concerning the potential refurbishment of
        the Darlington nuclear station started in the third quarter of 2007;
        and
    -   OPG initiated a federal approval process with the Canadian Nuclear
        Safety Commission ("CNSC") during 2006 for new nuclear generating
        units on the site of its Darlington nuclear generating station. In
        2007, OPG has implemented initiatives in support of an environmental
        assessment, submitted a project description to the CNSC, and is
        undertaking a technology assessment.



    FINANCIAL AND OPERATIONAL HIGHLIGHTS
    -------------------------------------------------------------------------
                                                Three Months    Nine Months
                                                   Ended           Ended
                                                September 30    September 30
    (millions of dollars - except where noted)  2007    2006    2007    2006
    -------------------------------------------------------------------------
    Earnings
    Revenue after revenue limit rebate         1,421   1,435   4,318   4,288
    Fuel expense                                 336     310     962     831
    -------------------------------------------------------------------------
    Gross margin                               1,085   1,125   3,356   3,457
    -------------------------------------------------------------------------
    Operations, maintenance and administration   689     628   2,159   1,946
    Other expenses                               257     279     676     853
    Income tax expenses                           26      51     112     149
    -------------------------------------------------------------------------
    Net income                                   113     167     409     509
    -------------------------------------------------------------------------
    Cash flow
    Cash flow provided by operating activities   248     307     723     306
    -------------------------------------------------------------------------
    Electricity Generation (TWh)
    Regulated - Nuclear                         10.8    12.9    33.5    36.8
    Regulated - Hydroelectric                    4.4     4.6    13.7    13.5
    Unregulated - Hydroelectric                  2.8     2.2    10.6    11.0
    Unregulated - Fossil-Fuelled                 8.2     7.3    22.6    19.6
    -------------------------------------------------------------------------
    Total electricity generation                26.2    27.0    80.4    80.9
    -------------------------------------------------------------------------
    Average electricity sales price(1)
     (cents/kWh)
    Regulated - Nuclear(1)                       4.9     4.9     4.9     4.9
    Regulated - Hydroelectric(1)                 3.5     3.6     3.5     3.5
    Unregulated - Hydroelectric(2)               4.7     4.6     4.7     4.7
    Unregulated - Fossil-Fuelled(2)              4.9     4.8     4.9     4.8
    OPG average sales price                      4.7     4.7     4.6     4.6

    Nuclear unit capability factor (per cent)
    Darlington                                  96.3    94.5    91.4    89.8
    Pickering A                                    -    82.9    41.5    86.1
    Pickering B                                 82.0    87.5    74.7    79.2

    Equivalent forced outage rate (per cent)
    Unregulated- Fossil-Fuelled                 10.5    11.7    11.2    12.5

    Availability (per cent)
    Regulated - Hydroelectric                   97.4    95.9    94.2    93.1
    Unregulated- Hydroelectric                  92.2    89.2    94.2    92.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) After April 1, 2005, electricity generation from stations in the
        Regulated - Nuclear segment receives a fixed price of 4.95 cents/kWh
        and electricity generation from stations in the Regulated -
        Hydroelectric segment receives a fixed price of 3.3 cents/kWh for the
        first 1,900 MWh of generation in any hour, and the Ontario spot
        electricity market price for generation above this level.
    (2) Eighty-five per cent of the electricity generation from unregulated
        stations, excluding the Lennox generating station and other contract
        volumes, is subject to a revenue limit. During the period from
        April 1, 2005 to April 30, 2006, the revenue limit was set at
        4.7 cents/kWh. Starting May 1, 2006, the revenue limit decreased to
        4.6 cents/kWh and increased to 4.7cents/kWh effective May 1, 2007.
    


    Ontario Power Generation Inc. is an Ontario-based electricity generation
company whose principal business is the generation and sale of electricity in
Ontario. Our focus is on the efficient production and sale of electricity from
our generation assets, while operating in a safe, open and environmentally
responsible manner.
    Ontario Power Generation Inc.'s unaudited interim consolidated financial
statements and Management's Discussion and Analysis as at and for the three
and nine months ended September 30, 2007, can be accessed on OPG's website
(www.opg.com), the Canadian Securities Administrators' website
(www.sedar.com), or can be requested from the Company.





For further information:

For further information: Investor Relations: (416) 592-6700,
1-866-592-6700, investor.relations@opg.com; Media Relations: (416) 592-4008,
1-877-592-4008


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