Phase 2 of Nuclear RFP latest step in Ontario's 20-year plan to bring clean, affordable and reliable electricity to Ontarians



    OPG will operate new two-unit plant at Darlington site; Bruce Power to
    maintain 6300MW through either Bruce B refurbishment or new build

    TORONTO, June 16 /CNW/ - Infrastructure Ontario's Nuclear Procurement
Project Request for Proposals (RFP) entered Phase 2 today with a focus on cost
of power, on-time delivery and investment in Ontario, as well as the selection
of Darlington as the site for the new nuclear plant. The Ontario government
also reaffirmed the importance of the Bruce Power nuclear site to Ontario's
overall electricity plan.
    The announcement outlines the latest steps in the process to select and
build a two-unit nuclear power plant and maintain Ontario's nuclear generation
capacity at 14,000 MW. Maintaining and renewing Ontario's nuclear energy fleet
is an important part of the Ontario government's climate change plan and its
20-year plan to bring clean, affordable and reliable electricity to Ontarians.
    AREVA NP, Atomic Energy of Canada Limited and Westinghouse Electric
Company are the invited Respondents for Phase 2 of the RFP.
    Respondents will be evaluated in three key areas:
    
    -   Lifetime cost of power
    -   Ability to meet Ontario's timetable to bring new supply on line in
        2018
    -   Level of investment in Ontario
    

    The new plant will be operated by Ontario Power Generation and located at
its Darlington site. The construction of the new plant is expected to create
about 3,500 direct construction and engineering jobs between 2012 and 2018.
    As part of Ontario's energy plan to maintain 14,000 MW of nuclear
generation capacity, the Bruce Site will continue to provide approximately
6,300 MW of baseload electricity through either the refurbishment of the Bruce
B units or new units at Bruce C. A joint assessment will be undertaken to
determine which option delivers the best value for Ontarians.
    On March 7 the Ontario Government announced a two-phase competitive
procurement process to choose a preferred nuclear vendor. A commercial team,
led by Infrastructure Ontario is managing the procurement process. Commercial
Team members also include Bruce Power, Ontario Power Generation, the Ministry
of Energy and the Ministry of Finance. A preferred vendor will be chosen based
on the evaluation outcome and bidding process by the end of 2008.
    Please visit
http://www.infrastructureontario.ca/en/projects/energy/nuclear/profile.asp to
learn more about the competitive procurement process.

    Disponible en français


    
               Nuclear Procurement Project Phase 2 Backgrounder
    

    Energy Plan

    In June 2006, the Ontario government presented a balanced, clean,
reliable and affordable 20-year energy plan. The government's plan will double
conservation and renewables, eliminate coal-fired generation by the end of
2014, maintain nuclear energy capacity for baseload operation at approximately
14,000 megawatts and add additional gas-fired generation for use in peak
periods.
    The government's energy plan calls for refurbishment and new build of
nuclear facilities to maintain existing nuclear generation capacity at
approximately 14,000 megawatts.

    Phase 2 of the Request for Proposals (RFP) Process

    Phase 2 of the RFP will focus the competition on the cost of power,
on-time delivery and investment in Ontario. The competitive process will help
to ensure the greatest amount of cost certainty, lowest possible price and a
fair approach to risk sharing.

    Evaluating the Respondents

    To achieve the best possible deal for Ontarians, respondents to the
Nuclear Procurement Project Request for Proposals (RFP) will be evaluated in
three key areas:
    
    -   Lifetime cost of power
    -   Ability to meet Ontario's timetable to bring new electricity supply
        on line beginning July 1, 2018
    -   Level of investment in Ontario
    

    The lifetime cost of power and ability to meet Ontario's schedule will be
measured and converted into the Levelized Unit Electricity Cost (LUEC).
    The Levelized Unit Electricity Cost is an industry-standard measurement
tool that represents the average electricity price required to fund the
construction, operation, fueling, and decommissioning of any type of energy
power plant. It assumes a fixed rate of return and is typically expressed in
present day dollars per megawatt-hour.
    The LUEC will represent 80 per cent of the evaluation weighting in
Respondent submissions. Level of Investment in Ontario will be measured on the
basis of Gross Domestic Product (GDP) impact and will represent 20 per cent of
the evaluation weighting.
    The evaluation criteria is weighed on an 80/20 basis because the economic
benefit of cost of power and ability to deliver on time is more than four
times greater than the economic benefit gained through the level of investment
in Ontario through local spending.
    Although investment in Ontario will represent 20 per cent of the score it
is important to note that there will be a significant amount of spending in
Ontario. In fact any vendor would most likely allocate more than 50% of total
project costs in Ontario for labour, construction materials and manufactured
equipment.

    Lifetime Cost of Power

    Respondents will be evaluated on their ability to demonstrate the lowest
combination of capital and operating costs. Respondents will provide specific
information on:
    
    -   Capital costs
    -   Operating costs including maintenance, refurbishment, and sustaining
        investment costs
    -   Fuel requirements
    -   Decommissioning costs
    -   Output and expected service life
    

    Pricing

    As part of each Respondent's submission on lifetime cost of power they
will also provide a pricing submission. Respondents will be evaluated on their
overall financial submissions, including the level of cost certainty they can
provide.
    During Phase 2 of the RFP process commercially confidential discussions
will take place with all Respondents to seek further input on the pricing
methodologies and the commercially balanced way to deal with such issues as
uncertainty around the licensing process, wages, fluctuation in commodity
prices, inflation, construction quantities, and similar commercial
uncertainties.

    Ability to meet Ontario's schedule

    Respondents will be evaluated on their ability to demonstrate a schedule
that meets the target in-service date for the first unit of July 1, 2018. They
will also be evaluated on the potential for schedule delays by measuring the
following:
    
    -   Licensing management and identification of possible licensing delays
    -   Ability to demonstrate that the design will be ready for start of
        construction
    -   Management of the supply chain through identification of potential
        supply chain bottlenecks and mitigation strategies
    -   Demonstration of project management capabilities
    

    These will be individually measured and then converted into an expected
schedule delay which will be converted into a replacement cost of power
estimate.

    Level of Investment in Ontario

    Each respondent will be evaluated on the GDP impact from the construction
program, the long term GDP impact from future global construction, and any
additional economic offsets they may wish to propose. To assess level of
investment in Ontario, respondents will provide the following information:
    
    -   Detail on how the Project spend will flow to Ontario suppliers and
        sub-contractors
    -   A description of any additional ways that the respondent will add
        value to the Ontario economy beyond the scope of the Project (e.g.,
        establishment or expansion of fuel fabrication plant, research plant)
        including timeline of capital spend and domestic capital and
        operating spends.
    

    Scoring Respondent Submissions

    The total score for a Respondent submission will be out of a maximum of
100 points, and is the sum of the LUEC score out of 80 and the GDP impact
score out of 20.
    A full score of 80 points will be assigned to the lowest calculated LUEC
among the Respondents' submissions. Respondents with higher calculated LUEC's
will receive proportionately fewer points than the full score. For example: a
Respondent with a 10 per cent higher LUEC would receive 10 percent, or
8 points, less than the full score of 80.
    A full score of 20 points will be assigned to the Respondent with the
highest GDP impact among the Respondents' submissions. Respondent submissions
with lower GDP impact proposals will receive proportionately fewer points. For
example: A Respondent with a 40 per cent lower GDP impact than the best
submission would receive 12 points or 60 per cent of the full score of 20.

    Timelines

    Phase 1

    
    -   On March 7, 2008, the Ontario Government announced a two-phase
        competitive procurement process to choose a preferred nuclear reactor
        vendor

    -   In April 2008, a series of Commercially Confidential Meetings were
        held with potential vendors

    -   On May 9, 2008, Infrastructure Ontario announced that three vendors
        had submitted Phase 1 Proposal Submissions as required by the RFP

    -   On June 5, 2008, Infrastructure Ontario announced that all three
        vendors that had submitted Phase 1 Proposal Submissions received
        'satisfactory' ratings and would be invited to proceed to Phase 2 of
        the RFP

    Phase 2

    -   On June 16, 2008, Infrastructure Ontario released Phase 2 of the
        Nuclear Procurement Project RFP

    -   From July to October 2008, a series of bilateral confidential
        meetings will take place on aspects of design readiness and
        commercial aspects of the project

    -   October 2008, deadline for submission of Phase 2 Proposal Submission

    -   End of November, 2008, selection of Negotiations
        Respondent(s)/Preferred Vendor

    -   End of December, 2008, Project Agreement signed

    Governance Structure

        Commercial team: The competitive procurement process is being led by
        a commercial team that is directed by Infrastructure Ontario and
        includes: Ontario Power Generation, Bruce Power, the Ministry of
        Energy and the Ministry of Finance. The team includes legal,
        technical, commercial contracting, financial risk transfer, nuclear
        industry and procurement experts.

        Steering committee: Commercial team recommendations are reviewed by a
        steering committee consisting of senior deputy ministers and the CEOs
        of Ontario Power Generation, Bruce Power and Infrastructure Ontario.
        The steering committee recommends major commercial decisions to the
        decision review board.

        Decision review board: Scott Hand and Tim O'Neill were appointed in
        March to review the findings of the commercial team and to ensure the
        competitive procurement process is carried out in a fair and rigorous
        manner and in the best interests of Ontarians. The decision review
        board provides its recommendations to Cabinet.

        Fairness Monitor: A fairness monitor continues to ensure all
        respondents are treated fairly throughout the RFP process.
    

    Disponible en français





For further information:

For further information: Diane Flanagan, Infrastructure Ontario, (416)
212-1172; Alan Findlay, Ministry of Energy, (416) 327-3546


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