Bruce Power will continue to provide low-cost electricity while being Ontario's single largest source of clean power as the province tackles climate change
TIVERTON, ON, Dec. 3, 2015 /CNW/ - Bruce Power and the Independent Electricity System Operator (IESO) have entered into an amended, long-term agreement to secure 6,300 megawatts of electricity from the Bruce Power site, through a multi-year investment program.
In 2005, Bruce Power entered into the Bruce Power Refurbishment Implementation Agreement (BPRIA) to enable the restart of Bruce Units 1 and 2, to return the site to its full operating capacity of eight units. The amended agreement entered into today will enable the company to progress with a series of incremental life-extension investments, including refurbishment, to secure a clean, reliable and affordable source of electricity for Ontario families and businesses for decades to come, as outlined in Ontario's 2013 Long-Term Energy Plan (LTEP).
"Today is a major milestone in the history of Bruce Power as we build on our existing agreement with the province and extensive experience to enter the next phase of our site development," said Duncan Hawthorne, Bruce Power's President and CEO. "This provides us the opportunity to secure our long-term role as a supplier of low-cost electricity by demonstrating we can successfully deliver this program incrementally."
Over the past 14 years, Bruce Power has returned its eight-unit site to its full capacity, allowing Ontario to phase out coal-fired power generation, while providing low-cost, reliable and carbon-free electricity to families and businesses.
Bruce Power is Ontario's lowest cost source of nuclear, currently generating over 30 per cent of the province's electricity at 30 per cent below the average residential cost of power. Extending the operational life of the Bruce Power units will ensure Ontario families and businesses have long-term price stability.
The amended agreement, which will take economic effect on Jan. 1, 2016, will allow Bruce Power to immediately invest in life-extension activities for Units 3-8 to support a long-term refurbishment program that will commence on Unit 6 in 2020, optimizing the operational life of the site and offering significant ratepayer and system benefits.
"In the short term, this amended agreement will allow us to establish the building blocks to be successful with our long-term program by investing to extend the operational life of the units prior to refurbishment, while also preparing for the first refurbishment, which will commence in 2020," Hawthorne added. "This will set us up for success by allowing us to manage resources and facilitate a coordinated schedule to complete this program."
Highlights of the arrangement include:
- On Jan. 1, 2016, Bruce Power will receive a single price for all output from the site of $65.73 per megawatt hour (MW/h). This compares to the current price paid to Bruce Power of $64.90 MW/h against an average price of residential electricity in the province to date in 2015 of $98.90 MW/h to the end of the third quarter (January 2015-September 2015).
- Bruce Power, as a private sector operator, will continue to meet all investment requirements for the site. While there is a process to determine the cost of refurbishment and off-ramps, it is estimated the six refurbishments in the agreement will cost $8 billion ($2014), in addition to $5 billion ($2014) in a range of other life-extension activities from 2016-53. In the short-term, between 2016 and 2020, the company will be investing approximately $2.3 billion ($2014) as part of this plan. This is incremental to the company's ongoing financial investments to sustain eight units of operation.
- The refurbishment of each unit will add approximately 30 to 35 years of operational life, while other life-extension investments will add a combined 30 reactor years of operational life to the units, pre-refurbishment. This approach provides additional benefit in terms of sequencing refurbishments and optimizing asset life.
- Bruce Power will bear the risk of delivering these projects on time and budget with upside sharing for better than planned performance with the IESO. The price of these refurbishments will be finalized prior to each project through a defined, transparent process in the agreement.
- The agreement allows for Bruce Power to invest in the pre-planning of refurbishment activities, leading to greater predictability, which will lead to the successful delivery of the program. All of the future plant investment activities outlined in this agreement have been previously completed by Bruce Power over the last 14 years, and the company will build on these lessons learned moving forward. The price of electricity will be adjusted as funds are incrementally spent as part of the investment program.
- The program will secure an estimated 18,000 jobs directly and indirectly from operations, and an additional 3,000-5,000 jobs annually throughout the investment program, injecting billions into Ontario's economy as outlined in an Economic Impact Study, released in 2013.
- Consistent with the LTEP, a series of realistic off-ramps have been built into the agreement related to both refurbishment performance and if the province's market conditions change.
- Bruce Power will continue to provide approximately one-third of its output (2,400 MW) as flexible generation, allowing the province to permanently balance system needs in a post-coal environment. This is a feature that only the Bruce Power units can provide, and has been used frequently by the IESO since 2009.
- As has been the case since 2001, Bruce Power will continue to assume responsibility for operating the site. In Canada, nuclear facilities are regulated by the federal government through the Canadian Nuclear Safety Commission (CNSC) and Bruce Power, as a licensee, will be responsible for meeting all regulatory requirements and gaining the necessary approvals to implement the investment program. The refurbishment timetable is consistent with Bruce Power's current site license that runs to 2020, which assumes there will be no refurbishment within this period. The CNSC licensing process is an open, transparent process that provides the opportunity for public, community and Aboriginal engagement, and, consistent with past practice, Bruce Power will start the external engagement as part of this process in 2016.
The Bruce Power Refurbishment Implementation Agreement has been available to the public since it was first signed in 2005 and the company and the province continue to support this open and transparent approach. The agreement, along with other background materials, has been made available on the company's website.
Bruce Power currently has two different partnership structures – Bruce A LP (Bruce A) and Bruce Power LP (Bruce B). As a result of this transaction, Bruce Power will move to a single partnership structure through Bruce Power L.P.
TransCanada Corporation (TransCanada) has also announced today it intends to exercise its option to acquire an additional interest in Bruce Power for $236 million from the Ontario Municipal Employees Retirement System (OMERS). TransCanada and OMERS will each hold a 48.5 per cent interest in Bruce Power, with the remainder held by the Power Workers' Union, The Society of Energy Professionals and a Bruce Power Employee Trust.
About Bruce Power
Bruce Power operates the world's largest operating nuclear generating facility and is the source of roughly 30 per cent of Ontario's electricity. The company's site in Tiverton, Ontario is home to eight CANDU reactors, each one capable of generating enough low-cost, reliable, safe and clean electricity to meet the annual needs of a city the size of Hamilton. Formed in 2001, Bruce Power is an all-Canadian partnership among Borealis Infrastructure Management (a division of the Ontario Municipal Employees Retirement System), TransCanada, the Power Workers' Union and the Society of Energy Professionals. A majority of Bruce Power's employees are also owners in the business.
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SOURCE Bruce Power
Image with caption: "Bruce Power refurbishment infographic (CNW Group/Bruce Power)". Image available at: http://photos.newswire.ca/images/download/20151203_C6580_PHOTO_EN_557551.jpg
For further information: John Peevers, 519-361-6583, [email protected]; Duty Media Officer, 519-361-6161