TORONTO, Sept. 24, 2012 /CNW/ - Minister of Energy Chris Bentley
announced today that the Ontario Power Authority has reached an
agreement in principle with TransCanada Energy to develop a new
900-megawatt natural gas-fired power plant on the site of Ontario Power
Generation's Lennox Generating Station in eastern Ontario.
The location was selected to take advantage of existing transmission and
gas infrastructure as well as the expertise of local workers. The plant
is expected to be in service by the first quarter of 2017 and will
provide 600 jobs during construction.
"Today's announcement helps support Ontario's plan to modernize the
province's electricity infrastructure, clean up the air we breathe and
end the use of coal by 2014," said Minister Bentley.
The cost of TransCanada's plant at Lennox will be comparable to the cost
of the original competitively procured Oakville plant. In addition,
TransCanada will receive $40 million to cover the costs it incurred for
goods and services that cannot be used at the Lennox site.
The OPA-TransCanada agreement has been formalized in a memorandum of
understanding. OPA and TransCanada will now negotiate a contract based
on the terms of that agreement. TransCanada will also finalize
site-specific arrangements with Ontario Power Generation. It is
expected that the contract and other arrangements will be finalized by
December 14, 2012.
"OPA and TransCanada's existing power generation contracts provide good
value to ratepayers with clean, cost effective electricity. The Lennox
agreement will do the same and will benefit from OPA and TransCanada's
positive, long-standing relationship," said Colin Andersen, OPA's chief
Relocating the Oakville Gas Plant to Lennox
Cost of Relocating the Plant
The total cost for goods and services TransCanada incurred for Oakville
that cannot be used at the Lennox site is $40 million. These costs
Engineering and design work
Employee costs and overhead
Minimizing the Impacts
To minimize the cost of the relocation, gas turbines will be repurposed
and used at the Lennox plant ($210 million).
Turbine design and engineering costs
Storage and transportation of turbines
These costs will be subject to verification by an independent auditor.
The turbine payment recognizes that TransCanada would be carrying these
costs beyond the period of time expected under the Oakville contract.
Net Revenue Requirement
The Net Revenue Requirement is the monthly payment a power plant
developer uses to cover the fixed costs to build and operate the plant.
OPA contracts are structured so that the power plant developer only
receives payment from the OPA once the plant starts generating
The Net Revenue Requirement for Lennox is $15,200 MW/Month.
The original Oakville Net Revenue Requirement was $17,277 MW/Month under
the 2009 contract.
Once a contract is executed, OPA will pay TransCanada $210 million for
the cost of the gas turbines and other turbine related costs. The
turbine payment as well as covering the gas management costs for the
new plant reduces the Lennox Net Revenue Requirement.
SOURCE: Ontario Power Authority
For further information:
Kristin Jenkins (416) 969-6007