British Energy unit to run Canadian nuclear plant

Ontario Power Generation (OPG) said Tuesday it has signed an agreement under which Bruce Power Partnership, a 95%-owned unit of British Energy PLC, will operate Canada's largest nuclear power plant.

Located 150 miles north of Toronto on Lake Huron, the Bruce nuclear power plant has four working reactors that use uranium fuel and heavy water. The deal, a first by the provincial government-run Ontario Power Generation involving a nuclear plant, runs until 2018, with an option to extend for 25 more years. Four other reactors at the plant have been shut down under an Ontario Power Generation program to improve performance of its nuclear division.

Bruce Power's annual payments include base and variable elements. OPG will receive an initial payment of $625 million (Can.) to be made in three installments. A first payment of $400 million will be made at closing. The remaining $225 million will be paid in two installments of $112.5 million each, OPG said. The variable elements include a share of the net revenue and supplementary payments for the management of used fuel. In total these payments are estimated to be about $150 million in calendar year 2002.

The company reported the transaction gives its two main unions, the Power Workers' Union and The Society of Energy Professionals on the Bruce site, the opportunity to subscribe to 5% of the equity. The agreement is expected to close, subject to Bruce Power obtaining the necessary licenses, in the summer of 2001.

"This agreement injects private equity into the Bruce facilities which in turn will provide new opportunities for employees and the community," said Ron Osborne, OPG president and CEO.

He said it is also a major step toward opening the Ontario electricity marketplace to competition and giving electricity consumers a choice of suppliers. To reduce its market dominance, OPG is required by conditions in its operating license, granted by the Ontario Energy Board (OEB), to reduce its share of generating capacity to no more than 35% of that available to the province 10 years after the market opens.

Osborne noted that an additional benefit of the agreement allows OPG to concentrate on accelerating the performance improvements under way at its Darlington and Pickering nuclear facilities, while the new company focuses on the Bruce.

British Energy was selected after a worldwide competitive process during the past 2 years. British Energy PLC is the UK's largest electricity generator. British Energy owns and operates 15 reactors in the UK and 2 more in the US through its joint venture, AmerGen. To close the transaction, Bruce Power will be required to secure licenses from the Canadian Nuclear Safety Commission and the Ontario Energy Board.