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[cdn-nucl-l] Fw: Ontario Power Generation and Bruce Power complete lease agreement for Bruce nuclear stations
Sent: Saturday, May 12, 2001 6:29 AM
Subject: Ontario Power Generation and Bruce Power complete lease agreement
for Bruce nuclear stations
> Subject: Ontario Power Generation and Bruce Power complete lease agreement
> for Bruce nuclear stations
> TIVERTON, ON, May 12 /CNW/ - Ontario Power Generation (OPG) and Bruce
> Power today announced the successful financial close of the transaction
> related to Bruce Power's lease of the Bruce nuclear power stations from
> Bruce Power is now the licensed operator and will lease the Bruce A
> Bruce B stations until 2018. The total value of the transaction is more
> $3.2 billion, representing one of the largest public/private transactions
> Canadian history. There is also an option to extend the lease for up to a
> further 25 years.
> "Today's transaction is positive news for employees, the community,
> electricity consumer and the nuclear industry," said Ron Osborne, OPG
> President and Chief Executive Officer. "This agreement injects private
> into the Bruce facilities and represents a major step towards opening the
> Ontario electricity marketplace to competition. The agreement allows OPG
> concentrate on accelerating the performance improvements under way at its
> Darlington and Pickering facilities."
> "The successful conclusion of this transaction is a tribute to the
> people who have worked to see this historic agreement through to
> said Robin Jeffrey, Chairman Designate of British Energy plc and Chairman
> Bruce Power. "Bruce Power looks forward to playing a vital role in the
> of nuclear power in Canada."
> "The teamwork we have seen during transition is an example of what
> Power can do by achieving through people," said Duncan Hawthorne, Chief
> Executive Officer of Bruce Power. "I really would like to say 'thank you'
> the support and enthusiasm we have received from employees, the unions and
> local communities."
> The C$3.2 billion transaction includes an initial payment of C$625
> million, before various closing adjustments, paid in three installments,
> well as annual lease payments. The lease payments include monthly fixed
> payments and periodic variable payments. The variable payments include a
> revenue-sharing arrangement and supplementary payments for the management
> used fuel. In total, fixed and variable payments are estimated to be about
> C$150 million in calendar year 2002.
> Bruce Power is a partnership among British Energy, the UK's largest
> electricity generator, Cameco Corporation (15%), the world's largest
> fuel supplier and the two main unions representing employees on the Bruce
> site, the Power Workers' Union (up to 4%) and The Society of Energy
> Professionals (up to 1.2%). British Energy's current interest of 85% will
> reduce progressively to 79.8% as the unions take up their full equity
> in Bruce Power by May 2003.
> "This transaction represents a major step forward in our North
> strategy, enabling us to deploy both our existing nuclear operating skills
> our experience of trading in competitive markets," said British Energy
> Chairman, Sir John Robb.
> "Our partnership with British Energy, the Power Workers' Union and The
> Society of Energy Professionals underscores the confidence we all share in
> future of nuclear electricity," said Bernard Michel, Cameco's Chair and
> Executive Officer and a member of the Bruce Power Board of Directors. "We
> pleased to leverage our uranium expertise in this unique opportunity that
> builds on Cameco's long-term strategy to grow profitably in the nuclear
> Bruce Power welcomes some 3,000 employees who are transferring from
> to Bruce Power effective today. As part of the positive relationship with
> unions at the Bruce site, Bruce Power is honouring the current collective
> bargaining agreements and will safeguard existing pensions and other
> "This event marks the beginning of a new era for our employees and the
> local communities," said Dennis Fry, Power Workers' Union Executive Board
> member and PWU nominee to the Bruce Power Board of Directors. "Based on
> principles of 'Safety First' and employee empowerment that we share with
> Power, we are looking forward to working with our partners to make Bruce
> both a business and employment success."
> Don MacKinnon, Power Workers' Union President, said the Bruce
> deserved top marks for its positive impact on air quality in Ontario and
> surrounding jurisdictions. "Bruce Power and Ontario Power Generation's
> commitment to improving nuclear performance at their respective stations
> the production of more clean-air electricity."
> "We have successfully entered, not only into a partnership with new
> owners but, into an entirely different atmosphere," said representatives
> The Society of Energy Professionals. "It's our past accomplishments that
> allowed us to get to where we are today and it will be our future actions
> behaviours that will determine our success in this new environment," said
> Society Unit Directors John Hebb, Rod Sheppard and Bob Wells.
> Bruce Power. We look forward to working with you to secure exciting and
> term working relationships and career challenges for both our members and
> The Bruce nuclear power stations include four operating reactors at
> Bruce B station, with a capacity of 3,140 megawatts, and four laid-up
> at the Bruce A station. Following a condition assessment that confirmed
> technical feasibility and economic soundness of restarting two Bruce A
> reactors, Bruce Power recently announced the launch of a program to
> the two reactors by 2003. The restart is conditional on obtaining
> approvals and achieving performance targets for the four operational
> at Bruce B. The two Bruce A reactors have a capacity of 1,500 megawatts.
> All the output from the Bruce stations will be sold into the new
> electricity market, scheduled to open to competition by May 2002. In the
> meantime, the output will be sold to OPG under transitional arrangements.
> Ontario Power Generation is an Ontario-based company, whose principal
> business is the generation and sale of electricity to customers in Ontario
> to interconnected markets. OPG's goal is to be a premier North American
> company focused on low-cost power generation and wholesale energy sales
> operating in a safe, open and environmentally responsible manner.
> The Bruce Power stations are located near Kincardine, Ontario, about
> 250 km northwest of Toronto.
> For further information, please contact:
> Ontario Power Generation (www.opg.com)
> 1-877-592-4008 or 416-592-4008 Media Relations
> 1-866-381-2720 or 416-592-6700 Investor Relations
> Bruce Power (www.brucepower.com)
> Susan Brissette 519-361-6557 Media Relations
> British Energy plc (www.british-energy.com)
> Doug McRoberts 013555 94040 (from UK) Media Relations
> 011 44 1355 594 040 (from North America)
> Paul Heward 013552 62201 (from UK) Investor Relations
> 011 44 1355 262 201 (from North America)
> Cameco Corporation (www.cameco.com)
> Jamie McIntyre 306-956-6337 Media Relations
> Bob Lillie 306-956-6639 Investor Relations
> Power Workers' Union (www.pwu.ca)
> Bob Menard 416-322-2441 Media Relations
> The Society of
> Energy Professionals (www.society.on.ca)
> Brian Robinson 416-979-2709 Ext 3025 Media Relations
> Note to Editors
> - Bruce Power filed a licence application with the Canadian Nuclear
> Safety Commission on July 31, 2000 to operate Bruce A (currently
> up) and Bruce B (operating) nuclear reactors. After a regulatory
> process that included public hearings in Ottawa on February 8 and in
> Kincardine on April 19, the CNSC announced, on May 9, 2001, its
> approval of the licences, effective at financial close.
> - Bruce Power received a generator and wholesale licence from the
> Energy Board on February 28, 2001.
> - Electricity consumption in 2000 in Ontario was approximately 148
> terawatt hours.
> BACKGROUNDER ON HIGHLIGHTS OF THE DEAL
> The agreement between Ontario Power Generation (OPG) and Bruce Power
> lease of the Bruce A and B nuclear power stations and related facilities,
> together with the purchase of inventory, including fuel stocks. The total
> value of the transaction is more than $3.2 billion, representing one of
> largest public/private transactions in Canadian history.
> The initial term of the lease is until the end of 2018. There is an
> option to renew for up to a further 25 years.
> Some 3,000 employees are transferring from OPG to Bruce Power.
> remaining with OPG include those who provide waste management and
> nuclear operations support services.
> Ontario Power Generation receives:
> 1. Initial payments totalling $625 million, before closing
> to be made in three installments: payments at closing of $400
> (including $43 million paid by Cameco to OPG for finished fuel
> inventory); and the remaining $225 million paid in two
> of $112.5 million each.
> 2. Annual payments include monthly fixed payments and periodic
> payments. The variable payments include a share of the net power
> station revenue and supplementary payments for the management of
> Fixed and variable payments are estimated to be about $150 million
> - Fixed payments are scheduled to start at $62 million in the
> year increasing to $92 million in the eighteenth year.
> - Variable payments, which include an escalation factor, are
> expected to be approximately $90 million in 2002. The amount of
> these variable payments depends on market price and Bruce
> electricity production.
> - The lease provides for OPG to similarly share in station
> when the Bruce A units are returned to service.
> OPG as the owner of these facilities retains contractual
> for nuclear used fuel, waste management and decommissioning for the Bruce
> facilities. The total liability, which includes the historic liabilities
> inherited from Ontario Hydro and the future liabilities associated with
> fuel and nuclear waste produced during the term of the lease to 2018 with
> Bruce Power, is estimated to be approximately $3.1 billion (net present
> value). Funds covering almost half of this amount have already been
> The proceeds from the lease are expected to be more than sufficient to
> the balance of the Bruce liabilities ($1.6 billion) for nuclear used fuel,
> waste management and decommissioning.