Tiverton, ON: Bruce Power and the Independent Electricity System Operator announced an amended, long-term agreement December 3 to secure 6,300 megawatts of electricity from the Bruce Power site, through a multi-year investment program. APPrO President Dave Butters said, “APPrO congratulates Bruce Power and the IESO on concluding this important agreement. It will substantially secure Ontario’s energy system for years to come and put the province well on its way to the achievement of key goals in the Long Term Energy Plan.” Accolades came in from across the province. Ian Howcroft, Vice-President Ontario, Canadian Manufacturers and Exporters, said, “The important agreement reached by Bruce Power and the province is good news for Ontario’s economy and our manufacturing sector. Bruce Power’s revitalized nuclear fleet will be a critical source of reliable, low-cost electricity that is essential to our economy for many decades to come.”
Patrick Dillon, Business Manager of the Provincial Building and Construction Trades Council
of Ontario, said the agreement “will pave the way for substantial long-term investments and
careers in the trades, while also providing families and businesses from across the province with stable
electricity prices.” Mark Ward, President and CEO, GE Hitachi Nuclear Energy Canada, said, “This long term framework will provide stability so businesses can continue to innovate and invest in their
people through training and new technologies. Thousands of highly-skilled jobs will be created in Ontario,
from engineering to manufacturing, helping to grow and sustain strong communities for the long-term.”
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 newly amended agreement will enable the company to progress with a series of incremental life-extension investments, including refurbishment.
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,” said Bruce CEO Duncan Hawthorne. “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.
Consistent with the LTEP, a series of off-ramps have been built into the agreement related to both refurbishment performance and the potential for changes to market conditions in Ontario.
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.
TransCanada Corporation announced the same day that 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.
Laker Energy to provide key components
The following day, Bruce Power and Laker Energy Products announced an agreement to start a process to secure key long-lead reactor components including end fittings, liners and feeder pipes. The agreement will allow the process of procuring these critical components for the Unit 6 refurbishment set to start in 2020 at a cost of between $25 - $35 million.
By building on a successful Unit 6 refurbishment this agreement could also lay the ground work for additional business for Laker for future refurbishments at Bruce Power over the next 20 years that could require an additional spend of over $120 million on the same components.
The company, recognizing the requirement for nuclear power in Ontario’s Long-Term Energy Plan, recently purchased a second manufacturing facility, this one a 65,000 square foot building. Both Laker facilities will service the domestic and international nuclear markets. The company purchased its new plant specifically to manufacture fuel channel end fittings and liners, while tripling its machining capability and hiring an additional 40 employees.
Laker Energy Products, which has its head office and main manufacturing plant in Burlington, solely services the CANDU nuclear power sector, which has 19 operational reactors in Canada and many more across the world. Laker has received orders for previous plant life extension projects as well as upcoming new-build projects in Argentina, Romania, China and the UK.