Ontario Power Generation and Bruce Power Announce Leasing Agreement at Bruce Nuclear

KINCARDINE, ONà‚–Ontario Power Generation (OPG) has entered into a major leasing agreement at the Bruce nuclear site with Bruce Power Partnership. The transaction also provides an opportunity for the two main unions, the Power Workers’ Union and The Society of Energy Professionals on the Bruce site, to subscribe to 5 percent of the equity. Bruce Power is 95 percent owned by British Energy plc.

This public/private partnership involves a long-term lease agreement for the Bruce A (3,076 MW, currently in lay-up), and Bruce B (3,140 MW) facilities. The lease runs until 2018, with an option to extend for up to another 25 years. OPG will receive an initial payment of $625 million to be made in three installments. A first payment of $400 million will be made on closing subject to normal closing adjustments. The remaining $225 million will be paid in two installments of $112.5 million each.

Bruce Power’s annual payments include base and variable elements. 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.

Bruce Power will offer employment to all employees at the Bruce site, other than those being retained by OPG. Employees remaining with OPG include those that provide waste management and centralized nuclear operations support services. The agreement is expected to close, subject to Bruce Power obtaining the necessary licenses, in the summer of 2001.

“Today’s announcement is good news for employees, the community, the electricity consumer and the shareholder” stated Ron Osborne, OPG president and CEO. “This agreement injects private equity into the Bruce facilities which in turn will provide new opportunities for employees and the community. It is also a major step towards opening the Ontario electricity marketplace to competition and providing electricity consumers with choice.” Osborne noted that an additional benefit of the agreement allows OPG to concentrate on accelerating the performance improvements underway at its Darlington and Pickering nuclear facilities while the new company focuses on Bruce.

Nuclear safety continues to be of paramount importance for Ontario Power Generation, and safety has been a key tenet for British Energy. Both companies are committed to ensuring high safety performance standards.

“We are delighted to be announcing the creation of a new company. Bruce Power will demonstrate that safety and commercial success go hand in hand,” said Robin Jeffrey, British Energy Canada Ltd chairman and CEO. “We have a high regard for CANDU technology and for the skill of the staff at Bruce. We are confident that by working with the staff and the unions, Bruce Power can achieve world class safety and commercial performance.”

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 percent of that available to the province 10 years after the market opens.

British Energy was selected following an extensive worldwide competitive process over the last two years. They have significant operating experience and a proven safety track record with a range of nuclear reactor types.

To close the transaction, Bruce Power will be required to secure licenses from the Canadian Nuclear Safety Commission (CNSC) and the Ontario Energy Board. Bruce Power will be required to follow the stringent licensing and operating requirements established by CNSC, formerly the Atomic Energy Control Board.

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