Ontario counts on Bruce Power to provide 30% of its electricity.
The people of Ontario count on Bruce Power to do so at 30% less than the average residential price of power.
This important role for Bruce Power was solidified on Dec. 3, 2015, when the company and the Independent Electricity System Operator (IESO) entered into an amended, long-term agreement to secure 6,400 megawatts of electricity from the Bruce site, through a multi-year Life-Extension Program. The life extension began on Jan. 1, 2016, and will continue through 2053, allowing Bruce Power’s units to operate safely through to 2064.
The life extension also includes the Major Component Replacement Project, which will begin in Unit 6 in 2020 and extend the life of Unit 3-8 over a period of 16 years.
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 amended agreement enables the company to progress with a series of incremental life-extension investments, including Major Component Replacement, to secure a clean, reliable and low-cost source of electricity for Ontario families and businesses for decades, as outlined in Ontario’s 2013 Long-Term Energy Plan (LTEP).
“This is a major milestone in the history of Bruce Power as we build on our existing agreement with the province and extensive experience to enter the next phase of our site development,” said Mike Rencheck, Bruce Power’s President and CEO. “This provides us the opportunity to secure our long-term role as a supplier of low-cost electricity by demonstrating we can successfully deliver this program incrementally.”
Over the past 14 years, Bruce Power has returned its eight-unit site to its full capacity, allowing Ontario to phase out coal-fired power generation, while providing low-cost, reliable and carbon-free electricity to families and businesses.
Bruce Power is Ontario’s lowest cost source of nuclear, currently generating over 30 per cent of the province’s electricity at 30 per cent less than the average residential cost of power. Extending the operational life of the Bruce Power units will ensure Ontario families and businesses have long-term price stability.
The amended agreement, which took economic effect on Jan. 1, 2016, allows Bruce Power to immediately invest in life-extension activities for Units 3-8, followed by a Major Component Replacement program, 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, while also preparing for the first refurbishment, which will commence in 2020,” said Kevin Kelly, Bruce Power’s Acting President and Chief Financial Officer. “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 began receiving a single price for all output from the site of $65.73 per megawatt hour (MW/h), which is about 30% less than the average price of residential electricity in the province paid in 2015 of $98.90 MW/h (see above chart).
- 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 the work and off-ramps, it is estimated the six units 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 life-extension of each unit will add approximately 30 to 35 years of operational life, while other investments will add a combined 30 reactor years of operational life to the units. This approach provides additional benefit in terms of sequencing life-extension activities 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 life-extension activities 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 life-extension 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.
- The program will secure an estimated 22,000 jobs directly and indirectly from operations, and an additional 3,000-5,000 jobs annually throughout the investment program, injecting billions into Ontario’s economy as outlined in the updated Economic Impact Study, released in 2016. Learn more about job projections through this long-term outlook for Major Component Replacement.
- Consistent with the LTEP, a series of realistic off-ramps have been built into the agreement related to both life-extension performance and if the province’s market conditions change.
- 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.
- As has been the case since 2001, Bruce Power will continue to assume responsibility for operating the site. In Canada, nuclear facilities are regulated by the federal government through the Canadian Nuclear Safety Commission (CNSC) and Bruce Power, as a licensee, will be responsible for meeting all regulatory requirements and gaining the necessary approvals to implement the investment program. The life-extension timetable is consistent with Bruce Power’s current site license that runs to 2020, which assumes there will be no Major Component Replacement work completed within this period. The CNSC licensing process is an open, transparent process that provides the opportunity for public, community and Aboriginal engagement, and, consistent with past practice, Bruce Power will has started the external engagement as part of this process.
The Bruce Power Refurbishment Implementation Agreement has been available to the public since it was first signed in 2005 and the company and the province continue to support this open and transparent approach. The agreement, along with other background materials, can be found below.
Previously, Bruce Power had two different partnership structures – Bruce A LP (Bruce A) and Bruce Power LP (Bruce B). As a result of this transaction, Bruce Power moved to a single partnership structure through Bruce Power L.P. TransCanada Corporation (TransCanada) exercised its option to acquire an additional interest in Bruce Power for $236 million from the Ontario Municipal Employees Retirement System (OMERS). TransCanada and OMERS 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.