Bruce Nuclear Power Plant

operational

Opportunity In 2003 the Government of Ontario committed to phasing out coal as a power source by 2014. The combination of losing this generating capacity and increased demand made it necessary to refurbish, rebuild or replace 25,000 megawatts of supply. Additionally, the provincial government had split Ontario Hydro into five companies to deregulate the electricity industry including Ontario Power Generation (OPG), established in 1998.  At the time OPG was supplying 86 per cent of electricity, which was problematic because although wholly owned by the province, it was operating in what was supposed to be a competitive marketplace. As such, OPG chose to decontrol Bruce site A and other assets to make the market more balanced. A competitive procurement process resulted in the selection of a Bruce Power—a subsidiary of British Energy— to lease, develop and operate the nuclear facility. The project has been called “one of the largest and most complex public-private partnerships in Canada.” Challenges  Negotiating the contract was complex because of the industry’s significant safety and environmental rules and stringent licensing requirements. Careful timing and sequenced activities were required to ensure safety during handover of the plants’ operations. More than 90 per cent of the workforce at the facility was unionized and are represented by two unions, which initially campaigned against de-regulating Ontario Hydro. Innovations The first nuclear P3 in Canada introduced union equity participation. Operational and market risks were transferred from the province to Bruce Power. Results The facility is the source of 30 per cent of Ontario's electricity and contributes $960 to $1.2 billion in labour income into the economy annually. OPG shares in financial benefits from performance improvements and is protected by a price floor. Prior to the public-private partnership arrangement with Bruce Power, the province was responsible for all financial risks related to the power system. Since entering the 2000 lease agreement, Bruce Power: Returned Bruce A Units 4 and 3 to the grid in October 2003 and January 2004 respectively through a $725 million investment;  Reached an agreement with the Ontario Power Authority to expand the agreement to invest $4.25 billion in the site, beginning with the restart of Bruce A Units 1 and 2 and following with the refurbishment of Units 3 and 4 ; Expanded the agreement again on August 29, 2007 to include the full refurbishment of Unit 4, at an additional cost of $1 billion; and Announced the total forecasted investment in the refurbishment and restart program of Unit A is now approximately in the range of $5.6 to $5.9 billion.   To read CCPPP's case study of Bruce Power, click here!

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