Jeffrey Jones
Yahoo! Finance – UK & Ireland
September 12, 2002

CALGARY, Alberta, Sept 11 (Reuters) — The chief executive of Ontario’s Bruce Power nuclear partnership, which is majority owned by struggling British Energy Plc, will address concerns about the generator’s financial viability at a hearing in Ottawa on Thursday, an official with the group said.

Among topics expected to be addressed by Bruce Power CEO Duncan Hawthorne at the public hearing are the group’s ideas for alternative emergency financing should it be needed in the event of a shutdown, including getting its own credit rating and changing the partnership structure.

The British government has given British Energy, its largest electricity producer, 410 million pounds ($635 million) to prevent the company’s immediate collapse, but that has not assuaged the concerns of Canadian regulators and energy industry players over Bruce Power’s ability to keep operating.

The Bruce complex on Lake Huron provides 15 percent of the power in Ontario, Canada’s biggest power market, now faced with the latest of several bumps on the road to deregulation.

Bruce Power spokesman Steve Cannon said Hawthorne will be among several top executives to appear at a regularly scheduled public hearing before the Canadian Nuclear Safety Commission in Ottawa. But he declined to say if his message would be one of assurance that the Bruce plant is in no financial trouble.

"All I can tell you is, yes, he intends to touch on the British Energy situation during his presentation to the CNSC," Cannon said.

British Energy owns about 82 percent of the partnership, which operates the reactors in a leasing arrangement.

The regulator, prompted by news of British Energy’s troubles, had asked Bruce Power to respond by Sept. 10 on whether it could guarantee the facility would be funded for six months should a decision be made to shut it down. That is a standard commitment for all Canadian nuclear operators to ensure a safe shutdown.

According to a CNSC document, Bruce Power, in its response, said it believed that British Energy’s guarantees were still in full force, but acknowledged the British government did not mention the Ontario liability as part of the bailout.

The partnership also recognizes the need for further assurances and was exploring alternative "Canadian-based solutions," such as obtaining insurance coverage for a shutdown, achieving its own credit rating, developing new bank facilities or changing the partnership structure, said the document, signed by the director general of the Directorate of Power Reactor Regulation.

‘Safety catch’

"Bruce Power is operating safely, and there’s nothing to indicate a need to close down for any reason we can see," CNSC spokesman Michel Cleroux said. "That’s important to remember – all we’re asking for is the guarantee, this safety catch."

Despite the bailout, some British ministers have warned there were no guarantees they will keep British Energy afloat beyond the end of the month.

Analysts and energy players have warned Ontario’s power market would be hit hard if Bruce Power could not operate.

Tom Adams, executive director of independent watchdog Energy Probe, said he believed Direct Energy, a unit of Britain’s Centrica, and Toronto Hydro Energy Services were Bruce’s two top customers. Cannon would not confirm that, saying Bruce Power did not detail contract information.

The power market is already extremely tight in Ontario, a province of 11 million people, and highly reliant on imports from utilities in Michigan and New York, Adams said.

"If further complications develop on the production side, like if Bruce Power can’t meet the regulatory requirements, that would constitute an emergency condition," he said.

In addition, the facility could be pressured should customers shy away over credit concerns, regardless of what the regulator decides, he said.

Bruce Power’s other partners are uranium producer Cameco Corp., the Power Workers’ Union and the Society of Energy Professionals.

A Cameco spokesman said on Tuesday the firm has discussed the possibility of increasing its stake from the current 15 percent, but that there had been no formal offers.