John Spears
Toronto Star
July 12, 2000

Province says 18-year deal could bring in $3.1 billion.

The privatization of Ontario’s nuclear power network surged into high gear yesterday with the announcement that a British energy giant has signed a long-term lease to operate the aging and often-troubled Bruce nuclear station.

The deal, which has been rumoured for months, marks the first time a nuclear facility in Ontario has been handed over to a private company and, according to Ontario Energy Minister Jim Wilson, the 18-year deal with British Energy should fetch more than $3.1 billion.

Using some of that cash to pay down debt at provincially owned Ontario Power Generation should lead to cheaper rates, he said. “What we’re saying is anything that helps to pay down past liabilities helps to bring lower rates in the province.”

About 40 per cent of each Ontario consumer’s electricity bill goes to service charges on Ontario Power Generation’s $21 billion debt load. Ontario Power Generation inherited Ontario Hydro’s generating facilities after the provincial government decided to break the monopoly into five smaller companies focusing on different segments of the power business.

Ontario Power Generation, which generates more than 80 per cent of Ontario’s electricity, is under orders to reduce its market share to 35 per cent within 10 years as the province opens up the electricity market to competition.

That process was supposed to accelerate in November, but Wilson recently pushed back the market opening for up to six months because proper market mechanisms weren’t ready.

Under the new system, consumers will be able to sign deals to buy from generators, or from brokers who buy large amounts of power to resell.

They will also see a breakdown on their bill of what they’re paying for pure energy, for long-distance transmission and for local distribution of electricity.

Several foreign companies other than British Energy have said they are interested in buying up Ontario’s power plants.

Spokespersons for large industrial power users and consumer groups yesterday welcomed the news of the British Energy lease deal but expressed some caution because little is known about the rates the company will offer.

“For the first time we have a real competitor in the marketplace,” said Arthur Dickinson, president of the Association of Major Power Consumers in Ontario.

But Dickinson and others noted that while the competition is welcome, it’s extremely difficult to assess the fairness of the lease price and the rates that will flow from the operation, based on the limited information available.

Norman Rubin of Energy Probe also welcomed the competition British Energy brings to the energy market but had serious reservations about the deal.

He said he would have preferred to see Bruce and Ontario’s other nuclear plants in Darlington and Pickering sold outright rather than leased.

That way, Ontario taxpayers would not have to pick up the unknown costs of decommissioning the reactors and storing the nuclear waste when the plants reach the end of their lifespan.

Rubin noted that British Energy appears to be paying more to lease the Bruce facilities than they might have to buy them – probably to avoid to decommissioning costs.

British Energy spokesperson Robin Jeffrey announced the deal yesterday with a commitment to “safety first” and no forced layoffs.

“I look forward to building a team to find new and innovative ways to increase output and reduce costs while confirming our commitment to our safety-first principles,” said Jeffrey. He’s the chairman and chief executive officer of Bruce Power Inc., a new Canadian company established by British Energy to operate the Bruce plant.

Jeffrey, 62, who has spent the past three years in Toronto, said he intends to move from his native Scotland to make Bruce County his home. He said Bruce County will also be the location of British Energy’s North American headquarters.

Jeffrey said there will be no forced layoffs amongst the 3,500 workers at the Bruce plant and the company will respect existing bargaining rights and collective agreements with the Power Workers Union and the Society of Energy Professionals.

Power Workers president Don MacKinnon said the announcement was “positive news.”

While Bruce Power is inviting the unions to acquire a 5 per cent share in the new company, the details are still being ironed out and no final decision on the unions’ participation or where the estimated $20 million would come from, has been made, said MacKinnon.

The Bruce plant, located 250 kilometres northwest of Toronto on the shores of Lake Huron, opened in 1959 and has eight Candu nuclear reactors.

Four of the eight reactors were mothballed several years ago as part of Ontario Hydro’s plan to improve performance in its nuclear division, and require extensive refurbishing.

Bruce Power believes it makes good business sense to restart two of the four nuclear generators presently mothballed at Bruce A.

With files from Roberta Avery, Canadian Press and Reuters News Agency