Energy Probe

Paul Vieira
National Post
July 30, 2002

One of the closest advisors to Ontario’s premier, Ernie Eves, has been named chief executive of the agency that issues the province’s bonds and manages the former debt of the old Ontario Hydro monopoly.

Michael Gourley is the new CEO of the Ontario Financing Authority (OFA) and the Ontario Electricity Financial Corp. (OEFC). His appointment took effect this month, and the job will pay between $225,000 and $300,000 a year.

Mr. Gourley was the deputy minister of finance, from 1995 to 1998, when Mr. Eves held the finance portfolio under the government of Mike Harris, the former premier. In addition, he was chairman of the Ontario Financing Authority and served as the secretary of the cabinet committee on privatization.

He left government to take on a partnership at PriceWaterhouseCoopers, but resigned this year to form an independent firm. Sources say the firm had one client: Mr. Eves.

Insiders say Mr. Eves relies heavily on Mr. Gourley, and has turned to him, particularly on the electricity file.

"Eves brought him in to clean up the whole mess in respect to Hydro One," a government insider said, adding Mr. Gourley took over many of the responsibilities formerly held by David Lindsay, the CEO at Ontario SuperBuild Corp. and Mr. Harris’s former principal secretary.

A Bay Street insider said Mr. Gourley represents "a safe set of hands" and it’s good news for the province’s electricity industry.

"He’s a well-respected guy," the insider said. "He may bring a bit more sanity to the place. There’s been way too much emphasis on management issues and personalities, and not enough on the stranded debt."

The OEFC is the successor entity of Ontario Hydro responsible for managing the debt of the former Crown-owned power giant. The total debt leftover from Ontario Hydro stands at $38-billion, $19.7-billion of which is currently "stranded" – or what the ratepayers are on the hook for.

The OEFC was required to file an annual report for the 2001-02 fiscal year, ended March 31, by July 1 but has failed to do so. There’s concern the stranded debt has grown. It hit $20.03-billion in March of 2000, after $447-million in "adjustments" to earlier figures. Also, worries abound that the province will get reduced payments from Ontario Power Generation and Hydro One, as required under the province’s reforms to the power sector, because the two companies have recorded weaker earnings over the past year.

Paul Vieira
National Post
July 30, 2002

The Bruce Power consortium, made up of British Energy PLC and Cameco Corp., says it will be able to restart two of the idle units at its Bruce A nuclear station ahead of schedule, which will boost profit and provide Ontarians with much-needed power before next summer.

Duncan Hawthorne, Bruce Power’s chief executive, said yesterday Unit 4 of Bruce A could be supplying electricity to the Ontario market as early as next April, ahead of its planned restart of the summer of 2003, and Unit 3 would follow "shortly afterward," on the condition it gets regulatory approval from the federal nuclear regulator.

Adding the two units would bring another 1,500 megawatts (MW) of power to Ontario’s market, and go a long way toward alleviating the strain the province’s power system is currently under. It may also put downward pressure on electricity prices. (One megawatt can serve 1,000 households.)

Reserve power margins are tight in the province, largely because new plants have not come on board as quickly as expected and Ontario Power Generation has yet to restart its big Pickering nuclear facility. Earlier this summer, a power warning was issued, saying the province could be hit with rolling brownouts unless consumers cut back on power consumption.

The Bruce Power nuclear facility, the largest in North America, consists of two complexes: Bruce A and Bruce B, each containing four reactors. Bruce B is currently operating, while Bruce A has been mothballed since 1998.

The Bruce B, at full capacity, can provide 3,200 megawatts of power to Ontarians, or 15% of the province’s $10-billion market. However, one of the units in Bruce B is down for maintenance, but is expected to be up and running shortly.

Bringing two more units onstream will boost profit from the venture, Mr. Hawthorne said. (British Energy owns 80% of the consortium, while Saskatoon-based Cameco, the uranium miner, has a 15% stake.) According to Mr. Hawthorne, British Energy earns about $49-million per unit with four reactors on stream, and that will increase to $61-million per unit once Bruce A’s Units 3 and 4 are restarted.

Bruce Power obtained control of the nuclear facility in May, 2001, through a lease deal with OPG. Under the terms of the deal, Bruce Power made an upfront payment of $625-million and, for the next 18 years, will make annual payments to OPG – some of which fixed, some of which vary with electricity prices and productions. The annual payment for 2002 is expected to be $150-million.

Moreover, Bruce Power will spend $800-million to replace turbines and complete upgrades on the four reactors at the Bruce B generating station.

Martin Mittelstaedt
Globe and Mail
August 2, 2002

Bruce Power says it will restart a reactor at the mothballed Bruce A nuclear generating station as early as next April, ending a five-year shutdown caused by safety problems and poor operating performance.

But the reopening will likely draw renewed attention to safety concerns at the plant, where construction began in 1970. The plant is considered relatively old by nuclear-industry standards.

An antinuclear activist accused Bruce Power of cutting corners by proposing to reopen the plant without installing new pressure tubes that would improve safety margins.

"An advanced early restart raises the whole spectre that we feared the most – that profit is going to be put before safety and that they are going to push safety to the limit in order to get production out of these old reactors," said Dave Martin, nuclear adviser to the Sierra Club of Canada.

The company also intends to reopen a second idle reactor at the sprawling nuclear complex on the shores of Lake Huron before next summer.

The startup of the two reactors will cost $400-million and will add 1,500 megawatts, enough electricity to supply about 500,000 households, to the provincial grid.

Bruce Power, a branch of British Energy, the largest electricity producer in Britain, said it was able to set a timetable for the restart after federal nuclear regulators fixed dates for licensing hearings into the proposed reopening.

Chief executive officer Duncan Hawthorne said output from the station will reduce Ontario’s reliance on expensive electricity imports and will help prevent power shortages during peak summer months, when demand for air conditioning is highest.

Yesterday, the government agency operating the province’s electricity market once again called on consumers to voluntarily curb power use in order to help avoid brownouts and blackouts.

"If you look at it right now, you can see there is a pretty chronic shortage. You’re importing into Ontario more or less every day now," Mr. Hawthorne said.

Mr. Hawthorne discounted worries about the pressure tubes and said the company has inspected them and believes one reactor can be safely operated for another eight years and the second for 13 years before retubing will be required.

Before the station was shut, its pressure tubes were also viewed as vulnerable to sagging that engineers speculated might lead to blisters and dangerous cracks. Mr. Hawthorne said the company is installing new equipment to forestall the problem.

Because it is not retubing, Bruce Power will be able to reopen its reactors at a far lower cost than at Pickering A, where Ontario Power is restarting a similarly mothballed station for $2-billion.

Based on this expenditure, Ontario Power is paying about 3.5 times more than Bruce Power for each megawatt of generating capacity it is bringing back.

John Spears
Toronto Star
August 2, 2002

The current heat wave pushed Ontario’s electricity system to the limit yesterday as the province set a new unofficial record for demand.

As demand soared, industrial customers faced stiff extra charges to cover the cost of imported power – though the true price of imports is masked by the current market system.

Demand for power averaged 25,432 megawatts between 5 and 6 p.m. yesterday, breaking the old mark of 25,330 megawatts set July 3. Figures are sometimes adjusted slightly at a later date.

The extra demand for power used by air conditioners on hot days is roughly equivalent to adding a second City of Toronto to the electricity grid on a normal day.

The Independent Electricity Market Operator (IMO), which runs the provincial power grid, has asked householders and businesses to curb unnecessary power use.

The price of power rose strongly early in the afternoon, hitting nearly 40 cents a kilowatt hour at 2 p.m. But it subsided to less than 10 cents by 5 p.m. – despite the fact that demand was building through the afternoon.

The IMO can import power as demand builds, but the imports are expensive.

Industrial customers were paying an extra "uplift" charge of nearly 12 cents a kilowatt hour late yesterday afternoon to cover the cost of the expensive imports.

Reuters News Service
Planet Ark
August 5, 2002

NEW YORK — Bruce Power said it expects to restart two 750 megawatt units at its Bruce A nuclear power station in time to meet next summer’s peak electricity demand, several months ahead of its earlier schedule. Company officials said the earlier restart was due to an accelerated hearing schedule with Canadian energy regulators.

"We understand our case will have to be made at the hearings to justify our restart . . . (but we have) high confidence for a successful outcome," Bruce Power Chief Executive Duncan Hawthorne said in a statement this week.

With the Canadian Nuclear Safety Commission hearing expected next February, Bruce Power said Bruce A unit 4 could start supplying energy as early as April of 2003, well ahead of its summer 2003 objective. Hawthorne also said unit 3 could be in service before next summer, further helping Ontario meet its power needs during the peak summer months. Electricity demand typically peaks during the summer, when air conditioning accounts for about a third of all power used.

Ontario residents consumed an all-time record 25,342 MW of power on Thursday, while the Ontario grid imported some 3,000 MW from its neighbors in Manitoba and Quebec in Canada and New York, Michigan and Minnesota in the United States. When both units return, Bruce Power will be able to provide another 1,500 MW of electricity to the Ontario market the Bruce A station will provide Ontario with another 1,500 MW, enough to power about 1.5 million homes.

Bruce A unit 4 was taken out of service in Dec. 1997 and unit 3 in May 1998. All four units of Bruce A were shut by the former Ontario Hydro, the owner and operator at the time. There are no plans to restart units 1 or 2.

Bruce Power estimated the cost to restore the Bruce A units at C$400 million, which is above the company’s initial C$340 million estimate due, in part, to security enhancements made after the Sept. 11 attacks.

To date, Bruce Power has spent about C$195 million on the restart. Since the province’s electricity market opened to competition three months ago, Bruce Power said its four operating reactors at the Bruce B have worked at a capacity factor of nearly 100 percent. Bruce Power is a partnership among British Energy Plc, the UK’s largest electricity generator, Canada’s Cameco Corp. (15 percent), the largest uranium fuel supplier in the world, and the two main unions at the Bruce site, the Power Workers’ Union (up to 4 percent) and the Society of Energy Professionals (up to 1.2 percent).

Paul Waldie – with files from Bloomberg and Reuters
Globe and Mail
September 6, 2002

Canada’s nuclear regulator has ordered the operator of Ontario’s Bruce nuclear station to provide a guarantee by next week that it can meet its financial obligations or the reactors could be shut down.

The future of Bruce Power LP, which operates eight reactors at the station, has been thrown into question as financial problems mount for the company’s majority owner, British Energy PLC.

Yesterday, British Energy said it faces insolvency if it does not receive a bailout from the British government. British Energy, which lost more than $1-billion last year, has an interest in 26 nuclear reactors in Britain, Ontario and the United States. The British government has yet to respond to the request but British Energy’s problems are already having an impact in Ontario.

The utility owns 82.4 per cent of Bruce Power and provides it with several financial guarantees. One key commitment is so called "shutdown money" that is required by the Canadian Nuclear Safety Commission, or CNSC.

The CNSC, which licenses nuclear operators, requires Bruce Power to set aside enough cash to operate for six months in the event the station has to be shut down in an emergency. Under the terms of its licence, Bruce Power must show the CNSC every three months that it can meet the shutdown requirement. So far, British Energy has provided the guarantee, which amounts to $222-million.

On Aug. 12, Bruce Power filed its regular report confirming the guarantee was in place. But on Aug. 29, the CNSC wrote back saying it was concerned about British Energy’s ability to meet the commitment.

The commission gave Bruce Power until Sept. 10 to demonstrate either that British Energy can still provide the money, or show where else it would come from.

The British Energy option "seems to have been denied by BE to some extent in their news release [yesterday]," said Michel Cleroux, a spokesman for the CNSC. "So, we want to know the measures that [Bruce Power] would take to supply that guarantee of shutdown money on their own."

The commission’s "ultimate power is to take any decision necessary to ensure that the safety of the Canadian people is put first and foremost. Licences can be revoked, they can be modified, the person can be ordered to decommission or things of that nature to put it into a safe state."

Steve Cannon, a spokesman for Bruce Power, declined to comment on what the company will do. "We will respond to [the letter] as appropriate," he said yesterday.

The financial problems at British Energy could have other far-reaching consequences in Ontario.

The utility leased the operation of the Bruce station last year from the Ontario Power Generation, or OPG, the provincial entity that owns Ontario’s 20 nuclear reactors. Under the terms of the lease, which runs to 2018, British Energy still owes OPG $225-million and up to $102-million in annual fees for this year. (The other partners in Bruce Power are Cameco Corp. of Saskatoon, with 15 per cent, and the Power Workers Union, at 2.6 per cent.)

John Earl, a spokesman for OPG, said yesterday that the company is monitoring British Energy’s troubles but feels "quite secure with our lease."

Mr. Earl noted that Bruce Power is one of British Energy’s best-performing divisions. In British Energy’s previous fiscal year, ended March 31, 2002, Bruce Power’s revenue was $856-million and its operating profit was $103-million.

However, four of the Bruce reactors are shut down and Bruce Power has said it plans to have two operating of them by next summer. The cost of getting those reactors running will be nearly $400-million and some analysts wonder whether that project will proceed given British Energy’s troubles. Bruce Power faces financial penalties under the lease if the reactors are not put back into service.

Tom Adams, the head of Toronto-based Energy Probe, said he is also concerned about the safety at the Bruce station given British Energy’s problems.

"When you have a financially distressed operator, starving for cash, the instinct of just ignoring one of the alarm bells and keeping a unit in service, if it is generating revenue, has got to be a more powerful incentive," he said.

Analysts say British Energy’s problems relate in part to the government’s decision to deregulate the British electricity market earlier this year. That forced down prices the utility could charge its customers.

"It sounds like British Energy is in a lot more trouble than the market had thought," said Philip Hollobone, an analyst at SG Securities in London.

Most analysts expect the government to offer some kind of bailout. But some say British Energy may have to file for court protection from bankruptcy first.

"The last thing the government wants is 25 per cent of the nation’s electricity disappearing overnight," said UBS Warburg analyst Andrew Wright in London.

British Energy also said yesterday that it is considering selling its U.S. interests.

John Spears
Toronto Star
September 6, 2002

The Canadian Nuclear Safety Commission is seeking assurances from the financially troubled majority owner of Bruce Power that it can make good on guarantees of its ability to operate the nuclear plant safely.

British Energy PLC, which owns an 82.4 per cent stake in Bruce Power, announced yesterday that it is seeking a bail-out from the British government.

If no suitable bailout is forthcoming, "the company may be unable to meet its financial obligations as they fall due and therefore the company may have to take appropriate insolvency proceedings," British Energy said in a statement.

A Bruce Power spokesperson said yesterday that the nuclear station near Kincardine, which supplies about 15 per cent of the province’s power, continues to operate normally but would make no other comment.

Bruce Power holds an 18-year lease on the Bruce facility, expiring in 2018. The minority partners are Cameco Corp., which supplies uranium fuel, and Bruce Power’s two unions.

Currently, it is operating only one of the two plants on the Bruce site. But it has plans to restart two of the four reactors in the other plant, known as the Bruce A plant, as early as next spring.

The $340 million project is seen as important to the province, whose power grid was severely strained by this summer’s hot weather.

But Bruce Power wasn’t commenting yesterday on the future of the Bruce A restart.

As for the immediate future, Michel Cléroux of the Canadian Nuclear Safety Commission said in an interview that a condition of Bruce Power’s operating licence is that it must prove it has the financial ability to operate for at least six months, even if its revenues dry up.

That would give enough breathing room to find another operator or, in the worst-case scenario, allow for a safe shutdown of the nuclear reactors.

Cléroux said the commission received such a guarantee from Bruce Power on Aug. 12. But the commission wrote to British Energy again on Aug. 29, after seeing reports that slumping electricity prices in Britain were putting pressure on the company.

The letter asked Bruce Power to demonstrate that it can make good on its guarantee from British Energy – a guarantee that Cléroux acknowledged seems in question following yesterday’s announcement.

Alternatively, the letter asked British Energy to come up with another way of guaranteeing the six months of operating funds. The company has been given until Sept. 10 to reply, he said.

Cléroux wouldn’t speculate on what would happen if the company missed the deadline, or if the response was unsatisfactory.

In its release, British Energy said it "continues to comply with all safety and other regulatory requirements."

The company blames its problems in part on what it considers are tax disadvantages in Britain.

Bruce Power has been a money-spinner for British Energy since the 18-year lease took effect in May, 2001. British Energy reported that it earned $101.6 million in its first year of operating Bruce, by far the strongest performance of any of its units.

That’s a point in Bruce Power’s favour, noted energy consultant Jan Carr, who said it would be in the interests of all concerned – shareholders and creditors alike – to keep profitable units operating.

Carr said he doesn’t have inside knowledge of British Energy’s financial arrangements, but said it has a tradition of structuring deals with customers and suppliers so that they share rewards for good performance – and risks of potential failures.

While it’s "not positive news" for Bruce Power, Carr said British Energy’s troubles won’t necessarily lead to serious problems for Bruce Power, depending on the terms of the ownership.

Tom Adams, executive director of Energy Probe, was more worried, noting that if managers get sidetracked by worries over financing or legal issues, they would have less time to devote to operating the plants.

There’s also an incentive to operate with a short-term rather than a long-term view during a crisis atmosphere, said Adams, who said regulators should keep a close eye on the plants.

Ontario Power Generation, which owns the Bruce nuclear plants, was maintaining a calm demeanour yesterday.

Spokesperson John Earl noted that British Energy has boasted of Bruce Power being one of its jewels. Obligations under the lease with OPG have been met, Earl said.

Bruce Power has agreed to make fixed payments of $625 million, plus variable annual payments over the life of the lease to be determined by an agreed-upon formula. The payment for the year ending March 31, 2002, was $86 million.

Paul Waldie
Globe and Mail
September 7, 2002

British Energy PLC’s financial problems could cause electricity shortages in Ontario next year and drive up power prices for consumers, analysts warn.

British Energy owns 82.4 per cent of Bruce Power LP, which runs eight nuclear reactors in Ontario. The British utility has said it faces insolvency if it does not receive a bailout from the British government.

Currently four of Bruce Power’s reactors are operating and two more are slated to come into service next summer. Restarting those two reactors is expected to cost $400-million.

Tom Adams, head of Toronto-based Energy Probe, said yesterday that given British Energy’s financial problems, it is doubtful those reactors will go on line. That means Ontario’s power supply, which has been stretched to capacity this summer, could suffer.

"It was just through the aid of our neighbouring utilities that we were able to make it through the summer," Mr. Adams said.

Electricity demand and prices were at record levels this summer which forced the province to import power from outside sources. However, Ontario’s transmission system is limited in how much power it can import and Mr. Adams said the province surpassed its limit this summer.

The supply situation "was bad enough when we had a solvent operator running Bruce Power and now that that’s a question mark, the overall supply reliability perspective is more gloomy."

In a recent 18-month forecast, the Independent Electricity Market Operator, or IMO, which runs Ontario’s power market, warned of price hikes if the Bruce reactors do not come into service.

The effects of the two Bruce reactors not coming on line "include upward pressure on market prices and limited opportunities for the IMO to approve the release of generators for planned maintenance," the report said.

Duncan Hawthorne, Bruce Power’s chief executive officer, declined to comment yesterday on British Energy’s troubles. "However, I can say that during discussions with the British Energy board of directors, I received no change in direction with respect to our activities at Bruce Power," he said in a statement.

British Energy’s problems deepened yesterday as three credit rating agencies downgraded the utility’s debt rating to junk status.

Moody’s Investors Services said the downgrade means British Energy will have to post added collateral for some financial commitments.

"Moody’s believes that the additional liquidity requirements are of the order of hundreds of millions of pounds," the agency said.

In a recent securities filings, British Energy noted that some of Bruce Power’s energy contracts require the parent company to have an investment grade rating. If British Energy’s rating is below investment grade and it cannot provide alternative credit support, the contracts can be terminated, the filing said. Bruce Power has contracts with large customers for 65 per cent of its production.

Bruce Power has also been told by the Canadian Nuclear Safety Commission, or CNSC, to provide assurances by next week that it still has access to $222-million in emergency "shutdown money".

That guarantee has been provided by British Energy, but the CNSC is now concerned that the company can no longer meet the commitment.

In the security filing, British Energy said that if the commitment cannot be properly satisfied, "the CNSC may terminate Bruce Power’s licence to operate the Bruce nuclear station."

Mr. Adams of Energy Probe also yesterday urged the CNSC to increase its safety supervision of the Bruce station.

John Spears and Kate Harries
Toronto Star
September 7, 2002

Ontario Energy Minister John Baird says he’s seen no signs that the financial trouble of Bruce Power’s majority owner will delay plans to bring two nuclear reactors back into service next year.

In an interview from Ottawa yesterday, Baird said he’s spoken with Bruce Power’s chief executive, Duncan Hawthorne, twice in the past two weeks.

Bruce Power’s majority owner is British Energy PLC, with an 82.4 per cent stake. British Energy said Thursday it’s seeking a bailout from the British government and that it could go broke if it doesn’t get the help.

Bruce Power, which holds an 18-year lease on the Bruce nuclear station near Kincardine, is in the midst of a $340 million project to refit two reactors at its Bruce A generating plant and return them to service by spring.

Bruce Power hasn’t answered questions about the impact of British Energy’s woes.

Hawthorne, who was in Britain this week, released a statement yesterday saying that in his talks with British Energy’s directors, "I received no change in direction with respect to our activities at Bruce Power."

"On that basis, we continue with our Bruce Power business plan. My prime focus at this time is to ensure that Bruce Power’s employees are not distracted by this situation and that we continue to operate the Bruce reactors in accordance with the excellent performance we have delivered to date."

Ontario’s power supply was stretched to the limit this summer and the province had to rely on imports. The province has said its electricity reforms will encourage private investors to add generating capacity.

Baird said yesterday he’s not worried about Bruce Power’s plans to restart the Bruce A reactors, although "obviously there are challenges in the U.K." for its parent.

"There’s been no indication whatsoever at this stage, because of the financial issues, that it’s going to have an effect on the timing" of getting the two laid-up Bruce reactors back in service, he said. Baird, who took over as energy minister last month, said he’s already acquainted with Bruce Power’s Hawthorne.

"I talked to him personally last week, and I talked to him by telephone on Monday. We’re in close contact. We’ll watch it closely."

Market planning documents prepared by the agency that runs the Ontario power grid show the Bruce A project is by far the biggest project among any near-term expansions of the province’s power grid.

The latest projection by the Independent Electricity Market Operator (IMO) shows 2,371 megawatts of power coming on stream by next September. Of that, the Bruce project is supposed to deliver 1,500 megawatts.

Tom Adams, executive director of Energy Probe, was skeptical of Baird’s confidence. The IMO’s most recent projections underestimated peak demand this summer, Adams said.

Ontario had record-setting demand of more than 25,000 megawatts on several occasions. The IMO projections showed demand running about 23,000 megawatts or less.

In Inverhuron, a community of about 1,000 people a few kilometres from the massive Bruce nuclear complex, unease greeted news of British Energy’s difficulties.

"I think the first concern is safety when any corporation is struggling with cash-flow problems, " said Norm Chevrotiere, a member of a residents’ watchdog group.

"Will they cut corners?" he asked.

Kincardine Mayor Larry Kraemar said he doesn’t think so. "With the nuclear industry one always has to be extra cautious, but at this point I have no undue concerns," he said, noting Bruce Power is said to be properly financed and profitable.

Chevrotiere said the fact the Bruce plant is privately owned has made it hard to monitor safety concerns, because freedom of information legislation does not apply.

"I’m still trying to figure out how to get significant event reports," Chevrotiere said. These reports of radioactive releases would come several times a year when the facility was owned and operated by Ontario Hydro.

"It does make you wonder how economically viable nuclear energy is in a deregulated environment," he added, "especially when these corporations keep on having to go to the government cap in hand asking for more money."

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.