TransCanada Corp. (TSX and NYSE: TRP) said Aug. 10 that it can confirm that Bruce Power‘s force majeure claim to the Ontario Power Authority related to Unit 2 (at Bruce A) has been accepted.
The claim is the result of a May event that delayed the synchronization of this revived unit to the Ontario power grid. With the acceptance of the force majeure claim, Bruce Power will continue to receive the contracted price for power generated from the operating units at Bruce A after July 1, TransCanada noted.
TransCanada’s share of the total net capital cost for the Bruce refurbishment is expected to be about C$2.4bn. Once the refurbishment is complete, Bruce Power will be one of the world’s largest nuclear facilities, providing more than 6,200 MW or about 25% of Ontario’s power. Bruce Power consists of two generating stations (Bruce A and B), with each station housing four nuclear reactors. TransCanada owns 49% of Bruce A and 32% of Bruce B.
OPA says pre-installation design defect the problem
The Ontario Power Authority (OPA) said in an Aug. 9 statement that on May 7, scheduled equipment checks and testing by Bruce Power found a problem with a newly-serviced non-nuclear component which has delayed re-starting Unit 2 at Bruce A. A review by Bruce Power traced the cause of the problem to an error in the original design drawings used to manufacture the component. On May 25, Bruce Power asked the OPA to recognize that the problem was beyond the company’s reasonable control (known as force majeure).
Outside technical and legal experts carried out the due diligence on Bruce Power’s findings. In separate reviews, two technical experts confirmed the error and concluded it existed prior to Bruce Power acquiring the equipment and was therefore beyond the control of Bruce Power and prevented the company from meeting its July 1 in-service date, OPA said. As a result, Bruce Power will continue to receive the contract price (6.8 Canadian cents per kWh) for the electricity it currently generates by the operating Bruce A units.
There are no added costs to ratepayers. None of the repair and maintenance costs will be paid for by the ratepayer or taxpayer, OPA said. Once the two refurbished units are in-service, OPA will analyze the work schedule and determine if there were any delays not associated with fixing the non-nuclear problem. Bruce Power will not be paid for any such delays, as per Bruce Power’s contract.
“The price of energy under the Bruce contract provides good value to ratepayers,” OPA noted. “It is low-cost, reliable and flexible base-load generation for the province. Nuclear energy remains an important part of Ontario’s energy supply and an important part of getting out of coal by 2014.”
Bruce Power takes Bruce A Unit 1 critical
Bruce Power said Aug. 3 that it remains on schedule to return its 750-MW Bruce A Unit 1 to commercial operation in the third quarter. Unit 1 is now ‘critical’, meaning the nuclear reactor is operating as it progresses through the final stages of commissioning and testing.
The unit has been shut down for 15 years, but in July the Canadian Nuclear Safety Commission gave Bruce Power the go-ahead to restart the reactor.
Work is also underway to ensure Unit 2 will soon be generating electricity following a non-nuclear issue that occurred within an hour of synchronization to Ontario’s electricity grid in May. This work program is expected to be complete and Unit 2 generating electricity in the fourth quarter of this year, Bruce Power said. On the nuclear side of the plant, Unit 2 is also critical.
Bruce Power said it will also execute an expanded outage investment program on Unit 4 starting immediately, in support of extending the life of the unit to the end of decade. This planned maintenance outage will align the lifespan of Unit 4 to that of Unit 3, which recently underwent a C$300m investment project that extended its life by up to an additional 10 years.
On the other side of the plant, Bruce B Units 5-8 are all operating at full power. Bruce B produces approximately 3,300 MW annually, or 15% of Ontario’s electricity.