opg's contribution to ontario's energy needs: performance, projects and priorities pierre...
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OPG's Contribution to Ontario's Energy Needs: Performance, Projects and
Priorities
Pierre Charlebois Chief Operating Officer: Ontario Power Generation
Canadian Manufacturers and Exporters Navigating Ontario’s Energy Future
February 20, 2008Mississauga, Ontario
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OPG Profile
OPG’s Contribution to Ont.’s Energy Needs current performance
environmental contribution
OPG’s Contribution Going Forward new hydro projects
nuclear refurbishment
new build nuclear
OPG and Financial Sustainability
Priorities
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OPG: Profile
Owned by Province of Ontario
Produces about 70% of electricity consumed in Ontario
In-service capacity: 22,147MW 64 Hydroelectric stations:
6,956 MW 10 Nuclear Units: 6,606 MW 5 Fossil Stations: 8,578 MW
Approximately 11,500 employees
Generating Facilities
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Safety: OPG’s Fundamental Value
In 2007, OPG achieved its best workplace safety performance in its history
CEA Silver Safety Excellence Award for 2005 and 2006
Numerous Safety Milestones achieved at OPG sites
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Operational Performance: Darlington
Performance recognized worldwide
Most improved performance -- INPO
Darlington units in top quartile among CANDU units
Approx. 90% unit capability in 2007
Major planned outages completed on, or ahead of, schedule
4 million hours worked without a lost time injury
50
60
70
80
90
100
'03 '04 '05 '06 '07
Darlington Unit Capability
Darlington Unit 2
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Operational Performance: Pickering
Pickering A 1.5 million hours without lost time injury Decision to shut down Units 1 & 4 (June
2007) to modify backup electrical system negatively affected production
Pickering B: Inspection completed in 2006 on 1,554
fuel channels 4 million hours without lost time injury Production down slightly during 2007
Pickering A & B site 2007: Corporate Habitat of the year 5,000 trees planted over past four years
Pickering A Employees
Pickering B Employees
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Operational Performance: Hydroelectric
Beck Hydroelectric Complex
GO
OD
100
50
0
%
92.9 92.493 94.2
2007200620052004Q1-Q3
Availability
Chats Falls – 75 years of service Availability well above 90%-- best since 1984 -- top quartile industry performance
Upgrades have added 427 MW since 1992……this will increase to 490 MW by 2012
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Operational Performance: Fossil
GO
OD
20.0
10.0
0.0
%
11.2
14.1
15.9
18.7
2007200620052004Q1-Q3
Forced Outages
Lennox – 30 years of service
Nanticoke –35 years of service
Excellent performance during summer •all 16 units in southern Ontario operating in June heatwave
•satisfied 25%-30% of Ont. demand in early August
Best reliability since 2000
OPG will continue to operate its coal-plants efficiently and responsibly until their closure in 2014
9Source: Ipsos-Reid July 2007
Public Perception in Ontario of Electricity Generation Sources
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Typical Summer Day (June 21, 2007)
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Hours
MW
Lennox GS
Other Oil and Gas
OPG Coal
Other Peaking Hydro
OPG Peaking Hydro
Wind
Bruce Nuclear
OPG Nuclear
OPG Base Hydro
OPG Baseload Hydro
OPG Nuclear
Bruce Nuclear
OPG Peaking Hydro
OPG Coal
Non-OPG Gas
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Fossil Flexibility: Nanticoke GS Example
Fossil plants can start, stop & change output more quickly than most other generation sources
Ideal for meeting minute-to-minute changes in demand and peak electricity demand periods
In 2007, Nanticoke received over 175,000 dispatches Over 146,000 were “changes in direction”
to reduce or increase output
This is impressive performance for a station such as Nanticoke: 3,920 MW 8 units (over 600,000 HP per unit)
200,000
100,000
0
175,116
150,000
Total Dispatches
Dispatches received by Nanticoke GS in 2007
50,000
Changes in
Dispatch Direction
146,602
Nanticoke G1 -- January 19, 2008
# Dispatches on this day for this unit: 191
Unit responds very quickly to fast-changing dispatch pattern.
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OPG’s Environmental Performance: SO2 and NOx Fossil Emission Rates -- 1983-2007
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
1983
1984
1985
1986
1987
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1989
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1991
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1996
1997
1998
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2003
2004
2005
2006
Em
iss
ion
Ra
te (
Gig
ag
ram
s/T
Wh
-ne
t)
Year
2003: 4 SRCs installed
Low Sulphur CoalIntroduced In 1980s
2 FGD systems at Lambton: 1994
Lennox GS converts
from oil to gas: 1999-2002
New Lower NOx Burners
Installed 1997 thru 2003
2007
*
NOx as NO2 Rate
SO2 Rate
*approximate estimate for 2007
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OPG’s Environmental Performance Sources of CO2 in Ontario (2004)
4.4%
15.5%
4.3%
0.3%
12.0%
0.3%
8.0%
10.6%0.5%
34.4%
1.9%0.5% 4.6%
2.6%
OPG
TransportationStationary
Combustion - Manufacturing
Stationary Combustion
- Agriculture & ForestryStationary
Combustion- Residential
OPG accounts for 15.5% of CO2 produced in Ontario
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OPG’s Environmental Performance: Biomass Testing
Biomass provides an option for reducing net CO2
OPG is currently testing biomass co-firing with coal
Biomass fuels being used: wood pellets, agricultural by-products; milling by-products
Nanticoke testing produced electricity to power 1,000 households for one month
OPG is host for provincial Atikokan Biomass Energy Centre
Nanticoke GS
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OPG’s Environmental Performance: GHG Management
Increase generation from nuclear and hydroelectric plants
Promote energy efficiency and GHG reductions at plants
Increase use of biofuels to displace coal Expand biodiversity program as a GHG
mitigation and adaptation strategy Research impacts of climate change on our
existing and future operations
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New Generation Projects: Niagara Tunnel
10.4 KM long
1.6 TWh average annual energy
Over 1,600 metres excavated
Design build approach reduces OPG financial risk
Contractor has extended the completion date
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New Generation Projects: Lac Seul
12.5 MW
Located in Northwest Ontario
Design-Build arrangement with contractor reduces OPG’s financial risk
Contractor has extended completion date
Lac Seul Powerhouse: Fall 2007
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Proposed New Hydroelectric Projects
Smoky Falls: Lower Mattagami
Mattagami Lake Control Dam
Hound Chute Generating Station
•Lower Mattagami • Definition stage • Consultations continuing with First Nations • Study process required under CEAA regulations
Small Hydro Projects Approved by OPG Board • Redevelopment of Upper Mattagami hydro stations• Redevelopment of Hound Chute on the Montreal River.
• Expansion of Healy Falls GS
Ont. Govt. directive to OPA in Dec 2007 • allows OPG to move forward on these projects
Potential New Capacity – 500 MW
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New Generation Projects: Portlands Energy Centre
Summer 2006
November. 2007
• Located in Toronto • 550 MW • On schedule/On budget
• First power in 2008
• Fully operational by 2009
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Potential Gas Opportunities: Lakeview Site
• Lakeview Station shut down in 2005
• Demolition 2006-2007 • OPG is exploring potential development of gas-fired facility at the site
Lakeview station prior to demolition
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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Ins
talle
d M
W
Existing Committed Planned
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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Ins
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Existing Committed Planned
Pic
keri
ng
B R
efu
rbis
hed
Pic
keri
ng
B N
ot
Ref
urb
ish
ed
IPSP - 10,000 MW of Nuclear Power through Replacement and/or Refurbishment
Add over 6000 MW of fossil generation to be removed in 2014
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Nuclear Refurbishment
Darlington Pickering B
Pickering B • Plant condition assessment• Preliminary cost estimates on construction• Independent integrated safety review -- continuing
• CNSC to provide feedback in late 2008• OPG submits EA Study Report to CNSC (Dec. 2007) • Management will make a recommendation to the Board • Solid business case is a prerequisite.
Darlington • Work on the refurbishment business case to start in 2008.
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Nuclear New Build
Q1 2007 • EA support initiatives underway
Q2 2007 • Project Description filed
Q3 2007 • new build planning continues, including public consultation • OPG/Bruce Power joint assessment of potential nuclear technologies• Province’s technology assessment
Q4 2007 • Phase 2 community information sessions – 200 individuals attended• over 1,200 individuals reached during the year through OPG communications initiatives
Q1 2008• CNSC requests federal Environment Ministry to refer EA to a review panel.
Darlington Site
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OPG Helps Moderate Electricity Prices
Difference between Market price & OPG’s price2005-2007 ~ $3 billion
OPG’s regulated rates were set in 2005
ROE was set at 5% OEB hearings planned in
2008 for rate adjustment
Difference between Market price & OPG’s price2005-2007 ~ $3 billion
OPG’s regulated rates were set in 2005
ROE was set at 5% OEB hearings planned in
2008 for rate adjustment
¢/kWh 7.2■
4.94.6
2006
~ 4.6
2007
4.9 ■
5.1 ■
2005
Ontario Market Price
OPG’s Average Price
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Focus on Financial Sustainability
• Early Nov. 2007: OPG conducts pre-submission stakeholder consultation to discuss business factors underpinning a proposal to increase rates for its regulated nuclear & baseload hydro output
• Late Nov. 2007: OPG submits a rate application to the OEB
• OPG seeks rate of return consistent with scope and type of business risks associated with reliably operating its regulated assets
• If approved by OEB, the application will result in a 14% rate increase on output from OPG’s regulated assets
• This will be OPG’s first rate increase in three years
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Key Drivers of Rate Increase Application
Nuclear Change in ROE and capital structure Increased costs associated with the nuclear used fuel and
decommissioning liability Changes in Post Employment Benefit costs Inflation and nuclear fuel costs Projects:
Nuclear New Build Nuclear Refurbishment Studies
Hydroelectric Change in ROE and capital structure Projects:
Upgrade and rehabilitation of two older units at Sir Adam Beck I
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Priorities Going Forward
Maintain strong performance
Continue to operate coal-fired stations in an efficient and environmentally responsible manner until their closure
Continue hydroelectric expansion program
Explore opportunities for gas-fired generation
Continue with nuclear new build process “Time is of the Essence”
Achieve financial sustainability
OPG's Contribution to Ontario's Energy Needs: Performance, Projects and
Priorities
Pierre Charlebois Chief Operating Officer: Ontario Power Generation
Canadian Manufacturers and Exporters Navigating Ontario’s Energy Future
February 20, 2008Mississauga, Ontario