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Bruce Power to upgrade six reactors for $13-billion in deal with Ontario

Bruce nuclear power plant.

Fred Lum/The Globe and Mail

Ontario has cut a deal with Bruce Power to refurbish six reactors in the country's largest nuclear power plant.

Bruce will spend $13-billion on the 15-year refurbishment project, while the province will pay Bruce an estimated average of $77 per megawatt-hour for the electricity, which is below the average electricity price in Ontario of $83 per megawatt-hour.

The price for Bruce's power could go up, but in such a scenario the province would have the option of cancelling the refurbishment.

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"We're getting a hell of a bargain here in terms of price," Energy Minister Bob Chiarelli said Thursday morning, as he announced the deal with Bruce chief executive officer Duncan Hawthorne.

The deal gave the government a chance to change the channel on a damning audit of electricity prices the day before.

Auditor-General Bonnie Lysyk revealed that Ontarians have paid $37-billion above market rates for electricity over the past eight years because of political interference in the power system by the governing Liberals. In one example cited by Ms. Lysyk, the government decided to move forward with a biomass-fuelled power plant in Thunder Bay even though the plant's electricity costs 25 times the average for biomass power in the province, and the fuel has to be imported from Europe.

At the announcement, Mr. Chiarelli said the government had learned its lesson and is now trying to reach better agreements for power. Bruce, for instance, will be on the hook for cost overruns if the refurbishments go over budget, he said.

"All of the risk, basically, of operation and what the impact of that might be are on Bruce. We pay for the power that we will receive and not anything else," Mr. Chiarelli said.

Added Mr. Hawthorne: "If it costs us more – $7-billion, $70-billion – Bruce Power will bear the cost of that … We are 100-per-cent accountable for over budget or late. No ambiguity."

Nuclear plants provide 62 per cent of Ontario's electricity. The fleet is split between the government-owned Pickering and Darlington plants, in Durham Region east of Toronto, and Tiverton-based Bruce, a private company owned by TransCanada Corp., the Ontario Municipal Employees Retirement System and the Power Workers' Union. The province's plan is to refurbish Bruce and Darlington, while closing Pickering in 2020. The importance of nuclear has risen in Ontario over the past decade as the province has sought emissions-free electricity to help meet its climate-change targets.

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But negotiations with Bruce dragged on for months and the government explored options for importing hydroelectric power from Labrador. Some sources with knowledge of the government's plans said the province was lukewarm about nuclear power and wanted to explore other options; others said its hydro musings were mostly a negotiating tactic to crank up pressure on Bruce.

Refurbishment will start in 2020 instead of its previously planned start date of next year, a move the government says will save $1.7-billion for electricity consumers or about $66 a year for an average household. The new start date will not affect the shutdown of Pickering. Mr. Chiarelli said he expects to have more details on the Darlington refurbishment early next year.

If Bruce completes the refurbishment, the reactors will be good to go until some time in the 2060s.

"This really is foundational. It's securing a third of Ontario's electricity supply for this and the next generation of Ontarians," said Bruce Campbell, CEO of the Independent Electricity System Operator, the government agency that manages the province's electricity supply.

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About the Author
Washington correspondent

Adrian Morrow covers U.S. politics from Washington, D.C. Previously he was The Globe's Ontario politics reporter. He's covered news, crime and sports for The Globe since 2010. He won the National Newspaper Award for politics reporting in 2016. More

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