Agreement Strengthens Reliability of Supply and Brings on Enough New

Power for One Million Homes

QUEEN'S PARK, ON, Oct. 17 /CNW/ - Energy Minister Donna Cansfield today announced that the government and Bruce Power have reached an agreement to produce another 1,500 megawatts of electricity capacity with the refurbishment of Bruce A Units 1 and 2 at the Bruce Nuclear facility near Kincardine. The agreement will bring on-line enough generating capacity to power one million homes, or a city the size of Ottawa.

"This agreement is another step forward in the McGuinty government's plan to increase Ontario's supply of safe, clean, reliable and affordable electricity," Cansfield said. "Refurbishing Units 1 and 2 will help ensure Ontario continues to enjoy a diverse and reliable supply of electricity over the 30 years of the facility's life, and supports our strategy to replace coal-fired generation with cleaner sources of energy."

"Over the next fifteen years Ontario will need to refurbish, rebuild, or replace 25,000 megawatts of supply," Cansfield added. "In addition to this agreement, the McGuinty government is also maximizing the potential for cleaner energy, through hydroelectric and renewable power, and maximizing the potential for conservation in our province."

Under the agreement, Bruce Power will invest $4.25 billion to restart Units 1 and 2, refurbish Unit 3 when it reaches the end of its operational life and replace the steam generators in Unit 4. The additional generation will boost total capacity at Bruce's nuclear facilities to 6,200 megawatts.

Restarting Bruce Units 1 and 2 will mean more jobs, more opportunities and more prosperity for the people of Kincardine and throughout Ontario. The four-year project is expected to create 1,500 construction jobs.

"This is a landmark transaction for our province," Cansfield said. "In the past, financial risks associated with Ontario's nuclear fleet have rested squarely on the shoulders of ratepayers or taxpayers, costing them billions of dollars. This agreement transfers much of the risk associated with the project to the private sector and away from hard working Ontarians, while ensuring fair prices and the capacity to meet Ontario's future energy needs."

Bruce Power will receive $63 per megawatt hour for the electricity produced by all of the Bruce A units, compared with an average price of $67.65 per megawatt hour for all electricity in Ontario from January 1 to October 4, 2005. Bruce Power will pay all capital costs related to the refurbishment of the units, and ensure that much of the risks of cost overruns related to the refurbishment and restart of the units are transferred away from Ontario ratepayers. The output from Bruce B will continue to be sold into the Ontario spot market and to various customers under fixed price contracts.

The terms of the agreement were subject to detailed due diligence by financial, legal and technical advisors and approved by the Ontario Cabinet.

CIBC World Markets has provided the Ministry of Energy with an opinion that the principal financial terms of the transaction are fair. In reaching its opinion, CIBC World Markets considered whether the transaction implied a commercially reasonable financial return on investment for Bruce Power, having regard to the cost, complexity and risks associated with the refurbishment, restart, operation and maintenance of the Bruce A Facility.

The restart of Units 1 and 2 is subject to environmental and licensing approval by the Canadian Nuclear Safety Commission (CNSC).

Disponible en franEcais. www.energy.gov.on.ca

Backgrounder

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McGUINTY GOVERNMENT'S ENERGY SUPPLY INITIATIVES Bruce Agreement Brings Additional 1,500 Megawatts of Electricity Generating Capacity On-Line

The Ontario government today announced that it has reached an agreement with Bruce Power for the refurbishment of Bruce A Units 1 and 2 at the Bruce Nuclear facility near Kincardine, bringing on- line an additional 1,500 MW of new baseload capacity through 2036. The deal will bring on-line enough generating capacity to power one million homes, or a city the size of Ottawa.

Under the agreement, Bruce Power would receive $63 per megawatt hour for the electricity produced by the Bruce A units compared with an average price of $67.65 per megawatt hour for all electricity in Ontario from January 1 to October 4, 2005. Bruce Power will pay all capital costs related to the refurbishment of the units and ensure that much of the risks of cost overruns related to the refurbishment and restart of the units are transferred away from Ontario ratepayers.

CIBC World Markets has provided the Ministry of Energy with an opinion that the principal financial terms of the transaction are fair. In reaching its opinion, CIBC World Markets considered whether the transaction implied a commercially reasonable financial return on investment for Bruce Power, having regard to the cost, complexity and risks associated with the refurbishment, restart, operation and maintenance of the Bruce A Facility.

Bruce Power will invest approximately $4.25 billion to refurbish and restart Bruce A units 1 and 2, refurbish Unit 3 and extend the operating life of Unit 4 once the first two units are in service. Refurbishment will begin immediately, with the first unit expected to be operational in 2009. At the peak of construction, the project will involve more than 1,500 construction jobs.

The restart of units 1 and 2 will be subject to approval from the Canadian Nuclear Safety Commission.

Over the next fifteen years Ontario will need to refurbish, rebuild, or replace 25,000 megawatts of supply. This agreement is part of the McGuinty government's commitment to bring online a future energy supply that is safe, clean, reliable and affordable.

In addition to this agreement, the McGuinty government is maximizing the potential for cleaner energy by reducing the province's reliance on coal-fired generation and increasing the supply of hydroelectric and renewable power, while maximizing the potential for energy conservation in Ontario.

Since the McGuinty government took office in October 2003, it has brought more than 2200 megawatts online. In fact, between 2004 and 2007, Ontario will secure more new generating capacity than any other jurisdiction in all of North America. The McGuinty government has the wheels in motion to produce nearly 9,000 megawatts of diversified generating capacity -- enough power for 4.1 million homes.

This includes:

- Pickering A Unit 1 Return to Service - 515 megawatts

- Clean Energy Supply and Demand Side Projects - 1,955 megawatts

- Niagara Tunnel - 200 megawatts

- Renewables 1 RFP - 395 megawatts

- Renewables 2 RFP - 1,000 megawatts

- Renewables 3 RFP - 200 megawatts

- Replacement of Thunder Bay Generating Station with Gas-Fired Generation - 310 megawatts

- Co-generation - 1,000 megawatts

- Downtown Toronto - 500 megawatts

- West GTA - 1,000 megawatts

- Demand-Side Management and Demand-Response - 250 megawatts

A particular emphasis has been placed on expanding renewable generation, and the government is well on its way to meeting its target of adding five per cent, or 1,350 megawatts, of new renewable generating capacity by 2007. By the end of 2007, it is expected Ontario will see a 75-fold increase in its wind capacity alone. Groundbreakings have already occurred at two of the successful proponents of Renewables 1 RFP - Erie Shores Wind Farm (99 megawatts) and Melancthon Grey Wind Project (67.5 megawatts).

In addition to these supply initiatives, the government has undertaken various conservation initiatives, including:

- Created incentives for local distribution companies to invest over $160 million in conservation in their local communities in the next three years

- Appointed a Chief Energy Conservation Officer who is currently developing conservation programs

- Set a target to put smart meters in 800,000 homes by 2007 and in every home by 2010

- Established new energy efficiency standards including increasing the minimum efficiency level of air conditioners by 30 per cent and eliminate production of approximately 50 per cent of the least efficient models currently available in Ontario.

Disponible en franEcais. www.energy.gov.on.ca