| Ontario stifles Bruce plans By ERIC REGULY AND STEVEN CHASE With a file from reporter Paul Waldie in Toronto Friday, November 15, 2002 – Print Edition, The Globe and Mail, Page B1 TORONTO and OTTAWA -- Plans to recruit new investors to take over the half-shut Bruce nuclear power plant, whose output is crucial if Ontario is to avoid blackouts, have been thrown into doubt by the government's about-face on electricity deregulation. Industry sources said three Canadian companies that wanted to buy the Bruce Power lease from near-bankrupt British Energy are trying to renegotiate their offer because they fear the new cap on electricity retail prices will impair the long-term value of the Bruce business. Cameco Corp. of Saskatchewan, the world's largest publicly traded uranium supplier, is leading the group of potential Bruce investors. Its two partners are thought to be TransCanada PipeLines Ltd. of Calgary and Toronto's Borealis Capital Corp., a merchant bank funded by the Ontario Municipal Employees Retirement Board. Cameco already owns 15 per cent of the Bruce partnership. British Energy, based in Scotland, owns 82.4 per cent and two unions representing Bruce employees own the rest. Cameco would not comment on the purchase negotiations. Spokesman Jaimie McIntyre would say only that "we are interested in seeing if we can augment our stake in the Bruce Power partnership. . . . We haven't even disclosed that we have partners." TransCanada and Borealis officials declined to comment. The glitch in the talks to take control of the Bruce partnership comes as Ontario's Progressive Conservative government is under pressure to assure customers that they will not face California-style rolling blackouts next summer, even as it guarantees customers a relatively low fixed price. Ontario made emergency purchases of imported power several times last summer to avoid blackouts and brownouts. The purchases cost as much as 40 times more than the going rate for electricity produced by Ontario generators, dominated by Crown-owned Ontario Power Generation. Ontario Energy Minister John Baird said this week that restarting OPG's Pickering "A" nuclear units as well as the Bruce Power "A" units, both among the largest nuclear-generating plants on the continent, would help to prevent energy shortages. The budget for the Bruce unit overhaul is $400-million and the work is about 80 per cent completed, with startup tentatively scheduled by next summer. Mr. Baird's office would not comment on the talks to replace British Energy as the controlling shareholder of the Bruce partnership. Neither would Duncan Hawthorne, the British Energy board member who is the chief executive officer of Bruce Power. A source said a breakdown in negotiations to sell British Energy's interest could delay the startup of the Bruce "A" units, especially if it prompts litigation. That, he said, could happen if British Power takes the position that Ontario's meddling in the electricity market has damaged the Bruce plant's value. Yesterday, Mr. Hawthorne appeared before the Canadian Nuclear Safety Commission in Ottawa to assure it that Bruce Power still has access to about $222-million, currently guaranteed by British Energy, in "shutdown" money should the plant face an emergency. Later, he gave a private presentation to the commission about what he called a "partnership restructuring" -- the possibility of new investors replacing British Energy at Bruce. In a news release, he said Bruce Power was "looking for a Canadian-based solution," evidently referring to Cameco, TransCanada and Borealis. He gave no details but said that "excellent progress has been made." British Energy and Cameco agreed to lease Bruce Power, which is capable of supplying 17 per cent of the province's electricity, from OPG in 2000. The partners' initial payment for the 18-year lease was $625-million. The partnership's longevity came into doubt earlier this year when falling energy prices in Britain pushed British Energy to the brink of insolvency. Since September, it has survived on British government loan guarantees. At that point, Cameco raised the possibility of increasing its stake to protect its investment. Replacing British Energy at Bruce is a matter of urgency because the British government's guarantees expire at the end of this month. Under the terms of the lease, OPG has the right to approve or reject any new Bruce lease owners if British Energy's stake falls below 50 per cent. It is believed that Ontario would put pressure on OPG to approve Cameco, TransCanada and Borealis taking over the lease. "Given the crisis the Eves government has triggered by fixing prices, it would be of great value to them to restore some confidence by showing they can still attract new investors," said a source close to the negotiations. OPG would not comment, other than to say it was not directly involved in the talks between British Power and any potential investors. |