OPG's Contribution to Ontario's Energy Needs: Performance, Projects and Priorities

1
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 Ontarios Energy Future
• February 20, 2008
• Mississauga, Ontario

2

• OPG Profile
• OPGs Contribution to Ont.s Energy Needs
• current performance
• environmental contribution
• OPGs Contribution Going Forward
• new hydro projects
• nuclear refurbishment
• new build nuclear
• OPG and Financial Sustainability
• Priorities

3
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
4
Safety OPGs 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

5
Operational Performance Darlington
Darlington Unit 2
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
Darlington Unit Capability
6
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
Availability
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
Chats Falls 75 years of service
Beck Hydroelectric Complex
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Operational Performance Fossil

• 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

Forced Outages
Nanticoke 35 years of service
Lennox 30 years of service
9
Public Perception in Ontario of Electricity
Generation Sources
Source Ipsos-Reid July 2007
10
Typical Summer Day (June 21, 2007)
25000
20000
Non-OPG Gas
OPG Coal
Lennox GS
Other Oil and Gas
15000
OPG Coal
Other Peaking Hydro
OPG Peaking Hydro
MW
OPG Peaking Hydro
Wind
Bruce Nuclear
10000
Bruce Nuclear
OPG Nuclear
OPG Base Hydro
5000
OPG Nuclear
OPG Baseload Hydro
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Hours
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Fossil Flexibility Nanticoke GS Example
Dispatches received by Nanticoke GS in 2007

• 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
Nanticoke G1 -- January 19, 2008
175,116
146,602
150,000
100,000
50,000
Dispatches on this day for this unit 191
0
Total Dispatches
Changes in Dispatch Direction
Unit responds very quickly to fast-changing
dispatch pattern.
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OPGs Environmental Performance SO2 and NOx
Fossil Emission Rates -- 1983-2007
14.00
Low Sulphur Coal Introduced In 1980s
12.00
10.00
2 FGD systems at Lambton 1994
8.00
Lennox GS converts from oil to gas 1999-2002
Emission Rate (Gigagrams/TWh-net)
6.00
4.00
2.00
New Lower NOx Burners Installed 1997 thru 2003
2003 4 SRCs installed
0.00
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Year
approximate estimate for 2007
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OPGs Environmental Performance Sources of CO2 in
Ontario (2004)
2.6
4.4
4.6
0.5
1.9
OPG accounts for 15.5 of CO2 produced in
Ontario
15.5
OPG
4.3
0.3
Transportation
Stationary
34.4
Combustion
- Manufacturing
12.0
0.3
8.0
Stationary
0.5
10.6
Combustion
- Agriculture
Stationary
Forestry
Combustion
- Residential
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OPGs 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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OPGs 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
17
New Generation Projects Lac Seul

• 12.5 MW
• Located in Northwest Ontario
• Design-Build arrangement with contractor reduces
  OPGs financial risk
• Contractor has extended completion date

Lac Seul Powerhouse Fall 2007
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Proposed New Hydroelectric Projects

• 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

Smoky Falls Lower Mattagami
Hound Chute Generating Station
Mattagami Lake Control Dam
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New Generation Projects Portlands Energy Centre
Summer 2006

• Located in Toronto
• 550 MW
• On schedule/On budget
• First power in 2008
• Fully operational by 2009

November. 2007
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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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IPSP - 10,000 MW of Nuclear Power through
Replacement and/or Refurbishment
Pickering B Refurbished
Pickering B Not Refurbished
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
• Provinces 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 OPGs price
• 2005-2007 3 billion
• OPGs regulated rates were set in 2005
• ROE was set at 5
• OEB hearings planned in 2008 for rate adjustment

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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 OPGs
  regulated assets
• This will be OPGs 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

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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 Ontarios Energy Future
• February 20, 2008
• Mississauga, Ontario