In a deal that will transform Ontario’s electricity generation industry, British Energy plc and Ontario Power Generation Inc. jointly announced on July 11, 2000 the lease of OPG’s Bruce nuclear site to Bruce Power L.P. (the Canadian subsidiary of British Energy, the United Kingdom’s largest electricity generator). The public/private partnership involves a long term lease for the Bruce A (3076 MW, currently in lay up) and Bruce B (3140 MW) facilities. The lease will run until 2018 with an option to extend for another 25 years.
Under the arrangement, OPG will receive an initial payment of $625 million in three installments plus annual lease payments estimated to be $150 million in calendar year 2002. Total lease payments, which will be partly based on plant capacity and energy prices, have been estimated to be from $3.1 billion to $3.5 billion.
The deal is the first significant divestiture by OPG of generating assets as part of the restructuring of Ontario’s electricity industry (see Lexpert May, June and July/August 2000 issues). It is also the first instance of a nuclear power plant in Canada being operated by a private sector entity. Completion of the transaction is subject to a number of regulatory approvals including the Canadian Nuclear Safety Commission and the Ontario Energy Board. Closing is expected to occur during the first half of 2001.
Bruce Power’s team was led by in-house counsel, John Young, who drew upon the services of the Smith Lyons Energy Group. The Smith Lyons team was led by David McFadden (energy, governmental relations and public affairs) and Paul Harricks (corporate and energy) and consisted of lawyers in a wide range of practice areas including Seán O’Neill (commercial), Alan Dean (real estate), Brian Armstrong (nuclear regulation), Tom Brett (provincial energy regulation), Andrew Brands (finance), Bill McNaughton and Allen Craig (labour), Dan Hayhurst (pensions), Richard Owens (intellectual property and information technology), Ron Richler (tax), Katherine van Rensburg (environmental), Bob Hull and Bob Milnes (partnership) and Graeme Mew (insurance). OPG’s team was led by Executive Vice-President David Drinkwater, and drew upon the services of in-house counsel Dickson Harkness and a team from Torys, including Phil Symmonds, Brian Flood, Krista Hill, Don Roger, David Nowak, Michael Padfield, Ryan Barry, Rob Normandeau, Michael Fortier, with Chris Medland covering pension and benefits, John Unger on tax, Robert Mansell on environmental issues, Gabe Takach on IT/IP issues and John Cameron and Catherine Forbes on research issues.