Bruce Power to spend $13B to extend the operating life of its facility to 2064

On December 3, 2015, Bruce Power L.P. (Bruce Power) and the Independent Electricity System Operator (the IESO) entered into the Amended and Restated Bruce Power Refurbishment Implementation Agreement (the ARBPRIA) to extend the operating life of the Bruce Power facility to 2064.

The deal will secure 6,300 megawatts of electricity from the Bruce A and B Nuclear Generation Stations operated by Bruce Power and owned by Ontario Power Generation Inc. (OPG), through a multi-year $13-billion investment program that will result in the refurbishment and life extension of six of the eight nuclear reactors at the site.

When Bruce Power brought Units 1 and 2 back into operation in 2012 after completion of those Units’ refurbishment, the site became the largest operating nuclear facility in the world.

Bruce Power currently generates over 30 per cent of Ontario’s electricity from the site, and the restart of Units 1 to 4 was one of the significant contributors to Ontario’s ability to be the first North American jurisdiction to phase out coal-fired power generation.

The foundation of the transaction is that Bruce Power will receive a stable price for the electricity it generates over the life of the Units, allowing it to undertake life-extension activities including the refurbishment and major component replacement of the Units. The initial price for such electricity under the ARBPRIA is $65.73 per megawatt-hour (MWh), about 30 per cent lower than the average price of power that Ontario residents paid for electricity in 2015.

As part of the transaction, Bruce Power was reorganized to consolidate the two limited partnership structure that was created in 2005 to permit the refurbishment of Units 1 and 2, and the lease and several services agreements between Bruce Power and OPG were amended.

Additionally, one of the limited partners of Bruce Power, a subsidiary of TransCanada Corporation, exercised its option to acquire limited partnership interests from BPC Generation Infrastructure Trust (a trust established by Ontario Municipal Employees Retirement System), such that those two limited partners each have an equal interest in the reorganized Bruce Power. Trusts associated with the Power Workers’ Union, the Society of Energy Professionals and Bruce Power employees are the other partners of Bruce Power. In addition, Bruce Power’s banking facilities (led by Scotiabank and TD Bank) were restructured as part of the reorganization.

Representing the limited partners and Bruce Power in negotiations with the IESO were Bruce Power Chief Legal Officer, Brian Hilbers, and McCarthy Tétrault LLP’s David Lever, Seán O’Neill, Michael Weizman, Matt Appleby and Jamie Klein (energy/corporate), with necessary tax rulings obtained by Douglas Cannon, Robert Nearing, Brian Pel and Wendy Brousseau (tax). Acting on behalf of the IESO were Director, Corporate Commercial Legal Group, Michael Boll, and Davies Ward Phillips & Vineberg LLP’s Nicholas Williams, Brooke Jamison, Chris Figel, Michael Disney and Steven Cutler.

McCarthy Tétrault LLP also acted for BPC Generation in the sale of its partnership interest to TransCanada and the renegotiation of the governance arrangements related to Bruce Power. The BPC Generation team comprised Kath Hammond, Vice President Legal at Borealis Infrastructure, and McCarthy Tétrault LLP’s David Lever, Matthew Cumming, Chris Langdon and Jake Irwin.

TransCanada was represented by David Kohlenberg, Vice President Law, Energy and Liquids, Victoria Marselle, Associate General Counsel, Craig Newman, Senior Legal Counsel, and Sean Vanderpol, Michael Decicco and Rolake Adeniran (corporate) and Doug Richardson and Dean Kraus (tax) of Stikeman Elliott LLP.

The reorganization of Bruce Power was undertaken by a McCarthy Tétrault LLP team comprising SuzAnne Murphy, Jake Irwin, David Badour, Omar Soliman, Na Fan and Zach Masoud. Acting for Bruce Power on the renegotiation of arrangements with OPG was Len Arnold, Assistant General Counsel, and McCarthy Tétrault LLP’s David Lever, Gord Sato, Chris Langdon and Jake Irwin. Representing OPG was John Kalm, Senior Counsel, and Torys LLP’s Krista Hill and Don Roger.

Acting for Bruce Power on the restructuring of its bank facilities was Bill Schnurr, Assistant General Counsel, and McCarthy Tétrault LLP’s Barry Ryan and Chris Perez.

The banks were represented by Jonathan Weisz, Nina Mansoori, Dan Doubilet and Sam Levitt of Torys LLP.

Power Workers’ Union was represented by its General Counsel Chris Dassios and by Blake, Cassels & Graydon LLP’s Graham Smith (corporate) as well as Bryan Bailey (tax).

The Society of Energy Professionals was represented by John Ball and Sarah MacDonald of Keyser Mason Ball, LLP. The Bruce Power Employee Trust was represented by Len Arnold of Bruce Power and by Myron Dzulynsky of Gowling WLG. Click save click save