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OPG's Contribution to Ontario's Energy Needs: Performance, Projects and Priorities Pierre Charlebois Chief Operating Officer: Ontario Power Generation.

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Presentation on theme: "OPG's Contribution to Ontario's Energy Needs: Performance, Projects and Priorities Pierre Charlebois Chief Operating Officer: Ontario Power Generation."— Presentation transcript:

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 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 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 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 5 Operational Performance: Darlington 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 Darlington Unit 2

6 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

7 7 Operational Performance: Hydroelectric Beck Hydroelectric Complex GOOD % Q1-Q3 Availability Chats Falls – 75 years of service Availability well above 90% -- best since top quartile industry performance Upgrades have added 427 MW since 1992… …this will increase to 490 MW by 2012

8 8 Operational Performance: Fossil GOOD % Q1-Q3 Forced Outages Lennox – 30 years of service Nanticoke –35 years of service 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

9 9 Source: Ipsos-Reid July 2007 Public Perception in Ontario of Electricity Generation Sources

10 10 Typical Summer Day (June 21, 2007) Hours MW Lennox GS Other Oil and Gas OPG Coal Other Peaking Hydro OPG Peaking Hydro Wind Bruce Nuclear OPG Nuclear OPG Base Hydro OPG Baseload Hydro OPG Nuclear Bruce Nuclear OPG Peaking Hydro OPG Coal Non-OPG Gas

11 11 Fossil Flexibility: Nanticoke GS Example 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 Total Dispatches Dispatches received by Nanticoke GS in ,000 Changes in Dispatch Direction 146,602 Nanticoke G1 -- January 19, 2008 # Dispatches on this day for this unit: 191 Unit responds very quickly to fast-changing dispatch pattern.

12 12 OPGs Environmental Performance: SO2 and NOx Fossil Emission Rates Emission Rate (Gigagrams/TWh-net) Year 2003: 4 SRCs installed Low Sulphur Coal Introduced In 1980s 2 FGD systems at Lambton: 1994 Lennox GS converts from oil to gas: New Lower NOx Burners Installed 1997 thru * NOx as NO2 Rate SO2 Rate *approximate estimate for 2007

13 13 OPGs Environmental Performance Sources of CO2 in Ontario (2004) 4.4% 15.5% 4.3% 0.3% 12.0% 0.3% 8.0% 10.6% 0.5% 34.4% 1.9% 0.5% 4.6% 2.6% OPG Transportation Stationary Combustion - Manufacturing Stationary Combustion - Agriculture & Forestry Stationary Combustion - Residential OPG accounts for 15.5% of CO2 produced in Ontario

14 14 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

15 15 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

16 16 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 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

18 18 Proposed New Hydroelectric Projects Smoky Falls: Lower Mattagami Mattagami Lake Control Dam Hound Chute Generating Station 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

19 19 New Generation Projects: Portlands Energy Centre Summer 2006 November Located in Toronto 550 MW On schedule/On budget First power in 2008 Fully operational by 2009

20 20 Potential Gas Opportunities: Lakeview Site Lakeview Station shut down in 2005 Demolition OPG is exploring potential development of gas-fired facility at the site Lakeview station prior to demolition

21 21 Pickering B Refurbished Pickering B Not Refurbished IPSP - 10,000 MW of Nuclear Power through Replacement and/or Refurbishment Add over 6000 MW of fossil generation to be removed in 2014

22 22 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.

23 23 Nuclear New Build Q EA support initiatives underway Q Project Description filed Q new build planning continues, including public consultation OPG/Bruce Power joint assessment of potential nuclear technologies Provinces technology assessment Q Phase 2 community information sessions – 200 individuals attended over 1,200 individuals reached during the year through OPG communications initiatives Q CNSC requests federal Environment Ministry to refer EA to a review panel. Darlington Site

24 24 OPG Helps Moderate Electricity Prices Difference between Market price & OPGs price ~ $3 billion OPGs regulated rates were set in 2005 ROE was set at 5% OEB hearings planned in 2008 for rate adjustment Difference between Market price & OPGs price ~ $3 billion OPGs regulated rates were set in 2005 ROE was set at 5% OEB hearings planned in 2008 for rate adjustment ¢/kWh ~ Ontario Market Price OPGs Average Price

25 25 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

26 26 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

27 27 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

28 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


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