New Nuclear Opportunities at Point Lepreau by Dr. Terry Thompson, Senior Advisor MZConsulting Inc NBSO 2008 Energy Conference Delta Brunswick Hotel, Saint John, NB 2008 May 15-16

2 Background August government announced a Feasibility Study for new nuclear plant at Point Lepreau To be conducted and paid for by Team CANDU New Brunswick (TCNB) –AECL –SNC-Lavalin Nuclear –Hitachi Canada –GE-Hitachi Nuclear Energy Canada –Babcock &Wilcox Canada

3 Team CANDU New Brunswick Feasibility Study Evaluate potential for ACR-1000 Objectives –Private sector investment and risk –Energy cluster for NB Jan study submitted to government 4 Feb NBDOE press conference –Announced TCNB report received, under review

4 MZConsulting Viability Study August NBDOE engaged MZConsulting to perform an independent Viability Study Higher level study than TCNB FS Objectives –Findings and Considerations for government –Workable business structure –Path forward for success December report submitted to NBDOE Feb Executive Summary released to public

5 MZConsulting Viability Study

6 Basis of MZC Study Assessed: –Market –Project Structures –Business Case –Local Benefits –Potential Role for New Brunswick

7 Key Inputs Key References –ISO New England Scenario Analysis –RGGI Web Site –NBSO 10-Year Outlook –Northeast Gas Association Market Overview –CRS Report for Congress –IEA Outlook –OPA IPSP –CERI Report –UK Nuclear Consultation –WNA Web Site –Moody’s Report on Nuclear Power –Lacy Report on Attitudes of Financial Sector –Press Releases and Media reports –Technical papers and other web sites

8 Viability Study Outputs Findings that reflect the views and information available in the market Considerations for New Brunswick when reviewing the Team CANDU NB Feasibility Study Potential Role for New Brunswick

9 Market Findings There is a potential market for the output of an ACR-1000 plant LNG and natural gas generation is the major competition The Maritime market has the potential to take half the output of a new nuclear unit The New England market has potential Land transmission should be sufficient

10 Project Structure Findings A nuclear project has never been implemented on a merchant plant basis Success with this model will require long term commitments The Project cannot take significant First of a Kind ACR-1000 risk

11 Business Case Findings The economics of the project show that under a suitable set of conditions the project can be viable The viability of the project is dependent upon the structure Environmental issues are becoming more prominent in both the domestic and export markets

12 Economic Benefits Findings This project can provide an impetus to the province’s goal of creating an “energy cluster”. The province should receive demonstrable benefits from the project in return for hosting the First of a Kind ACR Sustainability of the jobs related directly to the implementation of the ACR-1000 will be directly related to the success of the ACR-1000 in the global market. Emphasis should be more on knowledge-based infrastructure than on fabrication.

13 Potential Role for New Brunswick NB brings key attributes to the table –World class nuclear operator –Licensed nuclear site –Community support –Willingness to host the FOAK ACR-1000 Should be fairly compensated –Price for Site –Local benefits Option for eventual financial involvement should the long-term investment opportunity be sound

14 Summary There is a potential market for an ACR plant –both domestic and for export A merchant plant model has many issues Project can be economically viable NB brings a lot to the table Significant knowledge localization is important

15 Path Forward Consider if critical success factors can be met –Demonstrated market –FOAK risks managed –Robust business case –Strong project proponent to take completion risk –Sustainable, knowledge-based nuclear infrastructure for NB If government’s conditions met –Site Preparation License Application –Environmental Assessment –Proposed In Service 2017

16 Thank You