OPA deal puts lid on ratepayer liability Tyler Hamilton - July 09, 2009

Cap targets budget overruns at Bruce nuclear plant, but doesn't kick in until costs surpass $3.4 billion

The bad news: Ontario ratepayers could end up paying $238 million to cover cost overruns related to the restart of two nuclear reactors northwest of Toronto.

The good news: at least the buck stops there.

Ontario's power-planning agency said it has struck an agreement with Bruce Power that caps the amount electricity consumers must pay for cost overruns related to the restart of reactor units 1 and 2 at the Bruce A nuclear plant in northwestern Ontario.

The project's original budget was pegged at $2.75 billion. In April 2008, Bruce Power reported that the restart was $300 million over budget and could run up to $650 million over budget, bringing project costs to $3.4 billion.

Under the government's earlier contract with Bruce Power, electricity consumers get stuck with half the cost of any overruns up to $300 million. Any amount above that threshold, their portion drops to 25 per cent.

Amendments to the contract now stipulate that Ontario electricity consumers won't get saddled with any costs that run above $3.4 billion, essentially putting a ceiling on risk. It means if the project ended up costing $4 billion, Ontario ratepayers would avoid having to pay $150 million for its share of the overrun.

"Ontario ratepayers get zero risk above $3.4 billion," said Ben Chin, a spokesman for the Ontario Power Authority.

The two reactors will supply up to 1,500 megawatts to the Ontario grid when operational, likely in early 2010.

In exchange for the cap, the government has agreed to move up the dates of support payments to Bruce Power so it can better weather a period of unusually low spot prices for electricity.

"There's no change to the rate of return for Bruce overall in this deal," Chin said.