Ontario Power Authority - TransCanada Energy Reach Deal to Relocate Power Plant
TORONTO, Sept. 24, 2012 /CNW/ - Minister of Energy Chris Bentley announced
today that the Ontario Power Authority has reached an agreement in principle
with TransCanada Energy to develop a new 900-megawatt natural gas-fired power
plant on the site of Ontario Power Generation's Lennox Generating Station in
The location was selected to take advantage of existing transmission and gas
infrastructure as well as the expertise of local workers. The plant is
expected to be in service by the first quarter of 2017 and will provide 600
jobs during construction.
"Today's announcement helps support Ontario's plan to modernize the province's
electricity infrastructure, clean up the air we breathe and end the use of
coal by 2014," said Minister Bentley.
The cost of TransCanada's plant at Lennox will be comparable to the cost of
the original competitively procured Oakville plant. In addition, TransCanada
will receive $40 million to cover the costs it incurred for goods and services
that cannot be used at the Lennox site.
The OPA-TransCanada agreement has been formalized in a memorandum of
understanding. OPA and TransCanada will now negotiate a contract based on the
terms of that agreement. TransCanada will also finalize site-specific
arrangements with Ontario Power Generation. It is expected that the contract
and other arrangements will be finalized by December 14, 2012.
"OPA and TransCanada's existing power generation contracts provide good value
to ratepayers with clean, cost effective electricity. The Lennox agreement
will do the same and will benefit from OPA and TransCanada's positive,
long-standing relationship," said Colin Andersen, OPA's chief executive
Relocating the Oakville Gas Plant to Lennox
Cost of Relocating the Plant
The total cost for goods and services TransCanada incurred for Oakville that
cannot be used at the Lennox site is $40 million. These costs include:
-- Engineering and design work
-- Land cost
-- Employee costs and overhead
-- Legal fees
Minimizing the Impacts
To minimize the cost of the relocation, gas turbines will be repurposed and
used at the Lennox plant ($210 million).
-- Gas turbines
-- Turbine design and engineering costs
-- Storage and transportation of turbines
These costs will be subject to verification by an independent auditor.
The turbine payment recognizes that TransCanada would be carrying these costs
beyond the period of time expected under the Oakville contract.
Net Revenue Requirement
-- The Net Revenue Requirement is the monthly payment a power
plant developer uses to cover the fixed costs to build and
operate the plant.
-- OPA contracts are structured so that the power plant developer
only receives payment from the OPA once the plant starts
-- The Net Revenue Requirement for Lennox is $15,200 MW/Month.
-- The original Oakville Net Revenue Requirement was $17,277
MW/Month under the 2009 contract.
-- Once a contract is executed, OPA will pay TransCanada $210
million for the cost of the gas turbines and other turbine
related costs. The turbine payment as well as covering the gas
management costs for the new plant reduces the Lennox Net
Media contact: Kristin Jenkins (416) 969-6007
SOURCE: Ontario Power Authority
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CO: Ontario Power Authority
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-0- Sep/24/2012 15:51 GMT
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