Ontario Power Authority - TransCanada Energy Reach Deal to Relocate Power Plant

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 
eastern Ontario. 
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 
officer. 
Backgrounder 
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
    --  Permitting
    --  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
        generating electricity
    --  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
        Revenue Requirement.

Media contact: Kristin Jenkins (416) 969-6007 
kristin.jenkins@powerauthority.on.ca

SOURCE: Ontario Power Authority

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CO: Ontario Power Authority
ST: Ontario
NI: OIL VNT 

-0- Sep/24/2012 15:51 GMT