Bruce Power appeared before the Canadian Nuclear Safety Commission and failed to satisfy the regulator of its ability to meet the fiscal commitments of its license to operate the Bruce nuclear facility.
Bruce Power fails to satisfy commission
Emergency ‘shutdown’ money in question
By STEVEN CHASE AND PAUL WALDIE
Friday, September 13, 2002 – Globe and Mail Print Edition, Page B3
OTTAWA and TORONTO — Bruce Power LP failed to convince the Canadian Nuclear Safety Commission yesterday that it still has access to $222-million in emergency “shutdown money” from parent British Energy if needed.
Jim Blyth, director of power reactor regulation at the CNSC, told the commission that he still isn’t assured the British Energy guarantee can be drawn on if necessary. The shutdown money is a requirement under Bruce Power’s licence.
“I don’t have anything I can take to the bank,” he told the commission.
“I do not believe we have definitive information to the effect that in the highly unlikely event that these funds were needed, they are available today,” Mr. Blyth told the commission.
Bruce Power’s future has been thrown into turmoil as a result of financial troubles at British Energy, which owns 82.4 per cent of the Ontario company. Bruce Power runs eight nuclear reactors and British Energy provides several key financial commitments including the “shutdown money.”
Bruce Power’s chief executive officer Duncan Hawthorne told the commission yesterday that the company is doing its best to ensure the emergency commitment remains in place.
However, he received a rough ride from commissioners on the guarantee.
“If today you . . . needed $222-million, is that money available from British Energy?” CNSC commisioner Alan Graham asked Mr. Hawthorne.
Mr. Hawthorne said British Energy is still obliged to cover that guarantee but wasn’t clear on where the cash would come from.
“I know I am not providing a clear answer to this because you are asking me to foresee a situation . . . where you are asking me to burn the house down to see if the fire brigade turn up,” Mr. Hawthorne said.
He suggested the British government might step in to cover it. Earlier this week, the British government provided British Energy with £410-million ($1-billion) in emergency funding to meet its needs for this month.
The government and the utility are now working on a long-term restructuring that could result in British Energy filing for bankruptcy protection.
“It’s my full expectation that if we require that, then they [British Energy] have to access those funds from the appropriate source — that source may in fact be the U.K. government,” Mr. Hawthorne said. However, he later added that he cannot speak for the British government.
Mr. Hawthorne said the company is looking at getting assurances to cover the guarantee from the U.K. government, or using other means such as establishing its own credit rating so it could borrow money more freely if necessary, or taking out more comprehensive insurance to cover the guarantee.
Mr. Graham said he still isn’t satisfied with the state of things.
“I think we’ve got a little bit of work to do within CNSC to make sure those guarantees are in place . . . if, God forbid, they are ever needed, but today I wouldn’t hold my breath on it,” Mr. Graham said.
Mr. Hawthorne said Ontario Power Generation (OPG) has the option of taking back the nuclear plants if British Energy were to become insolvent under a “nightmare scenario” he hopes doesn’t occur. Bruce Power leased the reactors from OPG last year and it still owes $225-million on the deal. The company will also pay OPG up to $160-million this year in annual lease fees.
“If the guarantor, British Energy, were to go into insolvency, then the landlord, in the form of OPG, have a number of courses of action, including recovery of the assets,” he told the commission.
John Earl, a spokesman for OPG, confirmed the agency has security provisions under the lease. “As any landlord we have appropriate safety measures in place in the lease to cover any kind of financial concerns.”
CNSC staff could not say how much time Bruce Power has to shore up the guarantee question.
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