Bruce Power head says parent woes won't affect safety
But British Energy poses other problems
Globe and Mail - September 12, 2002, p. B7
by Paul Waldie
The head of Bruce Power LP shot back at critics yesterday saying financial
troubles at its parent, British Energy PLC,will not affect safety at the
Ontario operation.
"Frankly, I am insulted by speculation that Bruce Power might lose this
safety focus as the result of the financial condition of our majority
shareholder," Duncan Hawthorne, the company's chief executive officer,
said in a mid-term report filed yesterday with the Canadian Nuclear Safety
Commission (CNSC).
Bruce Power operates eight nuclear reactors and is 82.4 per cent owned by
British Energy, which is restructuring and faces insolvency. Cameco Corp.
of Saskatoon and the Power Workers' Union own the remainder of Bruce
Power.
Some analysts have raised concerns that Bruce Power might have an
incentive to cut corners on safety because of the financial problems
facing its majority owner.
"I am aware that there were concerns that a private sector operator would
make decisions on a commercial basis rather than safety," Mr. Hawthorne
said. However, he added, Bruce Power will "never stray from our commitment
to safety."
He acknowledged that British Energy's financial troubles have affected
Bruce Power. Under its licence, Bruce Power must have access to
$222-million in "shutdown money" to ensure that it can operate for six
months in the event of an emergency. British Energy has provided that
guarantee but the CNSC has raised concerns about the utility's ability to
continue the commitment.
British Energy also provides collateral for Bruce Power's trading
contracts.
"Although all financial guarantees remain in full force and effect,
British Energy's financial position has now changed to the point that the
quality of the guarantees is in question," Mr. Hawthorne said.
He noted that the British government has provided British Energy with
£410-million (nearly $1-billion Canadian) in emergency funding so it can
meet its needs until the end of the month. Some of that money will be used
to boost collateral for Bruce Power.
British Energy hopes to work out a long-term restructuring plan with the
British government, but said it still faces the possibility of insolvency.
Mr. Hawthorne said Bruce Power is still working on addressing the CNSC's
concerns about the "shutdown money.
"Bruce Power's commitment to the CNSC was to work expeditiously to provide
any assurance that the commission might require. We are confident that any
and all CNSC concerns will be appropriately addressed."
Mr. Hawthorne will be in Ottawa today to make a presentation to the CNSC.
Direct Energy Marketing Ltd. and Toronto Hydro Energy Services Inc.
confirmed yesterday that they also have contracts with Bruce Power.
In securities filings, British Energy has said Bruce Power's energy
contracts could be affected if the British company does not maintain an
investment-grade rating. Last week, three credit agencies downgraded
British Energy's debt to junk status.
If British Energy cannot provide added credit support, Bruce Powers'
direct sales contracts could be terminated.
Direct Energy and Toronto Hydro Energy Services are two of the largest
energy marketers in Ontario.
Both companies buy power from producers and then resell it to consumers
under long-term contracts at a fixed price.
Toronto-based Direct Energy has about 600,000 customers. Toronto Hydro
Energy is a division of Toronto Hydro Corp., a city-owned company that is
one of the largest municipal utilities in the country.
"We see no reason why Bruce will not continue to perform under the
contract, the terms of which are confidential," said Ray McManus, a Direct
Energy vice-president.
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