Electricity
BPLP
(100% – not prorated to reflect our 31.6% interest)
| Highlights ($ millions except where indicated) |
2011 | 2010 | change |
|---|---|---|---|
|
|||
| Output - terawatt hours (TWh) | 24.9 | 25.9 | (4)% |
| Capacity factor (the amount of electricity the plants actually produced for sale as a percentage of the amount they were capable of producing) |
87% | 91% | (4)% |
| Realized price ($/MWh) | 541 | 58 | (7)% |
| Average Ontario electricity spot price ($/MWh) | 30 | 36 | (17)% |
| Revenue | 1,354 | 1,509 | (10)% |
| Operating costs (net of cost recoveries) | 1,006 | 910 | 11% |
| Cash costs | 812 | 740 | 10% |
| Non-cash costs | 194 | 170 | 14% |
| Income before interest and finance charges | 348 | 599 | (42)% |
| Interest and finance charges | 37 | 37 | – |
| Cash from operations | 490 | 669 | (27)% |
| Capital expenditures | 243 | 136 | 79% |
| Distributions | 270 | 525 | (49)% |
| Capital calls | 21 | – | – |
| Operating costs ($/MWh) | 401 | 35 | 14% |
| Highlights ($ millions except where indicated) |
2011 | 2010 | change |
|---|---|---|---|
| BPLP's earnings before taxes (100%) | 311 | 562 | (45)% |
| Cameco's share of pretax earnings before adjustments (31.6%) | 98 | 178 | (45)% |
| Proprietary adjustments | (6) | (6) | – |
| Earnings before taxes from BPLP | 92 | 172 | (47)% |
BPLP's results in 2011 are largely the result of lower revenues, which were 10% lower than 2010 due to a 7% decrease in realized electricity prices. BPLP's average realized price reflects spot sales, revenue recognized under BPLP's agreement with the Ontario Power Authority (OPA) and revenue from financial contracts.
BPLP has an agreement with the OPA under which output from each B reactor is supported by a floor price (currently $50.18/MWh) that is adjusted annually for inflation. The floor price mechanism and any associated payments to BPLP for the output from each individual B reactor will expire on a date specified in the agreement. The expiry dates are December 31, 2015 for unit B6, December 31, 2016 for unit B5, December 31, 2017 for unit B7 and December 31, 2019 for unit B8. Revenue is recognized monthly, based on the positive difference between the floor price and the spot price. BPLP does not have to repay the revenue from the agreement with the OPA to the extent that the floor price for the particular year exceeds the average spot price for that year.
The agreement also provides for payment if the Independent Electricity System Operator reduces BPLP's generation because Ontario baseload generation is higher than required. The amount of the reduction is considered 'deemed generation', and BPLP is paid either the spot price or the floor price—whichever is higher. Deemed generation was 0.4 TWh in 2011.
During 2011, BPLP recognized revenue of $498 million under the agreement with the OPA, compared to $339 million in 2010.
BPLP also has financial contracts in place that reflect market conditions at the time they were signed. Contracts signed in 2006 to 2008, when the spot price was higher than the floor price, reflected the strong forward market at the time. BPLP receives or pays the difference between the contract price and the spot price. BPLP sold the equivalent of about 54% of its output under financial contracts in 2011, compared to 42% in 2010. Pricing under these contracts was lower than in 2010. From time to time, BPLP enters the market to lock in gains under these contracts.
BPLP's operating costs were $1.0 billion this year compared to $910 million in 2010 due to higher maintenance costs incurred during outage periods and increased staff costs.
The net effect was a decrease in our share of earnings before taxes of 47%.
BPLP distributed $270 million to the partners in 2011. Our share was $85 million. BPLP capital calls to the partners in 2011 were $21 million. Our share was $7 million. The partners have agreed that BPLP will distribute excess cash monthly, and will make separate cash calls for major capital projects.
BPLP's capacity factor was 87% in 2011, down from 91% in 2010 due to a higher volume of outage days during the year's planned outages compared to last year's planned outages.
Outlook for 2012
Bruce Power estimates the average capacity factor for the four Bruce B reactors to be 95% in 2012, and actual output to be about 9% higher than it was in 2011 due to fewer planned outage days in 2012. The 2012 realized price for electricity is projected to be about the same as 2011. As a result we expect that revenue will increase by 5% to 10%.
We expect the average unit cost (net of cost recoveries) to be 5% to 10% lower in 2012 and total operating costs to decrease by about 0% to 5%, mainly due to fewer planned outages resulting in lower costs.