(100% — not prorated to reflect our 31.6% interest)


($ millions except where indicated) 2009 2008 change
Output — terawatt hours (TWh) 24.6 24.7 –  
Capacity factor (the amount of electricity the plants actually produced for sale as a percentage of the amount they were capable of producing) 87% 87% –  
Realized price ($/MWh) 64(1) 57 12% 
Average Ontario electricity spot price ($/MWh) 30 49 (39)%
Revenue 1,640 1,409 16% 
Operating costs (net of cost recoveries) 905 900 1% 
Cash costs 770 779 (1)%
Non-cash costs 135 121 12% 
Income before interest and finance charges 735 509 44% 
Interest and finance charges 4 41 (90)%
Cash from operations 754 547 38% 
Capital expenditures 123 85 45% 
Distributions(2) 610 329 85% 
Operating costs ($/MWh) 35(1) 36 (3)%
(1) Based on actual generation of 24.6 TWh plus deemed generation of 1.2 TWh.
(2) Does not include the full repayment of the partner loans of $225 million in 2008 (our share was $75 million).

Our earnings from BPLP

($ millions) 2009 2008 change
BPLP's earnings before taxes (100%) 731  468  56%
Cameco's share of pretax earnings before adjustments (31.6%) 231  148  56%
Proprietary adjustments (7) (7)
Earnings before taxes from BPLP 224  141  59%

BPLP's improved results in 2009 are largely the result of higher revenues, which were 16% higher than 2008 due to a 12% increase in realized 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 that extends to 2019. Under the agreement, output from the B reactors is supported by a floor price (currently $48.76/MWh) that is adjusted annually for inflation. 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 to the extent that the floor price exceeds the average spot price for the 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.

During 2009, BPLP recognized revenue of $514 million under the agreement with the OPA.

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. Since the electricity market in Ontario has weakened, BPLP has been putting fewer contracts in place.

BPLP sold the equivalent of about 57% of its output under financial contracts in 2009, compared to 67% in 2008.

BPLP's operating costs were $905 million this year compared to $900 million in 2008.

The net effect was an increase in our share of earnings before taxes of 59%.

BPLP distributed $610 million to the partners in 2009. Our share was $193 million. The partners have agreed that BPLP will distribute excess cash monthly, and will make separate cash calls for major capital projects.

BPLP's adjusted capacity factor was 91% in 2009 (including actual generation of 24.6 TWh and deemed generation of 1.2 TWh). Excluding deemed generation, the capacity factor was 87% – unchanged from 2008.

Outlook for 2010

We expect the average capacity factor for the four Bruce B reactors to be approximately 90% in 2010, and actual output to be about 4% higher than it was in 2009. The 2010 realized price for electricity is projected to be about 5% to 10% lower than 2009 as BPLP has fewer financial contracts in place for 2010. At December 31, 2009, BPLP had about 6.5 TWh under financial contracts, which is equivalent to about 25% of Bruce B generation at its planned capacity factor. We expect that revenue will decline by a corresponding 5% to 10% as a result.

We expect the average unit cost (net of cost recoveries) to be 10% to 15% higher in 2010, and total operating costs to rise by about 10% to 15%, mainly due to higher costs for planned outages and maintaining the workforce.

Sensitivity analysis

A change of $1 in the electricity spot price in 2010 would change our 2010 net earnings by $3 million, based on the assumption that the spot price will remain below the floor price provided for under BPLP's agreement with the OPA.

Cameco 2009 Annual Report