Electricity
BPLP
(100% – not prorated to reflect our 31.6% interest)
| Highlights ($ millions except where indicated) | 2012 | 2011 | Change |
|---|---|---|---|
|
|||
| Output - terawatt hours (TWh) | 26.8 | 24.9 | 8% |
| Capacity factor (the amount of electricity the plants actually produced for sale as a percentage of the amount they were capable of producing) | 94% | 87% | 8% |
| Realized price ($/MWh) | 551 | 542 | 2% |
| Average Ontario electricity spot price ($/MWh) | 23 | 30 | (23)% |
| Revenue | 1,487 | 1,354 | 10% |
| Operating costs (net of cost recoveries) | 889 | 1,006 | (12)% |
| Cash costs | 669 | 812 | (18)% |
| Non-cash costs | 220 | 194 | 13% |
| Income before interest and finance charges | 598 | 348 | 72% |
| Interest and finance charges | 26 | 37 | (30)% |
| Cash from operations | 543 | 490 | 11% |
| Capital expenditures | 194 | 243 | (20)% |
| Distributions | 425 | 270 | 57% |
| Capital calls | 63 | 21 | 200% |
| Operating costs ($/MWh) | 331 | 402 | (18)% |
Our Earnings From BPLP
| Highlights ($ millions except where indicated) | 2012 | 2011 | Change |
|---|---|---|---|
| BPLP’s earnings before taxes (100%) | 572 | 311 | 84% |
| Cameco’s share of pre-tax earnings before adjustments (31.6%) | 181 | 98 | 85% |
| Proprietary adjustments | (6) | (6) | - |
| Earnings before taxes from BPLP | 175 | 92 | 90% |
BPLP’s increased results in 2012 when compared to 2011 are partially the result of revenues being 10% higher than in 2011 due to a 2% increase 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 $51.62/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 (IESO) reduces BPLP’s generation because Ontario’s baseload generation supply is higher than required. The amount of the reduction is considered ‘deemed generation’, for which BPLP is paid either the spot price or the floor price—whichever is higher. The deemed generation approach has provided the IESO with significant flexibility in dealing with changes to the Ontario electricity market in recent years. Deemed generation was 0.4 TWh in 2012, the same as in 2011.
During 2012, BPLP recognized revenue of $773 million under the agreement with the OPA, compared to $498 million in 2011.
BPLP also has financial contracts in place that reflect market conditions at the time they were signed. BPLP receives or pays the difference between the contract price and the spot price. BPLP sold the equivalent of about 64% of its output under financial contracts in 2012, compared to 54% in 2011. From time to time, BPLP enters the market to lock in gains under these contracts. Gains on BPLP’s contracting activity were slightly higher than in 2011.
In addition, BPLP’s increased results in 2012 when compared to 2011 were also partially the result of lower operating costs. BPLP’s operating costs were $889 million this year compared to $1.0 billion in 2011 due to lower supplemental lease payments and lower maintenance costs incurred during outage periods.
The net effect was an increase in our share of earnings before taxes of 90%.
BPLP distributed $425 million to the partners in 2012. Our share was $134 million. BPLP capital calls to the partners in 2012 were $63 million. Our share was $20 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 94% in 2012, up from 87% in 2011 due to a lower volume of outage days during the year’s planned outages compared to last year’s planned outages.
Outlook For 2013
Bruce Power estimates the average capacity factor for the four Bruce B reactors to be 88% in 2013, and actual output to be about 5% to 10% lower than it was in 2012 due to more planned outage days in 2013. The 2013 realized price for electricity is projected to be slightly lower than 2012. As a result, we expect that revenue will decrease by about 5% to 10%.
We expect the average unit cost (net of cost recoveries) to be 25% to 30% higher in 2013 and total operating costs to increase by about 15% to 20%, mainly due to more planned outages resulting in higher costs.
In 2013, we will account for our interest in BPLP using equity accounting.