TransCanada Provides Update on Bruce A Units 1 and 2 Restart Project
CALGARY, ALBERTA--(Marketwire - April 17, 2008) - TransCanada Corporation (TSX:TRP) (NYSE:TRP) (TransCanada) today announced Bruce Power has completed its comprehensive review of costs to complete the Bruce A Units 1 and 2 Restart Project. The review, which was completed by Bruce Power, its owners and independent experts with significant experience in energy infrastructure mega-projects, included a thorough assessment of costs incurred to date together with a complete review of the remaining work. Based on the assessment the capital cost for the restart and refurbishment of Bruce A Units 1 and 2 is expected to be in the range of $3.1 to $3.4 billion, up from an original 2005 cost estimate of $2.75 billion. TransCanada's share is $1.55 to $1.7 billion compared to an original estimate of $1.375 billion. The project cost increases are subject to the capital cost risk and reward sharing mechanism under the agreement with the OPA.
"The Bruce Power restart and refurbishment project was carefully structured and is fully consistent with our disciplined approach to growth and value creation," said Hal Kvisle, TransCanada's president and chief executive officer. "Based on the new capital cost estimate of $3.1 to $3.4 billion for the Bruce A restart, TransCanada expects the unlevered after tax return on its investment to be in the middle of the previously announced range of 9.5 per cent to 13.5 per cent." He added, "In the event of a further 10 per cent increase in capital costs, our unlevered after tax return on the project would be approximately 10 per cent."
This outcome is a result of the risk and reward sharing mechanisms that were negotiated with the OPA.
With approximately 60 per cent of the project complete, it is expected that the two units will return to service in late 2009 and early 2010 adding 1,500 megawatts to the Ontario power grid.
Major project milestones and successes to date include:
- Babcock & Wilcox Canada and SNC Lavalin Nuclear have successfully manufactured and installed 16 new steam generators for Units 1 and 2, the first time such work has ever been done at a CANDU facility
- Stellar safety performance continues with nine million hours worked on the project without an acute lost-time injury
- Steam turbine work is progressing well with the Unit 2 steam turbine work largely completed while Unit 1 work is well underway with reassembly set to begin in May
- Significant progress has also been made on the complex reactor refurbishment work undertaken by Atomic Energy of Canada Limited (AECL)
Currently, AECL is beginning to remove the calandria tube components in Unit 2 which is the final component in the disassembly process. The next major step will be to install the new pressure and calandria tubes. AECL has faced unique challenges while developing new tools and robotic equipment to remove and replace the reactor's internal components. This work has been, by its very nature, discovery work since many of the robotic designs had to be tested during the project. As a result, Unit 2, which is the lead unit, has borne many of the first-of-a-kind risks which impacted overall costs for the project. However, as work has progressed, performance improvements have been experienced on Unit 1. Similarly the steam generator replacement program experienced improvements in efficiency by roughly 40 per cent between the first and second unit.
This comprehensive review also confirms that while the most challenging project risks have been removed, challenges still exist in the remaining work activities outside of the complex fuel channel and steam generator replacement programs. Looking forward there are more than 20,000 activities, both large and small, that have to be completed before Units 1 and 2 return to service. A range of Canadian companies are conducting these activities with expertise in the various elements of the plant systems and components. This work requires a high level of co-ordination and is being supported by more than 1,500 skilled building tradesmen and nearly 800 support staff drawn from across the country. Many of these activities will deliver safety and performance enhancements.
For further detail on the Bruce A restart and refurbishment project, please visit the Bruce Power website at www.brucepower.com.
With more than 50 years experience, TransCanada is a leader in the responsible development and reliable operation of North American energy infrastructure including natural gas pipelines, power generation, gas storage facilities, and projects related to oil pipelines and LNG facilities. TransCanada's network of wholly owned pipelines extends more than 59,000 kilometres (36,500 miles), tapping into virtually all major gas supply basins in North America. TransCanada is one of the continent's largest providers of gas storage and related services with approximately 355 billion cubic feet of storage capacity. A growing independent power producer, TransCanada owns, or has interests in, approximately 7,700 megawatts of power generation in Canada and the United States. TransCanada's common shares trade on the Toronto and New York stock exchanges under the symbol TRP.
Note: All financial figures are in Canadian dollars unless noted otherwise.
This news release may contain certain information that is forward looking and is subject to important risks and uncertainties. The words "anticipate", "expect", "may", "should", "estimate", "project", "outlook", "forecast" or other similar words are used to identify such forward looking information. All forward-looking statements reflect TransCanada's beliefs and assumptions based on information available at the time the statements were made. Actual results or events may differ from those predicted in these forward-looking statements. Factors which could cause actual results or events to differ materially from current expectations include, among other things, the ability of TransCanada to successfully implement its strategic initiatives and whether such strategic initiatives will yield the expected benefits, the operating performance of the Company's pipeline and energy assets, the availability and price of energy commodities, regulatory processes and decisions, changes in environmental and other laws and regulations, competitive factors in the pipeline and energy industry sectors, construction and completion of capital projects, labour, equipment and material costs, access to capital markets, interest and currency exchange rates, technological developments and the current economic conditions in North America. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause TransCanada's actual results and experience to differ materially from the anticipated results or expectations expressed. Additional information on these and other factor is available in the reports filed by TransCanada with Canadian securities regulators and with the U.S. Securities and Exchange Commission. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date it is expressed in this news release or otherwise, and to not use future-oriented information or financial outlooks for anything other than their intended purpose. TransCanada undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.
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