British Energy to Lease Canada's Bruce Power Station

["Sandy Perle" <sandyfl@earthlink.net>]

British Energy to Lease Canada's Bruce Power Station

Toronto, July 11 (Bloomberg) -- British Energy Plc, the U.K.'s 
biggest electricity generator, agreed to lease Canada's Bruce nuclear 
power station, one of the world's largest, in a contract worth as 
much as $3.5 billion over 43 years. 

The U.K. company will pay Canada's Ontario Power Generation Inc. $422 
million in cash, plus annual payments of $72 million, for use of the 
Bruce station until 2018, with an option to extend for 25 more years. 
British Energy shares rose 12 percent. 

British Energy, which is cutting its dividend this year amid falling 
U.K. power prices, has been expanding in North America to bring in 
new revenue. It had been expected to buy Bruce, the largest of three 
nuclear generators in Ontario, though the lease arrangement may prove 
to be a better bargain, analysts said. 

``This is quite good for British Energy,'' said Nigel Hawkins, an 
analyst with Williams de Broe in London, who has ``hold'' rating on 
the stock. ``It should lead to decent revenue in the next two to 
three years.'' 

British Energy shares rose 24 pence to 220p, giving the company a 
market value of 1.37 billion pounds ($2.1 billion). They've lost 38 
percent of their value this year, compared with a gain of 10 percent 
on the FT-SE All-Share Electricity Index. 

Decommissioning 

The Bruce station has eight nuclear units, four of which are 
currently out of service. British Energy plans to bring two back 
online, and expects the six units to add $181 million to the 
company's annual profit. 

``This kind of deal is what we were aiming for,'' said British Energy 
spokesman Bob Fenton, ``We have the operation of the plant until at 
least 2018 and we're not responsible for its decommissioning.'' 

The station, which cost $5.2 billion to build, has the capacity to 
produce 6,400 megawatts of electricity -- enough to light 6.4 million 
homes -- though it now operates at less than half that. Its reactors 
were commissioned between 1984 and 1987. 

An Ontario Power spokesman said its nuclear units usually have a 
lifespan of around 40 years though this could be extended. 

``We are confident that we can run (Bruce) until 2043, although we 
have not negotiated terms for that period,'' said Fenton, ``The 
plants are very robust.'' 

It's the first nuclear plant in Canada to be opened to private 
investment since legislation passed last year paved the way to 
restructure Ontario Hydro. The utility had $26.6 billion of debt 
before being split up. 

Salomon Smith Barney advised Ontario Power Generation on the 
agreement. Lazard Brothers and TD Securities advised British Energy. 

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Sandy Perle					Tel:(714) 545-0100 / (800) 548-5100   				    	
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