Ontario Power Generation: Profile and Performance

Jim Twomey Executive Vice President – Fossil

Ontario Power Generationto the

American Society of Mechanical Engineers Research Committee on Power Plant and Environmental Chemistry

Niagara Falls, Ontario

October 2, 2006

Topics to be Covered

OPG Profile Recent Ontario Electricity Market Developments OPG’s Fossil Fleet OPG Fossil Performance Plant and Environmental Chemistry at OPG Conclusion

OPG Profile

Generated 108.5 TWh in 2005 53.9 TWh in first 6 months 2006

Produces approx. 70% of Ontario’s electricity generation Employs approx. 11,000 employees Operates:

Three nuclear stations (10 operating units, total) Five fossil-fuelled stations 64 hydroelectric stations

Capacity: 22,173 MW (at end of 2005)

Beck 2 GS Lambton GS Pickering B GS

Ontario’s Supply Gap

In December 2005, the Ontario Power Authority released its Supply Mix Advice Report. The Report estimates that Ontario demand will begin to exceed available supply by 2014. By 2025, the OPA estimates the energy gap will be about 10,000 megawatts.

Ontario’s Projected Supply Gap

Source: Ontario Ministry of Energy

Ontario Govt. Response to OPA Supply Mix Report

Double conservation efforts suggested in the OPA report to reduce electricity demand by 6,300 MW by 2025.

Double the electricity from renewables, for a total of 15,700 MW by 2025. Plan for nuclear capacity to meet base-load electricity needs, but limit in-service

capacity of nuclear power to its current 14,000 MW. OPG is directed to begin feasibility study on the refurbishment of its existing facilities

to review the economic, technological and environmental aspects of refurbishment. OPG is directed to begin work on entering into an approvals process, including

environmental assessment for new units to be built at an existing facility.

Develop a revised schedule for the replacement of coal-fired generation with cleaner sources of energy in the earliest practical timeframe.

Maintain the ability to use natural gas capacity at peak times and pursue applications that allow high efficiency and high value use of the fuel.

Enhance transmission to meet the supply mix goals and ensure reliability.

Integrated Power System Plan

Coal 6434 MW

Conservation675 MW

Nuclear*14,000 MW

Gas & Cogen4,976 MW

Renewables7,855 MW

Conservation6,300 MW

Nuclear14,000 MW or less

Renewables15,700 MW

Gas & Cogen9,400 MW (est.)

Gasification250 MW

Ontario Installed Capacity Today Ontario Installed Capacity 2025

• Late 2006: OPA launches IPSP public stakeholder consultation process • March 2007: Final version of IPSP filed with Ontario Energy Board (OEB) • Review of IPSP by OEB -- scheduled completion by early 2008

Source: Ontario Ministry of Energy

OPG’s Hydroelectric Mandate

OPG has a mandate from the government to develop and/or improve its hydroelectric capacity through: expansion and redevelopment of its existing sites

and pursuit of new projects where feasible

Current and proposed hydroelectric initiatives include: Niagara Tunnel (1.6 billion kWh average per year) Lower Mattagami River Development (450 MW) Lac Seul Development (12.5 MW) Upper Mattagami River Development (35 MW)

Hydroelectric Improvements investing an average of $95 million per year to

maintain/enhance hydroelectric capability existing plant capacity increased by 400 MW since

1992. further upgrades will add about another 150 MW by

2015

Niagara Tunnel Boring Machine, “Big Becky”

Government Directives: NuclearNuclear Refurbishment: Ont. Govt. has directed OPG to

Undertake feasibility studies re. refurbishment of units at Pickering B & Darlington sites

Begin Environmental Assessment (EA) on Pickering B refurbishment as part of this process

OPG is now assessing the business case for refurbishing Pickering B

New Nuclear Ont. Govt. has directed OPG to:

Begin federal approvals process for new nuclear units at an existing facility

• Includes an environmental assessment

On Sept. 22, OPG filed application for a Site Preparation Licence for new nuclear units at its Darlington nuclear site

Pickering B

Darlington

Ontario Government’s Coal Policy

Commitment to eliminate coal-fired generation in Ontario. Ontario’s market operator (IESO) reviewed its forecasting

methods and concluded it had under-estimated demand, especially for the summer, by as much as 3,000 MW.

As a result, government decided it can no longer proceed with timetable to close all coal-fired generation by 2009.

Govt. directed OPA to develop a revised schedule for replacing coal at the earliest practical time to ensure system reliability.

OPA to recommend to government on cost effective measures to reduce emissions including greenhouse gas emissions.

OPG’s Approach to Operation of Its Coal Plants

Until coal-plants are closed: OPG to meet all

environmental regulations governing the operation of its coal-fired stations

OPG will make additional, prudent investments in environmental equipment and systems to further improve environmental performance of its coal-fired plants

Lambton GS

Nanticoke GS

OPG’s Fossil Fleet

LambtonNanticoke

Atikokan

Thunder Bay

Lennox

OPG’s Fossil Fleet (contd.): Lakeview GS

Lakeview Generating Station in Mississauga: in service:1961 capacity 1,140 MW lifetime output: 214 TWh 275 employees permanently shut down in April 2005

June 12, 2006: stack demolition Site now being cleared of

remaining equipment Potential for future high-efficiency

gas plant at the site

OPG’s Fossil Fleet (Contd.)

Brighton Beach (in partnership with ATCO Power )

Portlands Energy Centre (in partnership with TransCanada

Energy)

Portlands Energy Centre Update

Toronto needs extra 500 MW by 2010

PEC is a 550 MW high efficiency combined-cycle facility: co-generation capable fuelled by natural gas

Located in Toronto’s Portlands area Environmental assessment and

approvals in place Accelerated Clean Energy Supply

contract signed with Ontario Power Authority

Construction underway First power in 2008; fully operational

by 2009 capital cost: approx. $730 million

Construction Underway

OPG’s Fossil Performance: Fossil Generation & Emissions

0

100

200

300

400

500

600

700

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Gig

agra

ms

0

5

10

15

20

25

30

35

40

45

Fo

ssil

En

erg

y P

rod

uct

ion

(T

eraw

att

Ho

urs

)

NOx Actual

SO2 Actual

Energy Production

Flexible Fossil Production

18

1516

19

24

3436

4240 40

31

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

TWh

Nuclear Units operating

Nuclear Units laid-up

27

2005

Nuclear Units

returning to service

39

2005 Fossil Performance Highlights

31 TWh -- 14% increase in generation over 2004 62% increase in summer generation over 2004 OPG Darlington and Nanticoke GS the number 1 and 2 producers

in June and July Lambton GS and Nanticoke GS production increase over 2004 >

provincial increase in demand in 2005 among best years for lowest total acid gas emissions lowest acid gas emission rate ever – 70% reduction over 20 years

Thunder Bay GS

Jan. - June 2006 Fossil Performance Highlights

Produced 12.3 TWh approx. 22% of OPG total

Acid gas emissions: 54,900 tonnes compared to 78,900 tonnes (Q1-Q2 2005) Reduction due to improved acid-gas

emission rates and reduced fossil generation

on track in 2006 to perform better than regulatory limit on acid gas emissions

Continued improved reliability improved equipment reliability at

Nanticoke EFOR declined from 16.1% (Q1-Q2,

2005) to 12.9% (Q1-Q2 2006)

Excellent performance during mid-summer heat wave

Lambton GS maintainers retrofitting new boiler feedpump turbine on Unit 2. This work helped ensure that Lambton’s capacity was at maximum during mid-summer heat wave.

Fossil’s Critical Role as a “Swing” Fuel

New Ontario Demand Record: 27,000 MW set on Aug. 1

Total Ontario energy demand during period: 1.6 million MWh

All OPG stations generated: 1.1 million MWh

OPG’s fossil stations generated: 425 thousand MWh 39 per cent of OPG’s total

production 26 per cent of Ontario demand

(x1000)

Plant and Environmental Chemistry at OPG: a Key Contributor to Performance

Selective Catalytic Reduction SCRs installed 2002-2003 on

Lambton units 3&4 and Nanticoke Units 7&8

OPG first utility in Canada to install SCRs

$250 million investment Chemistry personnel involved in all

major aspects of project Flue Gas Desulphurization

OPG units first in Canada to employ FGD technology

Lambton Gypsum Quality Assurance Lab

Chemistry and environmental personnel key contributors

Mercury Research SCR/FGD technology at Lambton has

led to over 90 per cent mercury capture

Chemistry Transformation at OPG Focus on chemistry has produced

significant cost savings

SCRs at Nanticoke GS

OPG Fossil Chemistry Challenges and Success

Challenge Ineffective Boiler Treatment:

Congruent Phosphate Treatment (Prior to 1986) Chemical cleans every 4 years,

numerous chemically influenced Boiler Tube Failures -

Fossil Units Switch From

Primarily Baseload Operation to Intermediate / Peaking Operation (1980’s-2006) Increased Starts, result in

increased Cycle contamination Events, potentially significantly reducing lifespan of Fossil Generating Assets

Success Equilibrium Phosphate Treatment

(1986 Onward) Chemical clean interval increased to

>10 years, In 1990’s no chemically influenced

Boiler Tube Failures (aside from corrosion fatigue)

Cost Savings: ~$110,000 / Fossil Boiler* / year in Clean

Costs

Chemistry Program Updated Dosing Practices for Start-ups

developed Pressure Dependant Boiler Chemistry

Curves introduced (maximize unit protection, minimize chemistry control Unit restrictions)

Cost Savings: Infrequent holds on Start-ups due to

Chemistry No measurable decrease in Generating

Asset Lifespan from Chemistry Impacts

*In 2006 $’s based on current avg Cost of Boiler Chemical Cleans on 500 MW Units

OPG Fossil Chemistry Challenges and Successes

Challenge Nanticoke GS: Condenser Leaks

(1995-2000) Operation with significant

Condenser Leakage over 5 year period resulted in numerous Overheating Failures

Cost of Overheat Tube Failures: 2001: 3000 FO Hours (~$45,000,000*) 2002: 1200 FO Hours (~$17,000,000*) 2003: 1000 FO Hours (~$13,000,000*)

Lambton GS: HP Turbine Copper Deposits (2001-2003) Excessive Deposition of Copper

on High Pressure Turbines resulting in dramatic loss in Unit Efficiency and Capacity

Cost of Copper Deposition: 2003: $10,000,000* in Loss

Efficiency and Unit Capacity

Success Boiler Condition Improvement Program

(2001-Present) Boiler Chemistry Reporting Program

Developed, Condenser Leakage dramatically reduced

8 Boilers Chemically Cleaned (2001-5) Condenser Condition Improvement

Program Developed

Cost of Overheat Tube Failures: 2005: 0 FO Hours ($0)

Lambton GS Chemistry Management System (CMS) CMS Introduced holistic approach to

chemistry control integrating inspections, chemistry control performance, industry affiliations, etc.

Cost of Copper Deposition: 2004-6: Minor Efficiency Losses

*Cost in Commercial Losses

Plant and Environmental Chemistry at OPG: Reward and Recognition

Chemistry Management System implemented at Lambton and Nanticoke by OPG Fossil employees

Keeps staff regularly informed on chemistry cycle performance

Results reduced losses improved performance improved boiler water chemistry

compliance significant cost savings

Received “Power Within” award, OPG’s highest employee achievement award

Michael Caravaggio (Lambton GS), Jim Twomey (Presenter), Chris Fralick (Nanticoke GS)

Ongoing Importance of Plant and Environmental Chemistry at OPG

Challenges going forward include: copper deposits on HP turbines condenser leakage

OPG’s Chemistry Management System and other station programs enhance our ability to address these challenges

Continuing focus on recruitment of chemistry professionals

Summary

OPG Priorities Going Forward Continuing performance

improvement Contribute to Ontario’s electricity

supply through new power initiatives

Implement Ont. government directives on nuclear refurbishment and new build

Operate coal plants efficiently and in an environmentally responsible manner until they are closed

Ontario Power Generation: Profile and Performance

Jim Twomey Executive Vice President – Fossil

Ontario Power Generationto the

American Society of Mechanical Engineers Research Committee on Power Plant and Environmental Chemistry

Niagara Falls, Ontario

October 2, 2006