August 29, 2007 08:30 ET

TransCanada Announces Expanded Unit 4 Refurbishment on Bruce A Restart Project

CALGARY, ALBERTA--(Marketwire - Aug. 29, 2007) - TransCanada Corporation (TSX:TRP) (NYSE:TRP) (TransCanada) today announced that Bruce Power and the Ontario Power Authority (OPA) have agreed to expand the scope of the Bruce A Restart and Refurbishment project by installing 480 new fuel channels in Unit 4.

Announced in October 2005, the $4.25 billion Bruce A Restart and Refurbishment project set out to deliver an additional 1,500 MW to the Ontario power grid by late 2009 or early 2010. Under the original plan, Bruce Power intended to install new steam generators in all four Bruce A units and replace the fuel channels in Units 1, 2 and 3. By replacing the fuel channels in Unit 4, Bruce Power will extend the expected operational life of the 750 MW unit from 2017 to 2036.

Under the revised plan, Bruce Power expects to invest an additional $1 billion, resulting in a total investment in the restart and refurbishment program of approximately $5.25 billion. TransCanada's share is expected to be approximately $2.625 billion.

"This expansion will align Unit 4's operating life with Bruce A's three other units, and extend Bruce A's ability to serve as a cost-competitive, long-term solution to help meet Ontario's power needs," said Hal Kvisle, TransCanada's president and chief executive officer. "The growing focus on emissions-free technology, together with our confidence in the Bruce Power organization, make this an ideal investment opportunity for us. The expanded scope of the project and our participation in it has been carefully structured to share risks and rewards and is consistent with our disciplined and prudent approach to long-term growth," he adds.

Bruce Power expects to complete the work on Units 3 and 4 by 2013. This will enable Bruce Power to apply processes and procedures consistent with the Unit 1 and 2 program. One of the largest engineering projects in North America, the Bruce A Restart program remains on budget and on schedule.

Under the revised agreement, the OPA may elect to proceed with a three unit restart program prior to April 1, 2008 under certain conditions. Those conditions include the OPA determining that there will be insufficient transmission to accommodate all eight Bruce Power units by mid 2013.

For further detail on the Bruce restart and refurbishment project, please visit the Bruce Power website at

For further detail on the terms of the amended implementation agreement between Bruce Power A L.P. (BALP) and the OPA, please refer to the attached backgrounder.

About TransCanada

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 360 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 are based on TransCanada's beliefs and assumptions based on information available at the time such statements were made. The results or events predicted in this information may differ from actual results or events. 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 availability and price of energy commodities, regulatory decisions, changes in environmental and other laws and regulations, competitive factors in the pipeline and energy industry sectors, construction and completion of capital projects, 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 other expectations expressed. For additional information on these and other factors, see 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 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.

Backgrounder - Highlights of the amended implementation agreement between BALP and the OPA:


- BALP expects to refurbish Units 3 & 4 beginning in late 2009 and return them to service by 2013.

- As a result of the refurbishment work, the Unit 4 estimated operational life will be until 2036.

Bruce A Pricing

- As of April 1, 2008, the original BALP Reference Price of $57.37 will increase by $2.11/MWH to $59.48 for output from Bruce A. In addition, fuel costs will continue to be passed through to the OPA.

- When the market spot price is below the Reference Price, the OPA will make payments to BALP. These payments will be equal to the difference between the spot price and the Reference Price.

- When the market spot price is greater than the Reference Price, BALP will pay the OPA the difference between spot price and the Reference Price.


- The Reference Price will continue to be adjusted annually for changes in the Consumer Price Index (CPI).

- The Reference Price will change with the CPI when CPI escalates between 0% and 2.5%. If CPI is greater than 2.5%, the price will be escalated at 2.5% + 0.6 times the difference between actual CPI and 2.5%. If CPI is below zero, the price will be reduced by 0.6 times the difference between zero and actual CPI.

- The price adjustment for CPI will take place annually on April 1.

Three Unit Election

- Under certain circumstances, the OPA has an election, to be exercised prior to April 1, 2008, to exclude one of the units from the implementation agreements (Three Unit Election).

- There must be a substantial risk that the required transmission upgrades will not be completed by July 1, 2013 and the expected cost of future deemed generation take or pay payments must be greater than the reasonably expected cost of generation alternatives for the Three Unit Election to be considered.

Capital Costs

- The agreement is based on the following estimated capital costs:

-- Units 1 & 2 refurbishment - $2.75 billion

-- Units 3 & 4 refurbishment - $2.50 billion

Capital Cost Risk and Reward Sharing

- A capital cost risk and reward sharing schedule for BALP and the OPA is in place for spending below or above the $5.25 billion base case estimate of Bruce A restart and refurbishment capital costs.

- BALP and the OPA, through adjustments in the Reference Price, share responsibility for Units 1 through 4 capital costs that are above or below $5.25 billion as follows:

-- 50/50 for cost overruns of up to $880 million and 75/25 BALP/OPA for any additional cost overruns.

-- 50/50 of the benefit if costs are up to $305 million less than expected and 75/25 BALP/OPA on the next $195 million of savings.

-- Cost sharing is divided between the two programs.

- In addition, the Bruce A Reference Price is also adjusted for changes of +/- $453 million in the estimated capital cost to refurbish Units 3 & 4 if those changes have been identified prior to the start of the project.

- BALP or the OPA can exclude the refurbishment of Units 3 & 4 from the agreement if the cost estimate prior to the start of the project exceeds the base forecast of $2.50 billion by more than approximately $1.034 billion.

Contact Information

  • TransCanada
    Media Inquiries
    Shela Shapiro
    (403) 920-7859 or Toll Free: 1-800-608-7859
    Investor & Analyst Inquiries
    David Moneta/Myles Dougan
    (403) 920-7911 or Toll Free: 1-800-361-6522