Division
United Kingdom
Table 12
Benchmark nuclear generation project
| Source: UK submission ‘Answers to the Commission's questions received 16 September 2014’ based on publicly available documents (Bruce Power audit report — April 2007, p. 14.: Confirmed as a project rate of return in letter from CIBC World Markets Inc. to The Ministry of Energy, Ontario, 17 October 2005, http://www.rds.ontarioenergyboard.ca/webdrawer/webdrawer.dll/webdrawer/rec/67137/view/PWU_Exhibit_K11.3_fairness_opinion_bruce_20080613.pdf.PDF, Letter from CIBC World Markets Inc. to the Ministry of Energy, Ontario, 17 October 2005, http://www.rds.ontarioenergyboard.ca/webdrawer/webdrawer.dll/webdrawer/rec/67137/view/PWU_Exhibit_K11.3_fairness_opinion_bruce_20080613.pdf.PDF Bruce Power Fairness Opinion (CIBC World Markets Inc.) — October 2005, p. 5. | |
| Project | Ontario Power Authority |
|---|---|
| Technology | Refurbishment of Bruce Power nuclear plant |
| Gearing | 20-40 per cent |
| Real cost of debt (pre-tax) | 6,20 per cent |
| Nominal target equity IRR (post-tax) | 13,7-18 per cent (12,8-17,1 per cent adjusted for current UK interest rate) |
| Target project IRR | 10,6-13,8 per cent (9,7-12,9 per cent adjusted for current UK interest rate) |
| Investment horizon (asset life) | 25 years |
| Investment size | 4bn CAD |
| Level of Revenue certainty | Fixed price CfD for remainder of plant life (25 years) |
| Level of construction risk | Lower — refurbishment, not new build, cost overrun sharing |
| Level of operating risk | Lower — staff cost overrun sharing, fuel cost pass-through |
| Level of financing risk | Lower — smaller capital project, shorter period |
| Contingent equity required | Unknown |