Last updated on May 19, 2013



 

VOICES from the Niagara Tunnel - A Living History
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ONTARIO POWER GENERATION - QUARTERLY REPORTS
NIAGARA TUNNEL PROJECT NOTES

November 16th 2007 -

Ontario Power Generation Inc. (“OPG” or the “Company”) reported its financial and operating results for the third quarter and nine months ended September 30, 2007. Net income for the three months ended September 30, 2007 was $113 million compared to net income of $167 million for the same period in 2006. For the nine months ended September 30, 2007, net income was $409 million compared to $509 million for the same period last year.

The report stated in part:

Niagara Tunnel

The Niagara tunnel project will increase the amount of water flowing to existing turbines at OPG’s Sir Adam Beck generating stations in Niagara Falls, allowing the stations to utilize available water more effectively. Upon the completion of the 10.4 km tunnel, the average annual generation from the Sir Adam Beck generating stations is expected to increase by approximately 1.6 TWh.

At September 30, 2007, the tunnel boring machine had advanced 1,028 meters. The progress of the tunnel boring machine by the design-build contractor through a fractured rock formation has been slower than expected. As a result, the contractor’s forecast completion date has been delayed from late 2009.

Considerable uncertainty remains with respect to the schedule until the tunnel boring machine advances sufficiently beyond the St. David’s Gorge to approximately 2,300 meters and establishes consistent tunneling performance. Potential deviation from the original project completion schedule approved by OPG’s Board of Directors of June 2010 will be assessed at that point.

The contract structure puts the onus on the contractor to mitigate schedule delays, including liquidated damages provisions for failure to meet the contractual in-service date. The project is still expected to be completed within the budgeted cost estimate of $985 million.

The capital project expenditures for the three months ended September 30, 2007 were $10 million and life-to-date capital expenditures were $281 million. The project is debt financed through the Ontario Electricity Financial Corporation (“OEFC”).

OPG negotiated an agreement with the OEFC to finance the Niagara Tunnel project for up to $1 billion over the duration of the project. The funding is advanced in the form of 10-year notes, on commercial terms and conditions. Advances under this facility commenced in October 2006, and amounted to $240 million as at September 30, 2007.

May 23rd 2008 -

Ontario Power Generation Inc. (“OPG” or the “Company”) reported its financial and operating results for the first quarter for the three months ended March 31st 2008. Net income for the first quarter of 2008 was $162 million compared to net income of $171 million for the same period in 2007.

The report stated in part:

Niagara Tunnel

At March 31, 2008, the boring machine for the Niagara tunnel had advanced 1,848 meters. Considerable uncertainty remains with respect to the schedule until the tunnel boring machine has advanced beyond the St. David’s gorge to approximately 2,300 meters, and establishes consistent tunneling performance.

The project cost estimate of $985 million will be reviewed in conjunction with any changes to the project completion schedule, and a dispute resolution process to review, among other things, the actual subsurface rock conditions compared to those that were anticipated as part of the design-build contract.

At March 31, 2008, the tunnel boring machine had advanced 1,848 meters. The progress of the tunnel boring machine by the design-build contractor continues to be slower than expected through the rock conditions encountered under the St. David’s gorge. Based on the information provided by the contractor, the in-service date of the tunnel will be delayed.

To mitigate the impact of the schedule delay, the contractor is investigating alternatives, including realignment of a portion of the tunnel. The estimated in-service date will be dependent on the alternative selected by the contractor. Considerable uncertainty remains with respect to the schedule for any of the contractor’s alternatives until the tunnel boring machine has advanced beyond the St. David’s gorge to approximately 2,300 meters, and establishes consistent tunneling performance.

The contract structure places the onus on the contractor to mitigate schedule delays, and includes liquidated damages provisions for failure to meet the contractual in-service date. There is a potential that the schedule delay could impact the project cost. The project cost estimate of $985 million will be reviewed in conjunction with any changes to the project completion schedule and a dispute resolution process to review, among other things, the actual subsurface rock conditions compared to those that were anticipated as part of the design-build contract, which is scheduled for June 2008.

The capital project expenditures for the three months ended March 31, 2008 were $23 million and life-to date capital expenditures were $326 million. The project is debt financed through the Ontario Electricity Financial Corporation (“OEFC”).

OPG negotiated an agreement with the OEFC to finance the Niagara Tunnel project for up to $1 billion over the duration of the project. The funding is advanced in the form of 10-year notes, on commercial terms and conditions. Advances under this facility commenced in October 2006, and amounted to $280 million as at March 31, 2008, including $40 million of new borrowing during the first quarter of 2008.
 

August 22nd 2008 -

Ontario Power Generation Inc. (“OPG” or the “Company”) reported its financial and operating results for the second quarter for the three months ended June 30th 2008. Net income for the second quarter of 2008 was $99 million compared to net income of $125 million for the same period in 2007. Net income for the six months ended June 30, 2008 was $261 million compared to $296 million for the same period in 2007.

The report stated in part:

Niagara Tunnel

At June 30, 2008, the boring machine for the Niagara tunnel had advanced 2,399 meters. The contractor previously advised OPG that due to excavation difficulties under the St. David's gorge, the in-service date of the tunnel will be delayed. To mitigate the impact of the schedule delay, the contractor continues to pursue alternatives including realignment of a portion of the tunnel. The project cost estimate of $985 million will be reviewed in conjunction with any changes to the project completion schedule and the issues being considered in the ongoing dispute resolution process that is primarily focused on whether the actual subsurface rock conditions differ from the baseline established within the design-build contract.
   

November 21st 2008 -

Ontario Power Generation Inc. (“OPG” or the “Company”) reported its financial and operating results for the third quarter for the three months ended September 30th 2008. Net income loss for the third quarter of 2008 was $142 million compared to net income loss of $113 million for the same period in 2007. Net income loss for the nine months ended September 30, 2008 was $119 million compared to $409 million for the same period in 2007.

The report stated in part:

Niagara Tunnel

At September 30, 2008, the boring machine for the Niagara tunnel had advanced 3,124 metres. The contractor previously advised OPG that due to excavation difficulties under the St. David’s gorge, the in-service date of the tunnel will be delayed. The contractor continues to pursue alternatives, including realignment of a portion of the tunnel. A dispute review hearing process was initiated to review, among other things, the actual subsurface conditions compared to those that were anticipated as part of the design build contract. OPG and the contractor are using
the recommendations from the Dispute Review Board as a basis for negotiating revisions to the contract, which are expected to have a significant impact on project cost and schedule. The negotiations are expected to be completed in the first quarter of 2009.

February 13th 2009 -

Ontario Power Generation Inc. ("OPG" or the "Company") today reported its financial and operating results for the year ended December 31, 2008. Net income for the year was $88 million compared to net income of $528 million for the year ended December 31, 2007.

The report stated in part:

Niagara Tunnel

At December 31, 2008, the boring machine for the Niagara tunnel had advanced to 3,306 metres. Progress continues to be slower than expected in the Queenston shale formation, primarily due to excessive over-break in the tunnel crown. To minimize further excavation in the Queenston shale, a change in the vertical alignment has been initiated. Non-binding recommendations issued by the Dispute Review Board in August 2008 are the basis of current negotiations between OPG and the contractor to revise the design build contract. The negotiations are targeted for completion in the first quarter of 2009, and are expected to have a significant impact on the project cost estimate and the completion schedule. These revisions are expected to have a significant impact on the project completion schedule and the cost estimate. The negotiations are underway and are targeted for completion in the first quarter of 2009. Uncertainties will continue with respect to cost and schedule.
The capital project expenditures for the year ended December 31, 2008 were $132 million and life-to-date capital expenditures were $435 million. The project is debt financed through the OEFC.

 

May 22nd 2009 -

The report stated in part:

Niagara Tunnel

With respect to the Niagara tunnel project, at March 31, 2009, the tunnel boring machine had advanced to 3,794 metres, which represents 37 percent of the tunnel length. It is now operating on a revised alignment that will minimize remaining excavation in the Queenston shale formation. OPG and the contractor are renegotiating the design build contract with a revised target cost and schedule. The contract includes incentives related to achieving the target cost and schedule. The original project cost was estimated at $985 million with a scheduled completion of June 2010, as approved by OPG’s Board of Directors. The revised project cost is estimated at $1.6 billion and the revised schedule targets completion by December 2013. This contract is expected to be finalized during the second quarter of 2009.

August 14th 2009 -

The report stated in part:

Niagara Tunnel

With respect to the Niagara tunnel project, at June 30, 2009, the tunnel boring machine had advanced to 4,568 metres, which represents 45 percent of the tunnel length. Progress of the tunnel boring machine has improved following realignment of the tunnel to reduce over-break and minimize the remaining excavation in the Queenston shale formation. The installation of the tunnel concrete lining is progressing well and is ahead of the revised schedule. OPG and the contractor renegotiated the design-build contract with a revised target cost and schedule. The target cost and schedule take into account the difficult rock conditions encountered and the concurrent tunnel excavation and liner installation work required for completion of the tunnel. The contract includes incentives and disincentives related to achieving the target cost and schedule. The original project cost was estimated at $985 million with a scheduled completion of June 2010. The revised project cost estimate is $1.6 billion and the revised schedule completion date is December 2013.
 

November 20th 2009 -

The report stated in part:

Niagara Tunnel

The Niagara tunnel boring machine (“TBM”) had advanced 5,418 metres as of September 30, 2009. The TBM reached the milestone of completing 50 percent of the tunnel excavation on August 4, 2009. The advancement of the TBM has been temporarily interrupted since September 11, 2009 to reinforce a short section of the temporary tunnel liner that failed about 1,800 metres behind the current location of the TBM. Installation of the permanent tunnel concrete lining is progressing well and is ahead of the revised schedule. Restoration of the circular cross-section of the tunnel before installation of the upper two-thirds of the concrete lining began, as planned, in September 2009.

March 8th 2010 -

The report stated in part:

Niagara Tunnel

In June 2009, following the recommendations of a dispute review board, OPG and the contractor signed an amended design-build contract with a revised target cost and schedule. The target cost and schedule took into account the difficult rock conditions encountered and the concurrent tunnel excavation and liner installation work required to expedite completion of the tunnel. The amended contract includes incentives and disincentives related to achieving the target cost and schedule. OPG’s Board of Directors approved a revised project cost estimate of $1.6 billion and a revised scheduled completion date of December 2013. Some uncertainty with respect to the cost and schedule for both the tunnel excavation and liner installation will continue.

As of December 31, 2009, the Tunnel Boring Machine (“TBM”) has progressed 5,481 metres, which is 54 percent of the tunnel length. The advancement of the TBM was temporarily interrupted from September 11, 2009 to December 8, 2009 to repair a short section of the temporary tunnel liner that failed about 1,800 metres behind the TBM location at that time, and to complete a planned overhaul of the TBM cutterhead, conveyor systems and other tunnel construction equipment. Installation of the lower one-third of the permanent tunnel concrete lining is progressing ahead of schedule. Restoration of the circular cross-section of the tunnel before installation of the upper two-thirds of the concrete lining began, as planned, in September 2009. Installation of the upper two-thirds of the concrete lining is scheduled to begin in the spring of 2010.

Uncertainty with respect to the cost and schedule for both the tunnel excavation and liner installation continues. There are a number of factors which contribute to this uncertainty, including challenging rock conditions. Allowances for differing rock conditions have been included in the cost estimate and schedule. Major equipment breakdown is also a risk factor. To mitigate this risk, the contractor is monitoring the equipment and maintenance programs are in place, with critical spare parts available, to minimize potential delays. In addition, there is risk with respect to the rate of progress for the restoration of the circular cross-section of the tunnel. Mitigation measures such as extended operations and use of additional equipment are planned by the contractor.

There are also uncertainties associated with aspects of the project which have yet to begin, such as the installation of the upper two-thirds of the concrete lining and tunnel pre-stress grouting. Allowances have been included in the cost estimate and schedule with respect to these uncertainties. Finally, events such as tunnel failure or flood are also a potential risk. The vendor has implemented appropriate tunnel convergence and cofferdam monitoring programs, and has rigorous emergency response programs in place, including safety drills and redundant equipment and materials on site, in order to minimize the impact should such an event occur.

The capital project expenditures for the year ended December 31, 2009 were $214 million and the life-to date capital expenditures were $649 million. The project is debt financed through the OEFC. OPG is in the process of pursuing an amendment to the Niagara Tunnel project credit facility with the OEFC, consistent with the revised cost estimate of $1.6 billion and the revised schedule.

OPG has an agreement with the OEFC to finance the Niagara Tunnel project for up to $1 billion over the duration of the project. The funding is advanced in the form of 10-year notes, on commercial terms and conditions. Advances under this facility commenced in October 2006 and amounted to $490 million as at December 31, 2009, which included $150 million of new borrowing during 2009. OPG is in the process of pursuing an amendment to the Niagara Tunnel project credit facility, consistent with the revised cost estimate of $1.6 billion, and the revised schedule.

In September 2005, OPG reached an agreement with the OEFC to provide debt financing for the Niagara Tunnel project. The funding, which is up to $1 billion over the duration of the project, will be in the form 118 of 10-year notes, which will be issued quarterly to meet the project’s obligations. Interest will be fixed for each note issued at the time of advance at a rate equal to the prevailing Benchmark Government of Canada 10-Year Bond, plus a credit spread determined by the OEFC based on a survey of market rates. As at December 31, 2009, OPG issued $490 million against this facility, which included new borrowing of $150 million under the facility in 2009. OPG is in the process of pursuing an amendment to the Niagara Tunnel project credit facility, consistent with the revised cost estimate of $1.6 billion, and the revised schedule.

May 14th 2010 -

OPG completed major equipment overhauls and rehabilitation work at several stations during 2009, including a major rehabilitation of Unit 9 at Sir Adam Beck hydroelectric generating station.

Niagara Tunnel

In June 2009, following the recommendations of a dispute review board, OPG and the contractor signed an amended design-build contract with a revised target cost and schedule. The target cost and schedule took into account the difficult rock conditions encountered and the concurrent tunnel excavation and liner installation work required to expedite completion of the tunnel. The amended contract includes incentives and disincentives related to achieving the target cost and schedule. OPG’s Board of Directors approved a revised project cost estimate of $1.6 billion and a revised scheduled completion date of December 2013. Some uncertainty with respect to the cost and schedule for both the tunnel excavation and liner installation will continue.

As of December 31, 2009, the Tunnel Boring Machine (“TBM”) has progressed 5,481 metres, which is 54 percent of the tunnel length. The advancement of the TBM was temporarily interrupted from September 11, 2009 to December 8, 2009 to repair a short section of the temporary tunnel liner that failed about 1,800 metres behind the TBM location at that time, and to complete a planned overhaul of the TBM cutterhead, conveyor systems and other tunnel construction equipment. Installation of the lower one-third of the permanent tunnel concrete lining is progressing ahead of schedule. Restoration of the circular cross-section of the tunnel before installation of the upper two-thirds of the concrete lining began, as planned, in September 2009. Installation of the upper two-thirds of the concrete lining is scheduled to begin in the spring of 2010.

The capital project expenditures for the year ended December 31, 2009 were $214 million and the life-to-date capital expenditures were $649 million. The project is debt financed through the OEFC. OPG is in the process of pursuing an amendment to the Niagara Tunnel project credit facility with the OEFC, consistent with the revised cost estimate of
$1.6 billion and the revised schedule.

Niagara Tunnel Project

Uncertainty with respect to the cost and schedule Uncertainty with respect to the cost and schedule for both the tunnel excavation and liner installation continues. There are a number of factors which contribute to this uncertainty, including challenging rock conditions. Allowances for differing rock conditions have been included in the cost estimate
and schedule. Major equipment breakdown is also a risk factor. To mitigate this risk, the contractor is monitoring the equipment and maintenance programs are in place, with critical spare parts available, to minimize potential delays. In addition, there is risk with respect to the rate of progress for the restoration of the circular cross-section of the tunnel. Mitigation measures such as extended operations and use of additional equipment are planned by the contractor. There are also uncertainties associated with aspects
of the project which have yet to begin, such as the installation of the upper two-thirds of the concrete lining and tunnel pre-stress grouting. Allowances have been included in the cost estimate and schedule with respect to these uncertainties.

Finally, events such as tunnel failure or flood are also a potential risk. The vendor has implemented appropriate tunnel convergence and cofferdam monitoring programs, and has rigorous emergency response programs in place, including safety drills and redundant equipment and materials on site, in order to minimize the impact should such an event occur.

In September 2005, OPG reached an agreement with the OEFC to provide debt financing for the Niagara Tunnel project. The funding, which is up to $1 billion over the duration of the project, will be in the form of 10-year notes, which will be issued quarterly to meet the project’s obligations. Interest will be fixed for each note issued at the time of advance at a rate equal to the prevailing Benchmark Government of Canada 10-Year Bond, plus a credit spread determined by the OEFC based on a survey of market rates. As at December 31, 2009, OPG issued $490 million against this facility, which included new borrowing of $150 million under the facility in 2009. OPG is in the process of pursuing an amendment to the Niagara Tunnel project credit facility, consistent with the revised cost estimate of $1.6 billion, and the revised schedule.

In June 2009, following the recommendations of a dispute review board, OPG and the contractor signed an amended design-build contract with a revised target cost and schedule. The target cost and schedule took into account the difficult rock conditions encountered and the concurrent tunnel excavation and liner installation work required to
expedite completion of the tunnel. The amended contract includes incentives and disincentives related to achieving the target cost and schedule. OPG’s Board of Directors approved a revised project cost estimate of $1.6 billion and a revised scheduled environmental obligations.

Guarantees

As part of normal business, OPG and certain of its subsidiaries and joint ventures enter into various agreements providing financial or performance assurance to third-parties on behalf of certain subsidiaries. Such agreements include guarantees, standby Letters of Credit and surety bonds. Contractual and Commercial Commitments The Company’s contractual obligations and other significant commercial commitments as at December 31, 2009, are as follows:

completion date of December 2013.
Some uncertainty with respect to the cost and schedule for both the tunnel excavation and liner installation will continue. As of December 31, 2009, the Tunnel Boring Machine (“TBM”) has progressed 5,481 metres, which is 54 percent of the tunnel length.

The capital project expenditures for the year ended December 31, 2009 were $214 million and the life-to-date capital expenditures were $649 million. The project is debt financed through the OEFC. OPG is in the process of pursuing an amendment to the Niagara Tunnel project credit facility with the OEFC, consistent with the revised cost estimate of
$1.6 billion and the revised schedule.

 

May 21st 2010 -

Niagara Tunnel

As of March 31, 2010, the tunnel boring machine has progressed 6,485 metres, which is 64 percent of the tunnel length. Installation of the lower one-third of the permanent concrete lining has progressed 4,550 metres. Restoration of the circular cross-section of the tunnel, before installation of the upper two-thirds of the concrete lining, has progressed 1,000 metres. Installation of the upper two-thirds of the concrete lining is scheduled to begin by the end of the second quarter. The capital project expenditures for the quarter ended March 31, 2010 were $47 million, and the life-to-date capital expenditures were $696 million. The project is debt financed through the OEFC. OPG is in the process of pursuing an amendment to the Niagara Tunnel project credit facility with the OEFC, consistent with the revised budget estimate of $1.6 billion, and the revised scheduled completion date of December 2013. The project is expected to be completed within the revised approved budget and schedule.
 

OPG has an agreement with the OEFC to finance the Niagara Tunnel project for up to $1 billion over the duration of the project. The funding is advanced in the form of 10-year notes, on commercial terms and conditions. Advances under this facility commenced in October 2006 and amounted to $540 million as at March 31, 2010, which included $50 million of new borrowing during the first quarter of 2010. OPG is in the process of pursuing an amendment to the Niagara Tunnel project credit facility, consistent with the revised approved budget estimate of $1.6 billion, and schedule.

As at March 31, 2010, OPG’s long-term debt outstanding with the OEFC was $3.7 billion. Although the new borrowings added in 2008, 2009 and in the first quarter of 2010 have extended the maturity profile, approximately $1.2 billion of long-term debt must be repaid or refinanced within the next three years. To ensure that adequate financing resources are available beyond the $1 billion revolving committed bank credit facility, OPG reached an agreement with the OEFC in the first quarter of 2010 for a $970 million credit facility to refinance notes as they mature over the period from January 2010 to December 2010. Refinancing under this agreement totalled $530 million as at March 31, 2010.

Niagara Tunnel Project

Uncertainty with respect to the cost and schedule for both the tunnel excavation and liner installation continues. There are a number of factors which contribute to this uncertainty, including challenging rock conditions. To address this, the cost estimate and schedule include allowances for differing rock conditions. Major equipment breakdown is also a risk factor. To mitigate this risk and minimize potential delays, the contractor is monitoring the equipment, and ensuring maintenance programs are in place and critical spare parts are available. In addition, there is risk with respect to the rate of progress for the restoration of the circular cross-section of the tunnel. The contractor has committed to supply additional resources for this operation in order to prevent an impact on the critical path for tunnel completion. OPG continues to assess the impact, if any, on the target cost and schedule.

There are also uncertainties associated with future project activities, such as the installation of the upper two-thirds of the concrete lining and tunnel pre-stress grouting. Allowances are included in the cost estimate and schedule with respect to these uncertainties. Finally, events such as tunnel failure or flood are also potential risks. The contractor has implemented tunnel convergence and cofferdam monitoring programs, and has emergency response programs in place, including safety drills and storage of redundant equipment and materials on site, in order to minimize the impact should such an event occur.


NiagaraTunnel

(millions of dollars)
Debt financing, as at December 31, 2009 = 490
New borrowing = 50
Debt financing, as at March 31, 2010 = 540

OPG is in the process of pursuing an amendment to the Niagara Tunnel project credit facility, consistent with the revised cost estimate of $1.6 billion, and the revised schedule
 

August 20th 2010 -

Ontario Power Generation Inc. (“OPG” or the “Company”) reported its financial and operating results for second quarter of 2010 ending June 30th. 
Net loss for the second quarter of 2010 was $29 million compared to net income of $306 million for the same period in 2009. Net income for the six months ended June 30, 2010 was $114 million compared to net income of $297 million for the same period in 2009.

A major outage to rebuild and upgrade Unit 9 of the Sir Adam Beck generating station is continuing and the Unit is scheduled to return to service at the end of 2010.

 
The report stated in part:

Niagara Tunnel

The development of the Niagara Tunnel has progressed in a number of key areas. As of June 30, 2010, the Niagara tunnel boring machine has progressed 7,050 metres, representing 69 percent of the tunnel length. Installation of the lower one-third of the permanent concrete lining has progressed 5,075 metres. Restoration of the circular cross-section of the tunnel, before installation of the upper two-thirds of the concrete lining, has progressed 1,870 metres. Installation of the upper two-thirds of the concrete lining started in late May and has progressed 75 metres. The Niagara Tunnel is expected to be in-service by the approved date of December 2013. The project costs are expected to be within the revised approved budget of $1.6 billion.

To ensure that sufficient funds are available to achieve its strategic objectives of performance excellence and generation development, OPG continued with a number of initiatives in the second quarter of 2010. OPG has executed an amendment to the Niagara Tunnel project credit facility with the OEFC, consistent with the revised cost estimate of $1.6 billion.

The capital project expenditures for the three and six month periods ended June 30, 2010 were $61 million and $108 million, respectively. As at June 30, 2010, the life-to-date capital expenditures were $757 million. The project is debt financed through the OEFC. OPG has executed an amendment to the Niagara Tunnel project credit facility with the OEFC to finance the project for up to $1.6 billion over the duration of the project. The Niagara Tunnel is expected to be completed within the revised approved

budget of $1.6 billion, and in-service by the approved date of December 2013.

Uncertainty with respect to the cost and schedule of the Niagara Tunnel project continues. There are a number of factors which contribute to this uncertainty, including challenging rock conditions. To address this, the cost estimate and schedule include allowances for differing rock conditions. Major equipment breakdown is also a risk factor. To mitigate this risk and minimize potential delays, the contractor is monitoring the equipment, and ensuring maintenance programs are in place and critical spare parts are available. In addition, there is risk with respect to the rate of progress for the restoration of the circular cross-section of the tunnel. The contractor is supplying additional resources for this operation in order to prevent an impact on the critical path for tunnel completion. OPG continues to assess the impact, if any, on the target cost and schedule.

There are also uncertainties associated with future project activities, such as the installation of the upper two-thirds of the concrete lining and tunnel pre-stress grouting. Allowances are included in the cost estimate and schedule with respect to these uncertainties. Finally, events such as tunnel failure or flood are also potential risks. The contractor has implemented tunnel convergence and cofferdam monitoring programs, and has emergency response programs in place, including safety drills and storage of redundant equipment and materials on site, in order to minimize the impact should such an event occur.

Niagara Tunnel Project

Debt financing, as at December 31, 2009  $490 million

New borrowing  $115 million

Debt financing, as at June 30, 2010  $605 million

During the third quarter of 2010, OPG executed an amendment to the Niagara Tunnel project credit facility to increase the credit facility from $1.0 billion to an amount up to $1.6 billion.

November 19th 2010 -

Ontario Power Generation Inc. (“OPG” or the “Company”) reported its financial and operating results for the third quarter of 2010 ending September 30th. 
Net income for the third quarter of 2010 was $333 million compared to $259 million for the same period in 2009. Net income for the nine months ended September 30, 2010 was $447 million compared to $556 million for the same period in 2009. OPG’s income before interest and income taxes was $381 million for the three months ended September 30th 2010 compared to $324 million for the three months ended September 30th 2009.

As at September 30, 2010, OPG’s long-term debt outstanding with the OEFC was $3.8 billion. Although the new borrowings added in 2008, 2009 and 2010 have extended the maturity profile, approximately $800 million of long-term debt must be repaid or refinanced within the next three years.

A major outage to rebuild and upgrade Unit 9 of the Sir Adam Beck generating station is continuing and the Unit is scheduled to return to service at the end of 2010.

 
The report stated in part:

Niagara Tunnel

As of September 30, 2010, the Niagara Tunnel project’s tunnel boring machine had progressed 8,331 metres, 82 percent of the tunnel length. Installation of the permanent concrete lining is progressing. The Niagara Tunnel is expected to be completed within the revised approved budget of $1.6 billion and in-service by the approved date of December 2013.

As of September 30, 2010, the tunnel boring machine has advanced to 8,331 metres, which is 82 percent of the tunnel length. Installation of the lower one-third of the permanent concrete lining has reached 5,788 metres. Restoration of the circular cross-section of the tunnel, before installation of the upper two-thirds of the concrete lining, has progressed 2,660 metres. Installation of the upper two-thirds of the concrete lining was completed to 525 metres.

The capital project expenditures for the three and nine month periods ended September 30, 2010 were $56 million and $164 million, respectively. As at September 30, 2010, the life-to-date capital expenditures were $813 million. The project is debt financed through the OEFC. OPG has executed an amendment to the Niagara Tunnel project credit facility with the OEFC to finance the project for up to $1.6 billion. The Niagara Tunnel is expected to be completed within the revised approved budget of $1.6 billion and inservice by the approved date of December 2013.

During the third quarter of 2010, OPG executed an amendment to the Niagara Tunnel project credit facility to increase the credit facility from $1.0 billion to an amount up to $1.6 billion. The funding under the credit facility is advanced in the form of 10-year notes, on commercial terms and conditions. Advances under this facility commenced in October 2006 and amounted to $640 million as at September 30, 2010, which included $35 million of new borrowing during the third quarter of 2010.

Debt financing for the Niagara Tunnel is provided by the OEFC. Advances under these credit facilities commenced in  December 2006. As at September 30, 2010, debt financing for this project which is included as part of the notes payable to the OEFC, consisted of the following:
(millions of dollars)

Niagara Tunnel

Debt financing, as at December 31, 2009  = $490,000,000
New borrowing  = $150,000,000
Debt financing, as at September 30, 2010  = $640,000,000

During the third quarter of 2010, OPG executed an amendment to the Niagara Tunnel project credit facility to increase the credit facility from $1.0 billion to an amount up to $1.6 billion.
 

March 3rd 2011 -

Ontario Power Generation Inc. (“OPG” or the “Company”) reported its financial and operating results for the year ending December 31st 2010. 
Net income for the year was $649 million compared to the net income of $623 million for the year ended December 31st 2009.

OPG’s income before income taxes from our electricity generating segments was $679 million for the year ended December 31, 2010 compared to $827 million for the
same period in 2009. This decrease of $148 million was mainly due to lower generation from the hydroelectric and nuclear generating stations, and a reduction in revenue related to a regulatory asset established as a result of a 2009 decision by the Ontario Energy Board.

Revenue was $1,324 million for the three months ended December 31, 2010 compared to $1,390 million during the same period in 2009. The decrease of $66 million was primarily due to a decrease in generation from the unregulated hydroelectric generating segment, and a decrease in revenue related to the OEFC contingency support agreement which provides for the continued reliability and availability of OPG’s Nanticoke and Lambton generations stations compared to the same period in 2009. This
decrease in revenue during the fourth quarter of 2010 compared to the same quarter of 2009 was partially offset by the increase in revenue related to the Lennox generating station as a result of the cost recovery contract which finalized in April 2010.

As of December 31st 2010, OPG’s long-term debt outstanding with the OEFC was $3.843 billion.

During 2010, the in-service capacity of the Regulated – Hydroelectric segment increased by 10 MW primarily due to a runner upgrade at the Sir Adam Beck 1 generating station. OPG completed major equipment overhauls and rehabilitation work at several stations during 2010, including a major rehabilitation of Unit 9 at Sir Adam Beck hydroelectric generating station.

The report stated in part:

Niagara Tunnel

The Niagara tunnel boring machine had advanced 9,152 metres, or 90 percent of the tunnel length, as of December 31, 2010. Installation of the lower third of the tunnel concrete lining was ahead of schedule at 6,563 metres. Restoration of the circular cross-section of the tunnel before installation of the upper two-thirds of the concrete lining was behind schedule at 2,989 metres, but is not expected to delay tunnel completion. Installation of the upper two-thirds of the concrete lining is ahead of schedule at 1,238 metres. Life-to-date capital expenditures for the project were $880 million at December 31, 2010. The Niagara Tunnel project is expected to be completed within the revised approved budget of $1.6 billion and the revised approved project completion date of December 2013.

As of December 31, 2010, tunnel boring machine (“TBM”) mining activity was on schedule, and the TBM had progressed 9,152 metres, which is 90 percent of the tunnel length. Installation of the lower one-third of the tunnel permanent concrete lining reached 6,563 metres, and was ahead of schedule. Restorationof the circular cross-section of the tunnel before installation of the upper two-thirds of the concrete liningwas behind schedule at 2,989 metres, but is not expected to delay tunnel completion. Installation of theupper two-thirds of the concrete lining began in May 2010 and had progressed 1,238 metres, which is ahead of schedule. Some uncertainty with respect to the cost and schedule for both the tunnel excavation and liner installation will continue. Notwithstanding the uncertainty, the Niagara Tunnel is expected to be completed within the revised approved budget of $1.6 billion and the revised approved project completion date of December 2013.

The capital project expenditures for the year ended December 31, 2010 were $231 million, and the life-to date capital expenditures were $880 million. The project is debt financed through the OEFC. OPG has executed an amendment to the Niagara Tunnel project credit facility with the OEFC to finance the project for up to $1.6 billion.

During the third quarter of 2010, OPG executed an amendment to the Niagara Tunnel project credit facility to increase the credit facility from $1.0 billion to an amount up to $1.6 billion. The funding under the credit facility is advanced in the form of 10-year notes, on commercial terms and conditions. Advances under this facility commenced in October 2006 and amounted to $690 million as at December 31, 2010, which included $200 million of new borrowing during 2010.

Significant Commercial Commitments

Niagara Tunnel

2011 - $231 million
2012 - $143 million
2013 - $44 million
2014 - $1 million
Total - $419 million

Long-term debt as at December 31, 2010 was $4,228 million compared to $4,046 million as at December 31, 2009. The increase was due to the issuance of general purpose debt totalling $1,010 million and the issuance of long-term debt of $150 million under the Niagara Tunnel Facility, partially offset by a repayment of long-term debt of $978 million during 2010.

The TBM mining activity is on schedule and has progressed 9,152 metres (90 percent to the tunnel length). Installation of the lower one-third of the permanent tunnel concrete lining is progressing ahead of schedule. Restoration of the circular cross-section of the tunnel before installation of the upper two-thirds of the concrete lining is behind schedule but is not expected to delay project completion. Installation of the upper two-thirds of the concrete lining began in May 2010 and is progressing ahead of schedule.

Some uncertainty with respect to the cost and schedule for both the tunnel excavation and liner installation continues. The factors which contribute to this uncertainty include difficult rock conditions and the activities to restore the tunnel profile. Allowances for these factors have been included in the cost estimate and schedule and the contractor is deploying additional resources on the profile restoration operation to prevent impacting the schedule for project completion. Major equipment breakdown is also a risk factor. To mitigate this risk and minimize potential delays, the contractor is monitoring the equipment and ensuring maintenance programs are in place, with critical spare parts available. There is also some additional uncertainty around the project activities which have yet to begin, such as the tunnel pre-stress grouting. Allowances have been included in the cost estimate and schedule with respect to these uncertainties. Finally, events such as tunnel failure or flood are also a potential risk. The contractor has implemented tunnel convergence and cofferdam monitoring programs, and has rigorous emergency response programs in place, including safety drills and redundant equipment and materials on site, in order to minimize the impact should such an event occur.
 

Debt financing, as at December 31, 2009 - $490 million
New Borrowing - $200 million
Debt financing, as at December 31, 2010 - $690 million

In September 2005, OPG reached an agreement with the OEFC to provide debt financing for the Niagara Tunnel project. The funding, which is up to $1.6 billion over the duration of the project was amended in the third quarter of 2010 from $1.0 billion and is in the form of 10-year notes, which will be issued quarterly to meet the project’s obligations. Interest will be fixed for each note issued at the time of advance at a rate equal to the prevailing Benchmark Government of Canada 10-Year Bond, plus a credit
spread determined by the OEFC based on a survey of market rates. As at December 31, 2010, OPG issued $690 million against this facility, which included new borrowings of $200 million under the facility in 2010.

As of December 31, 2010, the Tunnel Boring Machine (“TBM”) had progressed 9,152 metres, which is 90 percent of the tunnel length. Some uncertainty with respect to the cost and schedule for both the tunnel excavation and liner installation will continue. Notwithstanding the uncertainty, the Niagara Tunnel is expected to be completed within the revised approved budget of $1.6 billion and the revised approved project completion date of December 2013. The capital project expenditures for the year ended December 31, 2010 were $231 million and the life-to date capital expenditures were $880 million. The project is debt financed through the OEFC. OPG has executed an amendment to the Niagara Tunnel project credit facility with the OEFC to finance the project for up to $1.6 billion.

May 19th 2011 -

Niagara Tunnel

Mining activity at the Niagara Tunnel was completed. As of March 31, 2011, installation of the lower one-third of the tunnel permanent concrete lining reached 6,963 metres and was ahead of schedule. Restoration of the circular cross-section before installation of the tunnel concrete lining was behind schedule at 3,425 metres, but is not expected to delay tunnel completion. Installation of the upper two-thirds of the concrete lining is ahead of schedule at 2,100 metres. The Niagara Tunnel project is expected to be completed within the approved budget of $1.6 billion and the approved completion date of December 2013. As at March 31, 2011, the life-to-date capital expenditures were $961 million.

OPG plans to increase the capacity of existing stations by 60 MW over the next five years through the replacement of existing turbine runners and installation of more efficient equipment. OPG is planning to complete major equipment overhauls and rehabilitation work at several stations during 2011, including transformer replacements at Units 4, 5 and 6 of Sir Adam Beck Pump generating stations.

The tunnel boring machine (“TBM”) mining activity was completed. As of March 31, 2011, installation of the lower one-third of the tunnel permanent concrete lining reached 6,963 metres, and was ahead of schedule. Restoration of the circular cross-section of the tunnel before installation of the upper two-thirds of the concrete lining was behind schedule at 3,425 metres on March 31, 2011, but is not expected to delay tunnel completion. Installation of the upper two-thirds of the concrete lining has progressed 2,100 metres, and was ahead of schedule. Some uncertainty with respect to the cost and schedule for the liner installation will continue. Notwithstanding the uncertainty, the Niagara Tunnel is expected to be completed within the approved budget of $1.6 billion and the approved project completion date of December 2013. The capital project expenditures for the quarter ended March 31, 2011 were $81 million, and the life-to date capital expenditures were $961 million.

During 2010, OPG executed an amended Niagara Tunnel project credit facility for an amount up to $1.6 billion. As at March 31, 2011, advances under this facility were $730 million, which included $40 million of new borrowing during the first quarter of 2011

As at March 31, 2011, OPG’s long-term debt outstanding with the OEFC was $3,867 million, of which $588 million must be repaid or refinanced within the next three years.

While the TBM mining has been completed, some cost and schedule uncertainty remains with respect to the liner installation. The factors that contribute to this uncertainty include the activities to restore the tunnel profile and challenging logistics for concrete delivery. Allowances for these factors have been included in the cost estimate and schedule. The contractor is deploying additional resources on the
profile restoration and concrete delivery operations to minimize potential impact on the schedule for project completion.

During 2010, OPG executed an amended Niagara Tunnel project credit facility for an amount up to $1.6 billion. As at March 31, 2011, advances under this facility were $730 million, which included
$40 million of new borrowing during the first quarter of 2011.

 

August 26th 2011 -

Niagara Tunnel

The availability of OPG’s regulated hydroelectric stations during the three and six month periods ended June 30, 2011 was slightly lower than in the same periods in 2010 primarily as a result of an increase in planned maintenance and project outages, and an increase in forced outages at the Sir Adam Beck Pump generating station.

The Niagara tunnel boring machine (“TBM”) mining activity has been completed and the disassembly of the TBM is in progress. As of June 30, 2011, installation in the tunnel of the lower one-third of the permanent concrete lining reached 7,625 metres. This installation work has been temporarily interrupted since July 2, 2011 to reinforce a short section of the temporary tunnel liner that was overloaded by loose rock at 6,050 metres. This interruption is not expected to delay tunnel completion. Restoration of the circular cross-section of the tunnel before installation of the upper two-thirds of the concrete lining reached 4,422 metres and was behind schedule. Installation of the upper two-thirds of the concrete lining has progressed to 3,262 metres and is ahead of schedule. The Niagara Tunnel is expected to be completed within the approved budget of $1.6 billion and the approved project completion date of December 2013.

As of June 30, 2011, life-to-date capital expenditures were $1,032 million. Upon completion of the project, the average annual generation from the Sir Adam Beck generating stations will increase by approximately 1.6 TWh.

OPG plans to increase the capacity of existing stations by 50 MW over the next five years through the replacement of existing turbine runners, generators, transformers, and other control components with more efficient equipment. OPG is also planning to repair, rehabilitate, or replace aging civil structures. In the second quarter of 2011, OPG completed major equipment overhauls and rehabilitation work at several stations. This included the protection and controls upgrades of Units 9 to 16 at the Saunders generating station, the replacement of the main transformer bank of Units 4, 5 and 6 at the Sir Adam Beck Pump generating station, and the headgate replacement of Unit 2 at the Little Long generating station.
 

Niagara Tunnel

 
The tunnel boring machine (“TBM”) mining activity has been completed and the TBM disassembly is in progress. As of June 30, 2011, installation in the tunnel of the lower one-third of the permanent concrete lining reached 7,625 metres. This installation work has been temporarily interrupted since July 2, 2011 to reinforce a short section of the temporary tunnel liner that was overloaded by loose rock at 6,050 metres. This interruption is not expected to delay tunnel completion. Restoration of the circular cross-section of the tunnel before installation of the upper two-thirds of the concrete lining was behind schedule at 4,422 metres on June 30, 2011, but is not expected to delay tunnel completion. Installation of the upper two-thirds of the concrete lining has progressed 3,262 metres and was ahead of schedule. Contact grouting to fill the space between the concrete lining and impermeable membrane has progressed 1,375 metres and was ahead of schedule. Pre-stress grouting to complete the attachment of the concrete liner with the surrounding rock commenced in August 2011. Some uncertainty with respect to the cost and schedule for the liner installation will continue. Notwithstanding the uncertainty, the Niagara Tunnel is expected to be completed within the approved budget of $1.6 billion and the approved project completion date of December 2013. Upon completion of the project, the average annual generation from the Sir Adam Beck generating stations will increase by approximately 1.6 TWh.
 

The capital project expenditures for the three and six month periods ended June 30, 2011 were $71 million and $152 million, respectively. As at June 30, 2011, the life-to-date capital expenditures were $1,032 million. During 2010, OPG executed an amended Niagara Tunnel project credit facility for an amount up to $1.6 billion. As at June 30, 2011, advances under this facility were $765 million, which included $35 million of new borrowing during the second quarter of 2011.

Niagara Tunnel Project

While the TBM mining has been completed, some cost and schedule uncertainty remains with respect to the liner installation. The factors that contribute to this uncertainty include the activities to restore the tunnel profile, reinforcing the temporary tunnel liner, and challenging logistics for concrete delivery. Allowances for these factors have been included in the cost estimate and schedule. The contractor is deploying additional resources on the profile restoration and concrete delivery operations to minimize potential impact on the schedule for project completion.

OPG Long-term debt is (2011) $4,134 (2010) $3,843 million.
 

November 18th 2011 -

Ontario Power Generation Inc. (“OPG” or the “Company”) reported its financial and operating results for third quarter of 2011 ending September 30^th.  Net loss for the third quarter of 2011 was $96 million compared to a net income of $333 million dollars for the third quarter of 2010. Net income for the nine months ended

September 30, 2011 was $169 million compared to $447 million for the same period in 2010. As at September 30, 2011, OPG’s long-term debt outstanding with the OEFC was $3.9 billion dollars (actual $4.743 billion dollars).

The report stated in part:

Niagara Tunnel

The tunnel boring machine mining activity has been completed, and the disassembly of the tunnel boring machine is in progress. Lining installation activities at the Niagara Tunnel continue. Installation of the lower one-third of the permanent concrete lining had reached 7,625 metres by July 2, 2011 when this work was temporarily interrupted to do reinforcement repair work in the 6,050 metre area of the tunnel. This lining work is expected to resume in January 2012. All other tunnel lining activities are continuing. As at September 30, 2011, the life-to-date capital expenditures were $1.1 billion. The project is expected to be completed within the approved budget of $1.6 billion and the approved project completion date of December 2013.

The tunnel boring machine (“TBM”) mining activity has been completed and the TBM disassembly is in progress. Lining installation activities at the Niagara Tunnel continue. Installation of the lower one-third of the permanent concrete lining had reached 7,625 metres by July 2, 2011 when this work was temporarily interrupted to do reinforcement repair work in the 6,050 metre area of the tunnel. This lining work is expected to resume in January 2012. All other tunnel lining activities are continuing. At September 30, 2011, restoration of the circular cross-section of the tunnel before installation of the upper two-thirds of the concrete lining was behind schedule at 5,170 metres, but is not expected to delay tunnel completion. Installation of the upper two-thirds of the concrete lining has progressed 4,200 metres and is on schedule. Contact grouting to fill the space between the concrete lining and impermeable membrane has progressed 1,450 metres. Pre-stress grouting to complete the attachment of the concrete liner with the surrounding rock commenced in August 2011 and at September 30, 2011 has progressed 400 metres. 

Some uncertainty with respect to the cost and schedule for the liner installation will continue. Notwithstanding the uncertainty, the Niagara Tunnel is expected to be completed within the approved budget of $1.6 billion and the approved project completion date of December 2013. Upon completion of the project, the average annual generation from the Sir Adam Beck generating stations will increase by approximately 1.6 TWh.  

The capital project expenditures for the three and nine month periods ended September 30, 2011 were $57 million and $209 million, respectively. As at September 30, 2011, the life-to-date capital expenditures were $1,089 million. 

During 2010, OPG executed an amended Niagara Tunnel project credit facility for an amount up to $1.6 billion. As at September 30, 2011, advances under this facility were $815 million (December 31, 2010 – $690 million), which included $50 million of new borrowing during the third quarter of 2011. 

While the TBM mining has been completed, some costs and schedule uncertainty remains with respect to the liner installation. The factors that contribute to the uncertainty include the activities to restore and reinforce the tunnel profile, and the challenging logistics of concurrent construction operations. Allowances for these factors have been included in the cost estimate and schedule. The contractor has deployed additional resources to reinforce the initial tunnel liner and added concrete delivery methods to improve logistics, minimizing potential impact on the schedule for project completion.

 During 2010, OPG executed an amended Niagara Tunnel project credit facility for an amount up to $1.6 billion. As at September 30, 2011, advances under this facility were $815 million (December 31, 2010 – $690 million), which included $50 million of new borrowing during the third quarter of 2011.

May 24th 2012 -

Ontario Power Generation Inc. (“OPG” or the “Company”) reported its financial and operating results for first quarter of 2012 ending March 31st. 

Net income for the three months ended March 31, 2012 was $154 million compared to $153 million for the same period in 2011, an increase of $1 million dollars. Income before income taxes for the three months ended March 31, 2012 was $167 million compared to $188 million for the same period in 2011, a decrease of $21 million dollars.

As at March 31, 2012, OPG’s long-term debt outstanding was $4,784 million.

The report stated in part:

Niagara Tunnel

The tunnel boring machine (“TBM”) mining activity and TBM disassembly have been completed. Lining installation activities at the Niagara Tunnel continue. Installation of the lower one-third of the permanent concrete lining resumed on February 2, 2012 and reached 8,538 metres at March 31, 2012. This work had been temporarily interrupted to do reinforcement repair work in the 6,050 metre area of the tunnel. At March 31, 2012, restoration of the circular cross-section of the tunnel before installation of the upper two-thirds of the concrete lining was at 6,250 metres. Installation of the upper two-thirds of the concrete lining has progressed 5,588 metres. Contact grouting to fill the space between the concrete lining and impermeable membrane has progressed 3,562 metres, and pre-stress grouting to complete the attachment of the concrete liner with the surrounding rock was at 1,650 metres.

The Niagara Tunnel is expected to be completed within the approved budget of $1.6 billion and the approved project completion date of December 2013. Upon completion of the project, the average annual generation from the Sir Adam Beck generating stations will increase by approximately 1.6 TWh. The capital project expenditures for the three months ended March 31, 2012 were $59 million and the life-to-date capital expenditures were $1,203 million.

OPG also maintains a Niagara Tunnel project credit facility for an amount up to $1.6 billion. As at March 31, 2012, advances under this facility were $915 million, including $40 million of new borrowing during the first quarter of 2012.
 

August 26th 2012 -

Ontario Power Generation Inc. (“OPG” or the “Company”) today reported its financial and operating results for the three and six months ended June 30, 2012.

Net income for the second quarter of 2012 was $43 million compared to $109 million for the same period in 2011. Net income for the six months ended June 30, 2012 was $197 million compared to $262 million for the same period in 2011. Net income for the three months ended June 30, 2012 was $43 million compared to $109 million for the same period in 2011, a decrease of $66 million.

The report stated in part:

Niagara Tunnel

 The installation of the permanent concrete liner, as well as other lining and grouting activities continues at the Niagara Tunnel. The tunnel is expected to be completed within the approved budget of $1.6 billion, and by the approved completion date of December 2013. As at June 30, 2012, the life-to-date capital expenditures were $1.3 billion.

Lining installation activities at the Niagara Tunnel continue. At June 30, 2012, installation of the lower one-third of the permanent concrete lining reached 9,810 metres. The invert lining was complete on July 30, 2012. Restoration of the circular cross-section of the tunnel, before installation of the upper two thirds of the concrete lining, was at 8,432 metres and the installation of the upper two-thirds of the concrete lining has progressed to 7,100 metres, at June 30, 2012. In addition, contact grouting to fill the space between the concrete lining and impermeable membrane has progressed to 5,350 metres. The pre-stress grouting to complete the attachment of the concrete liner with the surrounding rock was at 4,100 metres.

The Niagara Tunnel is expected to be completed within the approved budget of $1.6 billion and the approved project completion date of December 2013. Upon completion of the 10.2 kilometre tunnel, an additional water flow of approximately 500 cubic metres per second will be diverted from the Niagara River, contributing to an increase of about 1.6 TWh of annual generation from the Sir Adam Beck generating stations. The capital project expenditures for the three and six months ended June 30, 2012 were $70 million and $129 million, respectively. The life-to-date capital expenditures were $1,273 million.

 OPG also maintains a Niagara Tunnel project credit facility for an amount up to $1.6 billion. As at June 30, 2012, advances under this facility were $950 million, including $35 million and $75 million of new borrowing during the three and six month periods ended June 30, 2012, respectively.

November 16th 2012 -

Ontario Power Generation Inc. (“OPG” or the “Company”) today reported its financial and operating results for the three and nine months ended September 30th 2012.

Net income for the third quarter of 2012 was $139 million compared to a net loss of $154 million in the third quarter of 2011. Net income for the nine months ended September 30th 2012 was $336 million compared to $108 million for the same period in 2011.

As at September 30, 2012, OPG’s long-term debt outstanding was $4,887 million ($4.887 billion dollars).

During the third quarter of 2012, OPG continued to execute a number of projects, including overhauls at Unit 3 of the Sir Adam Beck generating station.

The Niagara Tunnel project continues to progress. The installation of the permanent concrete liner was completed in the fourth quarter of 2012 while other lining and grouting activities continue at the Niagara Tunnel. The tunnel is expected to be completed within the approved budget of $1.6 billion and the approved project completion date of December 2013. OPG’s contractor, Strabag, has informed OPG that they expect to advance the completion date to mid-2013 and are developing options to further advance the schedule. As at September 30, 2012, the life-to-date capital expenditures were $1.3 billion.

Niagara Tunnel

Lining installation activities at the Niagara Tunnel continue. The restoration of the circular cross section of the tunnel was completed in the third quarter of 2012. Installation of the permanent concrete lining was completed during the fourth quarter of 2012. At September 30th 2012, contact grouting to fill the space between the concrete lining and impermeable
membrane had progressed to 8,238 metres. Pre-stress grouting, to complete the attachment of the concrete liner with the surrounding rock, was at 6,788 metres. . Upon completion of the 10.2 kilometre tunnel, an additional water flow of approximately 500 cubic metres per second will be diverted from the Niagara River, contributing to an average increase of approximately 1.6 TWh of annual generation from the Sir Adam Beck generating stations.

The capital project expenditures for the three and nine month periods ended September 30th 2012 were $58 million and $187 million, respectively. At September 30th 2012, the life-to-date capital expenditures were $1,331 million. OPG also maintains a Niagara Tunnel project credit facility for an amount up to $1.6 billion. As at September 30th 2012, advances under this facility were $995 million, including $45 million and $120 million of new borrowing during the three and nine month periods ended September 30th 2012 respectively.

OPG maintains a Niagara Tunnel project credit facility for an amount up to $1.6 billion.
 

March 8th 2013 -

Ontario Power Generation Inc. (“OPG” or the “Company”) today reported its financial and operating results for the year ended December 31st 20102.

Net income for the year was $367 million, compared to net income of $338 million for the year ended December 31, 2011.
 

As at December 31st 2012, OPG’s long-term debt outstanding was $5,114 million ($5.114 billion dollars).

All major tunnel lining activities at the Niagara Tunnel were completed in 2012, with the exception of pre-stress grouting to complete the attachment of the concrete liner with the surrounding rock. This activity had progressed to 9,525 metres as at December 31, 2012. In early March 2013, final testing is underway with water flowing through the Niagara Tunnel prior to declaring it in-service, more than nine months ahead of the approved project completion date of December 2013. Upon completion of the tunnel, the average annual generation from the Sir Adam Beck generating stations is expected to increase by approximately 1.5 TWh, depending on water flow. Life-to-date capital expenditures as at December 31, 2012 were $1.4 billion. Total costs of the project at completion are expected to be approximately $1.5 billion, compared to the approved budget of $1.6 billion.

During 2012, OPG continued to execute a number of projects, including overhauls at Unit 3 of the Sir Adam Beck generating station

 

Niagara Tunnel
 

All major tunnel lining activities at the Niagara Tunnel were completed in 2012, with the exception of pre-stress grouting to complete the attachment of the concrete liner with the surrounding rock. This activity had progressed to 9,525 metres as at December 31, 2012. Disassembly of the tunnel boring machine was completed in 2012.

In early March 2013, final testing is underway with water flowing through the Niagara Tunnel prior to declaring it in-service, more than nine months ahead of the approved project completion date of December 2013. Upon completion of the 10.2 kilometre tunnel, an additional water diversion capacity of approximately 500 cubic metres per second will increase annual generation from the Sir Adam Beck generating stations by an average of approximately 1.5 TWh, depending on water flow.

The capital project expenditures for 2012 were $231 million and the life-to-date capital expenditures as at December 31, 2012 were $1.4 billion. Total costs of the project at completion are expected to be approximately $1.5 billion, compared to the approved budget of $1.6 billion.

OPG also maintains a Niagara Tunnel project credit facility for up to $1.6 billion. As at December 31, 2012, advances under this facility were $1,025 million, including $150 million of new borrowing during 2012.

Significant commercial commitments:  Niagara Tunnel  2013 - $44 million


Construction in progress as at December 31st consists of the following:
Niagara Tunnel 2012 – 1.353 Billion
Niagara Tunnel 2011 – 1.122 Billion

 

May 16th 2013 -

Ontario Power Generation Inc. (“OPG” or the “Company”) reported its financial and operating results for the three months ended March 31, 2013. Net income for the first quarter of 2013 was $28 million compared to $154 million for the same quarter in 2012.

Mr. Mitchell added, “In addition to moderating prices, OPG had other successes in the first quarter that will benefit consumers. First among these was the completion of the 10-kilometre Niagara Tunnel below the approved budget and nine months ahead of the approved project completion date.

“This tunnel will provide comparatively inexpensive, clean hydroelectric power for many decades, serving our children and grandchildren – just as the original Sir Adam Beck station still serves Ontario after operating for almost a century.”  Looking ahead, Mr. Mitchell said, “The success at the Niagara Tunnel has provided important experience in planning, assessing, developing and managing a major project.
 

 Niagara Tunnel

In March 2013, the Niagara Tunnel was completed and declared in-service, approximately nine months ahead of the approved project completion date of December 31, 2013. This additional water diversion capacity of approximately 500 cubic metres per second will increase annual generation from the Sir Adam Beck GS by an average of approximately 1.5 TWh, depending on water flow. Total costs of the project are being finalized and are expected to be approximately $1.5 billion, compared to the approved budget of $1.6 billion.

Hydroelectric Generating Assets

With the consideration of current and future market conditions, OPG continues to evaluate and implement plans to increase capacity and maintain the hydroelectric generating assets. In March 2013, the Niagara Tunnel was completed and declared in-service which will increase annual generation from the Sir Adam Beck GS by providing an additional water diversion capacity of approximately 500 cubic metres per second.

 Niagara Tunnel Costs: 

Year to date: $72 million dollars
Life to date: $1,447 million dollars ($1.447 billion)

Approved Budget: 1,600 million dollars ($1.600 billion)
Planned In Service Date: December 2013
Completed below the approved budget and ahead of the approved project completion date.

Niagara Tunnel

In March 2013, the 10.2 kilometre tunnel was completed and declared in-service, approximately nine months ahead of the approved project completion date of December 2013. This additional water diversion capacity of approximately 500 cubic metres per second will increase annual generation from the Sir Adam Beck GS by an average of approximately 1.5 TWh, depending on water flow. Total costs of the project are being finalized and are expected to be approximately $1.5 billion, compared to the approved budget of $1.6 billion.

OPG also maintains a Niagara Tunnel project credit facility for an amount up to $1.6 billion. As at March 31, 2013, advances under this facility were $1,045 million, including $20 million of new borrowing during the first quarter of 2013.

As at March 31, 2013, OPG’s long-term debt outstanding was $5,409 million. The fair value of long-term debt is $6.060 billion dollars.

OPG maintains a Niagara Tunnel project credit facility for an amount up to $1.6 billion. As at March 31, 2013, advances under this facility were $1,045 million, including $20 million of new borrowing during the first quarter of 2013. 

OPG has entered into a number of forward start interest rate swap agreements to hedge against the effect of changes in interest rates for long-term debt for the Niagara Tunnel project.