OPG reports 2015 first quarter financial results

Strong nuclear fleet performance and higher earnings from nuclear funds result in quarterly income of $234 million

TORONTO, May 22, 2015 /CNW/ - Ontario Power Generation Inc. (OPG or Company) today reported its financial and operating results for the three months ended Mar. 31, 2015.  Net income attributable to the Shareholder for the first quarter of 2015 was $234 million compared to $242 million for the same quarter in 2014. 

Tom Mitchell, President and CEO said, "The strong performance of our nuclear units benefited everyone in Ontario by producing clean power reliably at moderate cost.  The four units at Darlington showed their reliability by operating at 97.8 per cent of their capacity.  Refurbishment would extend the life of these high performing units."

Mr. Mitchell added, "Together, the ten units at Darlington and Pickering increased their output by 5 per cent in the first quarter this year, compared to last year.  Overall, OPG received an average of 6.2 cents per kilowatt hour for its power, continuing our record of holding down the overall prices paid by consumers."

Last year, first quarter income was $8 million higher because unusually cold weather resulted in higher than normal market prices.  OPG benefited from these prices particularly for production from 48 of its hydroelectric stations, which used to receive market electricity prices.  As of November 2014, these stations started to receive regulated prices, which will provide the Company with a more stable income profile.

Business Segment, Generating, and Operating Performance

OPG's income before interest and income taxes from the electricity generation business segments was $337 million in the first quarter of 2015 compared to
$346 million in the same quarter of 2014.  The impact of higher than typical market prices during the first quarter of 2014 for the 48 hydroelectric stations that received market prices was largely offset by the impact of new regulated prices for all of OPG's regulated facilities effective November 1, 2014 and income from all six new units of the Lower Mattagami River project that were placed in-service in 2014.

The nuclear waste management business segment recorded income before interest and income taxes of $9 million in the first quarter of 2015, compared to a loss before interest and income taxes of $34 million in the same quarter of 2014.  The improvement was primarily due to earnings on the Decommissioning Segregated Fund.

The decrease in income before interest and income taxes of $42 million for the Services, Trading, and other Non-Generation business segment was primarily a result of lower trading margins for electricity sold to neighbouring energy markets during the first quarter of 2015, compared to the same quarter in 2014.

Total electricity generated during the three months ended March 31, 2015 was 21.3 terawatt hours (TWh) compared to 20.5 TWh for the same quarter in 2014.  The increase was mainly due to higher nuclear generation as a result of fewer outage days at the Pickering nuclear station and excellent performance at the Darlington nuclear station.

The capability factor at the Darlington nuclear station was 97.8 per cent in the first quarter of 2015 compared to 96.0 per cent for the same quarter in 2014.  This improvement reflected a decrease in planned outage days in anticipation of a Vacuum Building Outage scheduled later in 2015 as well as a reduction in unplanned outage days.  The capability factor at the Pickering nuclear station improved to 72.9 per cent from 66.6 per cent in the first quarter of 2014, primarily as a result of a decrease in both planned and unplanned outage days.  The availability of OPG's hydroelectric generating stations remained at high levels.  The significant increase in thermal Equivalent Forced Outage Rate during the first quarter of 2015, was primarily a result of major repairs at the Lennox GS.

Generation Development

OPG is undertaking a number of generation development and refurbishment projects to support Ontario's long-term electricity supply requirements and operate a generation portfolio that is essentially free of greenhouse gases and smog-causing emissions.  Significant developments to date are as follows:

Darlington Refurbishment project

• The Darlington Refurbishment project is currently in the definition phase which is scheduled to be completed in 2015. The final budget and schedule for the refurbishment of the four units at the Darlington station are on track to be completed in 2015. The project's execution phase is scheduled to begin in 2016. Life-to-date capital expenditures were $1,617 million as at Mar. 31, 2015.
  
  
• There are a number of definition phase projects underway that are required to be completed in advance of the project's execution phase. These pre-requisite projects are tracking on plan in order to support the start of execution of the first unit's refurbishment in 2016.

Peter Sutherland Sr. GS (formally the New Post Creek project)

• In March 2015, OPG's Board of Directors approved a project to construct a new 28 MW generating station – Peter Sutherland Sr. GS on the New Post Creek near its outlet to the Abitibi River, with a planned in-service date in the first half of 2018 and an approved budget of $300 million. The station will be constructed through a partnership between OPG and Coral Rapids L.P., a wholly owned subsidiary of the Taykwa Tagamou Nation. OPG and the Independent Electricity System Operator have agreed to the terms for an energy supply agreement. The agreement is expected to be finalized by mid-2015.

FINANCIAL AND OPERATIONAL HIGHLIGHTS
		Three Months Ended
		March 31
(millions of dollars – except where noted)		2015		2014
	Revenue	1,355		1,387
	Fuel expense	157		149
	Gross margin	1,198		1,238
	Operations, maintenance and administration	665		670
	Depreciation and amortization	196		181
	Accretion on fixed asset removal and nuclear waste management liabilities	224		196
	Earnings on nuclear funds - (a reduction to expenses)	(231)		(160)
	Income from investments subject to significant influence	(11)		(13)
	Other net expenses	13		14
	Income before interest and income taxes	342		350
	Net interest expense	47		12
	Income tax expense	56		95
	Net income	239		243
	Net income attributable to the Shareholder	234		242
	Net income attributable to non-controlling interest ^1	5		1
Income (loss) before interest and income taxes
	Electricity generation business segments	337		346
	Regulated – Nuclear Waste Management	9		(34)
	Services, Trading, and Other Non-Generation	(4)		38
	Total income before interest and income taxes	342		350
Cash flow
	Cash flow provided by operating activities	455		428
Electricity generation (TWh)
	Regulated – Nuclear Generation	12.2		11.6
	Regulated – Hydroelectric
	Existing regulated hydroelectric stations	4.7		4.8
	Hydroelectric stations prescribed for rate regulation beginning in 2014	3.5		3.3
	Contracted Generation Portfolio ^2	0.9		0.8
	Total electricity generation	21.3		20.5
Average revenue (¢/kWh)
	Average revenue for OPG ^3	6.2		6.2
	Average revenue for all electricity generators, excluding OPG ^4	9.4		10.1
Nuclear unit capability factor (per cent)
	Darlington GS	97.8		96.0
	Pickering GS	72.9		66.6
Availability (per cent)
	Regulated – Hydroelectric	91.5		92.4
	Contracted Generation Portfolio – Hydroelectric	97.8		96.0
Equivalent forced outage rate
	Contracted Generation Portfolio – Thermal	22.9		3.0
Return on common equity for the twelve months ended March 31, 2015 and		8.2		8.5
	December 31, 2014 (per cent) ^5
Funds from operations interest coverage for the twelve months ended March 31, 2015 and		3.0		2.8
	December 31, 2014 (times) ^5

^1	Relates to the 25 per cent interest of a corporation wholly owned by the Moose Cree First Nation in the Lower Mattagami Limited Partnership.
^2	Includes OPG's share of generation volume from its 50 per cent ownership interests in the Portlands Energy Centre (PEC) and Brighton Beach.
^3	Average revenue for OPG is comprised of revenues from regulated prices established by the OEB, market based revenues, and revenues from energy supply agreements.  Average revenue for OPG excludes OPG's share of revenues and generation from PEC and Brighton Beach.  The 2014 average revenue for OPG also excludes the revenue from the cost recovery agreement for costs related to the Nanticoke GS and Lambton GS which were shut down in 2013.
^4	Average revenue for other electricity generators is comprised of hourly Ontario demand multiplied by the hourly Ontario electricity price (HOEP), plus total global adjustment payments, plus the sum of hourly net exports multiplied by the HOEP, less OPG's generation revenue.
^5	"Return on common equity" and "Funds from operations interest coverage" are non-GAAP financial measures and do not have any standardized meaning prescribed by US GAAP.  Additional information about these measures is provided in OPG's Management's Discussion and Analysis for the period ended Mar. 31, 2015, under the heading, Supplementary Non-GAAP Financial Measures.

Ontario Power Generation Inc. is an Ontario-based electricity generation company whose principal business is the generation and sale of electricity in Ontario.  Our focus is on the efficient production and sale of electricity from our generation assets, while operating in a safe, open and environmentally responsible manner.

Ontario Power Generation Inc.'s unaudited interim consolidated financial statements and Management's Discussion and Analysis as at and for the three months ended Mar. 31, 2015, can be accessed on OPG's web site (www.opg.com), the Canadian Securities Administrators' web site (www.sedar.com), or can be requested from the Company.

SOURCE Ontario Power Generation Inc.

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