TransCanada considers increasing its nuclear investments

Bruce Power is one of the more interesting partnerships in the energy business. Cameco Corporation, TransCanada Corporation, BPC Generation Infrastructure Trust, the Power Workers’ Union and the Society of Energy Professionals came together to form Canada’s first privately owned company focused on nuclear power. The company purchased a nuclear power station that included eight reactors with a rather spotty operating history. It is now reliably operating six of those reactors and is still in the process of refurbishing the last two of them. Bruce Power now supplies about 20% of the electricity in Ontario.

It is not surprising to me that a uranium mining and processing company like Cameco, or a union of power workers, or an engineering society would be interested in such a project, but it takes a bit of out of the box thinking to realize how nuclear power fits into the investment portfolio of a company like TransCanada whose main business is transporting natural gas via pipelines.

Apparently, TransCanada has enjoyed its experience in the nuclear business and is now looking to expand. According to an October 30, 2007 article in the Financial Post titled TransCanada cautiously jumps on nuclear bandwagon the company is investigating the possibility of building a new plant in Alberta, Canada’s fastest growing province.

Mr. Kvisle (TransCanada CEO Hal Kvisle), who a little more than a year ago dismissed the likelihood of nuclear power being used any time soon as an energy source to develop Alberta’s vast oilsands resource, said TransCanada could leverage its expertise at Bruce, in which a multi-billion-dollar refurbishment is underway, if it were to build a greenfield plant in Alberta.
“We’ve got an exceptionally competent nuclear development team at Bruce that has done very good job of guiding the refurbishment of the Bruce A plant, which in many ways is similar to a complete new build,” he said. “We have confidence that team would do a very good job of pursuing nuclear projects in Alberta if they make sense.”

Nuclear may make sense for TransCanada leadership in Alberta because there is a growing market for electricity. That is occurring at the same time that natural gas production in the province is declining. TransCanada is apparently thinking that natural gas fired power generation is not a good long term choice. Price increases are an inevitable result when there is a collision between rising demand and falling supply.