Managing Nuclear Power Managing Nuclear Power Stations for SuccessStations for Success

Gregory Smith Senior Vice President

Darlington Nuclear Station Ontario Power Generation

to theCanadian Nuclear Society

June 12, 2006Toronto, Ontario

CONTENTS

OPG Nuclear Performance Update Continuous Improvement Strategy

Challenges Going Forward

New Nuclear

Wrap Up

OPG Nuclear: 2005 Highlights

Darlington -- best performing multi-unit nuclear station in Canada; 2nd consecutive year

Four OPG nuclear units among 10 best performing CANDUS in 2005

Pickering A, Unit 1 returned to service

Pickering A receives Five Year licence from CNSC

Decision made not to return Pickering A, Units 2 & 3 to service

New Mandate negotiated with Shareholder

Pickering A and B

Darlington

OPG MandateOPG Mandate

Our Mandate Targets Nuclear Improvement

Operate with a commercial focus Improve performance -- emphasis on nuclear Benchmark against the best Expand generating capacity - hydroelectric

OPG’s Nuclear Performance is Improving

2003

37.6

76.4

8.4

0.91

81.5

111

2004 2005

Production (TWh) 42.3 45.0

Capability Factor (%) 80.4 83.8

Forced Loss Rate (%) 7.6 5.35

All Injury Rate (#/200,000 hrs worked) 1.25 1.06

Nuclear Performance Index 70.7 76.4

Event Free Day Resets 40 33

Decision not to Refurbish Pickering A, Units 2&3 was a Sound Business Decision

Consistent with our Mandate’s commercial focus Refurbishing Units 2 & 3 was

technically feasible… …but commercially unjustified due

to higher financial risk Units 2 & 3 were in poorer

condition than Units 1 & 4

Enhanced OPG’s credibility Allows OPG to continue to improve

performance at its 10 operating units

Pickering A (foreground)

People are the Key to Achieving our Performance Goals

Nuclear energy is a people intensive business. Improve the performance of the people and you improve plant

performance

Pickering Darlington

OPG has has made Significant Progress in Improving Significant Progress in Improving Human PerformanceHuman Performance

Event free-day resets are a key HP metric

“Events” = human actions with negative consequences

Fewer is better From 223 to 33 in four

years – 84% reduction0

50

100

150

200

250

2001 2002 2003 2004 2005

223

153

111

4033

OPG is Committed to Continuously Improving its Nuclear Operations

Maintain Focus on Excellent Safety Performance

Put People First

Improve human performance, leadership & productivity

Attract highly qualified young people

Improve material condition of the plant

Reduce forced outages through improvements in equipment reliability

Optimize planned outages

Reduce maintenance backlogs

Mitigate technological risks through comprehensive inspection & testing programs

Ensure availability of parts and proactively address obsolescence

Build Effective Leadership Behaviours

Each OPG Nuclear Station Has a Specific Performance-Improvement Strategy

Path to ExcellencePickering B Darlington “Navigator”

EACH STRATEGY IS COMMITTED TO IMPROVING

• Human Performance • Station Reliability• Leadership Behaviours

Darlington

Maintain performance as Canada’s top performing multi-unit nuclear station through: improved human performance improved plant performance leadership behaviours

Move to three-year outage cycle Outage Work at Darlington, Unit 3

Human Performance - Station Reliability - Leadership Behaviours

Pickering B

Achieve and sustain 85% capacity factor and 5% forced loss rate by 2007

Complete inspection & maintenance of all fuel channels (SLAR)

Move to 40 day outages

Pickering B, Unit 8 Outage

Human Performance - Station Reliability - Leadership Behaviours

Pickering A

Continue to improve plant reliability through: improved equipment reliability preventive maintenance reduced backlogs

Successfully manage safe-storage of Units 2 and 3

Feeder Tube Inspections at Pickering A

Human Performance - Station Reliability - Leadership Behaviours

Challenges Going Forward

Feeders

Supply Chain

Life Extension

Human Resources Pickering B, Unit 6 Planned Outage

• Anticipate replacement in planned outages

• Mitigation strategies:• Inspections• Advanced Stress Analysis• Titanium Injection• Weld Overlay• Advanced Cut & Weld Tooling

• Management strategies:• Advancing feeder replacements where

beneficial• Aligning business plans with most likely

replacement schedule• Three year outage cycle

Feeder Tubes

• Improve procurement engineering and purchasing

• Improve materials planning and align with the outage and on-line work management processes

• Implement process improvements to better align procurement with the safety significance of components

• Maintain qualified supplier base for work programs

Supply Chain

Life Extension

Maintain Community Confidence/“Licence to Operate”

Complete Plant Condition Assessment for Pickering B in 2007

Begin Environmental Assessment process

Undertake safety reviews required by CNSC

Conceptual engineering for replacement of components such as:

feeder tubes, fuel channels; steam generators

Project plan and business case must be approved by OPG Board

Pickering B life-extension decision needed by 2008 to give time for engineering, planning, procurement

Pickering B (foreground)

Darlington

Strengthening Human Resources…because

OPG needs highly qualified employees to support operations and nuclear life extension

Workforce Demographics over 30% retirements at OPG

nuclear in skilled trades and technical staff in next 5 years

Life-extension/Refurbishment/New Build activity expected to increase in North America/worldwide

Intense competition for qualified people is expected

Pickering A, Unit 1, refurbishment

Strengthening Human Resources…through

Leadership Development WANO programs visits to high-performance plants rotations and secondments

Leadership behaviours delivering on commitments acting with integrity

Recruitment visible presence in the community,

high-schools, colleges, universities

Darlington Employees

New Nuclear is not part of OPG’s mandate

OPG sites could be considered as possible sites for nuclear new build

If shareholder asks, OPG would consider participating in new nuclear based on: our expertise in earning regulatory approvals; operating nuclear

facilities.

Bottom Line: “Performance Speaks for Itself” Performance excellence key to participating in new nuclear

New Nuclear?

Summary: OPG’s Approach to Managing Nuclear

Assets

Build exceptional human performance Focus on understanding plant

condition Implement preventative, not reactive,

maintenance Move to shorter outages Enhance inventory/procurement

management Plan ahead

Learn from others

Managing Nuclear Power Managing Nuclear Power Stations for SuccessStations for Success

Gregory Smith Senior Vice President

Darlington Nuclear Station Ontario Power Generation

to theCanadian Nuclear Society

June 12, 2006Toronto, Ontario