June 26, 2010 Canadian Powerhouse

Volume 13 | Issue 3

Toronto-headquartered Ontario Power Generation established itself as an industry leader in clean, renewable energy expertise, production and

As its name implies, Ontario Power Generation (OPG) generates and sells electricity all across Ontario. Along with this enormous territorial footprint, the company possesses a generating portfolio that boasts more than 21,000 megawatts (MW) of total capacity, making the Toronto-headquartered enterprise one of North America’s largest power generators.

Its robust portfolio includes 65 hydroelectric, three nuclear and five thermal generating stations and two wind power turbines. (OPG also co-owns the Portland Energy Center and the Brighton Beach gas-fired generating stations.)

OPG’s focus is straightforward: efficient production and sale of electricity in a safe and environmentally responsible fashion. It accomplishes its mandate via three major corporate strategies: performance excellence in generation, safety and environmental responsibility; generation development through capacity expansion or life extension opportunities; and by developing, acquiring and maintaining a talented and committed workforce to sustain ongoing operations and successfully deliver OPG’s portfolio of planned projects. Currently OPG, which generates about twothirds of power produced in Ontario, employs about 12,000 people from communities across its service region.

A PUBLIC POWER COMPANY
Incorporated in December 1998, OPG is a commercial company that is 100-percent owned by the Province of Ontario. “As such, the provincial government sets our broad priorities,” says John Murphy, OPG’s executive vice president-hydro. “One priority focuses on the hydroelectric fleet, making sure we have the right investment strategies to gain maximum energy in the most efficient manner from existing assets. But we’re also mandated to explore new hydroelectric development opportunities, either by ourselves or through partnerships.”

Continues Murphy: “For development projects, we look across the entire province to determine the ones that make the most economic sense and would be the easiest to accomplish.”

But that’s not to say that anything is really easy. Consider the front end. “That’s where the hardest work resides: getting the necessary regulatory approvals, gaining stakeholder support and finding the right contractors,” says Murphy.

OPG’s first new hydroelectric project was relatively diminutive in scope (it involved a small and new 12.4MW generating station in northwestern Ontario) but enormous in terms of learning curve. “It involved a new model as well as the engagement of First Nation partners,” informs Murphy.

MATTAGAMI PROJECTS
OPG’s mandates led the enterprise into two major development projects, specifically involving the upper and lower parts of the Mattagami River, which flows north into James Bay.

With the Upper Mattagami Project, OPG is adding more clean renewable energy by redeveloping the Wawaitin, Sandy Falls, Lower Sturgeon and Hound Chute generating stations located in Northeastern Ontario. “These are a group of small hydroelectric plants that were approaching the end of their life,” describes Murphy. “Some were about 100 years old. We looked at the existing opportunities and came up with a game plan to replace the outdated facilities with state of the art equipment.”

This was not only a major investment in clean energy for Ontario but it also created hundreds of jobs at peak, about 500 people were working on the project. Construction began in 2008 with Kiewit-Alarie Partnership (KAP) as the design/build contractor. It’s expected to be completed in 2011. KAP is a partnership between two of the largest construction firms operating in Canada: Peter Kiewit & Sons Company (a North American business with offices in Milton, Ontario) and Leo Alarie and Sons Construction LTD of Timmins, a subsidiary of the Aecon Infrastructure Group.

According to OPG, when the project is completed, the upgraded generating stations’ combined capacity will virtually double. “Capacity will increase from 23 to 44MW, using the same amount of water,” reports Murphy.

Annual energy will increase from more than 100 million to more than 200 million kilo watt hours. This represents enough electricity to meet the needs of more than 20,000 households.

“In starting with the Upper Mattagami project, we focused on accomplishing something that isn’t often done well: demonstrating that it is possible to undertake such complex work and do it safely, in an environmentally responsible fashion and within budget and on schedule,” says Murphy.

Again, this involves a great deal of front-end work. “We spent an extensive amount of time on the required upfront work that includes geotechnical evaluation and selecting the best contractors through the bid process; that is, the contractors that shared our values,” says Murphy. “We’re now seeing the benefits of such diligence. Work is nearing completion with positive safety and environmental records and has proceeded on budget and on time.”

The subsequent Lower Mattagami Project is much larger. Indeed, it is the largest northern hydroelectric generating construction project in 40 years. “It’s budgeted at $2.6 billion and it will add 440 MWs of capacity of clean, renewable power to the Mattagami system,” reports Murphy.

Added capacity will generate enough electricity to power between 330,000 and 440,000 homes. In addition, it will create hundreds of jobs within the construction industry and the local and First Nation communities. Specifically, approximately 600 people will work on the project each year, with a peak of more than 800 during the five years of construction. In total, the project will create more than 4,000 person-years of direct and indirect employment. Further, the Moose Cree First Nation, OPG’s business partner in the project, will have up to a 25-percent equity share.

Murphy explains the business partnership with the Moose Cree First Nation: “Historically, previous regional projects had negative impacts on the community. Now, decades later, we’ve been working very hard with the First Nation to quantify the impacts and redress what happened in the past. So we resolved past grievances and looked ahead to new development, which would benefit OPG in terms of creating additional clean energy as well as provide economic opportunity for the First Nation. In this business partnership, the First Nation realizes job opportunities and shares in revenue stream. The success of any hydroelectric project hinges on positive community engagement. We believe the First Nation will be a strong and valued partner in the next 100 years.”

The Lower Mattagami project has four parts: rebuilding Smoky Falls Generating Station and adding new generating units at Harmon, Kipling, and Little Long generating stations. Making use of existing sites creates valuable renewable energy with minimal environmental disruption. Development will expand the capacity of four existing stations from 486 MW to 924 MW of dispatchable, peaking power.

“So it’s not only clean energy that we’re helping to provide but also clean energy of a significant size,” comments Murphy.

Project construction also provides significant job opportunities in an area of Ontario where it is much needed. The project will directly employ about 600 people, to a maximum of 800 people during peak periods.

According to OPG, the $2.6 billion budget includes the design/build contract – OPG awarded the contract to KAP – as well as contingencies, interest and other OPG costs including project management, contract management, impact agreements with First Nation communities, and transmission connection costs.

“A lot of learnings came out of the Upper Mattagami Project that were directly transportable to the Lower Mattagami project,” observes Murphy. “Lessons learned on the smaller scale project directly corresponded to the larger project. We’re working with the most appropriate contractors and the best engineering firms, and we’ve done extensive planning to minimize risks associated with this kind of project. We’re confident that as we move forward, this project will represent the high level of environmental responsibility and safety standards that we insist upon.”

STRONG SAFETY FOCUS
As Murphy indicates, safety is a core company value. “It’s more than just a business priority,” he explains. “Priorities can change, but core values remain forever entrenched.”

OPG’s goal is zero injuries in all of its facilities and projects, and it applies its own standards to its contractors and suppliers. “And these standards are incredibly high,” he emphasizes. “Even if we have a near-miss event or observe something that appears unsafe, we connect with the highest senior level – for instance, with a contractor that provides us service – to go beyond investigation at the working level. This reinforces that we are quite serious about safety. We believe this kind of urgency will help us succeed in our quest for zero injuries.”

The company has come a long way in that mission, he reports. “Today, we have very few incidences.”

He points out that such a strong safety focus is not only ethically correct but it also improves overall performance and efficiency. “It fosters a much more rigorous program related to how work is planned and executed, and it entails commitment from everyone, from the workers up to the supervisors and right up to the highest levels of management.”

As OPG has discovered, employees committed to one operational element are generally committed to all. This, in turn, leads to a positive bottom line. As a result, everyone benefits – the company, the partners and the community serviced. There’s power in this approach, as OPG has demonstrated in numerous ways.

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