OPG reports 2021 financial results

Toronto, ON – Ontario Power Generation Inc. (OPG or Company) today reported its financial and operating results for 2021, with net income attributable to the Shareholder of $1,325 million, compared to $1,361 million for the same period last year.

Fourth quarter highlights include:

Darlington Refurbishment

The four-unit Darlington Refurbishment project has reached a significant milestone with the commencement of the reassembly of Unit 3 and, in February 2022, the refurbishment of Unit 1, the third unit to be overhauled. “For the first time since the project began, we are refurbishing two units concurrently,” said Ken Hartwick, OPG President and CEO. “The detailed planning, innovations and lessons learned, including COVID-19 safety measures, over the course of the project have set the team up for success as we continue the refurbishment of the Darlington station.”

Darlington small modular reactor technology development partner

In December 2021, OPG announced that it would collaborate with GE Hitachi Nuclear Energy with the goal of deploying Canada’s first grid-scale small modular reactor (SMR) at the Darlington New Nuclear project (DNNP) site. This clean energy project is anticipated to be completed as early as 2028, pending regulatory approvals. OPG expects to commence site preparation activities in 2022 and to apply to the Canadian Nuclear Safety Commission for a licence to construct application by the end of the year.

“Nuclear energy is a proven zero emissions baseload energy source that will help OPG achieve net-zero carbon emissions and assist with the economy-wide decarbonization. As a new source of energy, the nuclear energy potential of SMRs is critical in combating climate change,” said Hartwick. “Beyond the clean energy benefits, this project will drive employment and growth across Canada’s nuclear supply chain.”

Renewable hydroelectric facilities

OPG continues to execute on an extensive overhaul program at its hydroelectric facilities across Ontario to ensure this clean and renewable power can support the province for decades to come. Investments are also being made to grow OPG’s clean generation portfolio in the United States. “As a company, we have made a commitment to reach net-zero carbon emissions by 2040 and investing in our hydroelectric assets is key to reaching that goal,” said Hartwick.

People and culture

Building upon the Company’s organizational values of safety, integrity, excellence, and people and citizenship, OPG will launch its Equity, Diversity and Inclusion (ED&I) Strategy externally in March 2022. The strategy will serve as OPG’s roadmap towards ED&I excellence. OPG will rely on external benchmarks to be accountable, measure progress and ensure advancement of the strategy – to become one of Canada’s Best Diversity Employers and a global ED&I best practice leader. “We are committed to accelerating equity, celebrating diversity, and fostering a culture of inclusion,” said Hartwick. “Diverse workforces are at the core of creating environments where everyone can work safely and to their full potential every day.”

“I also would like to thank OPG’s supportive and dedicated workforce, project partners, and suppliers across the province who have been working diligently and safely as they kept the lights on for Ontario’s homes, hospitals and businesses during the ongoing COVID-19 pandemic,” said Hartwick. “Our workers’ commitment to safety and excellence has helped Ontario power through these difficult and demanding conditions.”

Net income attributable to the Shareholder

The decrease in net income attributable to the Shareholder for 2021, compared to 2020, was mainly due to lower electricity generation from the regulated nuclear stations, as planned, due to the actions taken in 2020 to ensure grid reliability during the onset of the COVID-19 pandemic. OPG has begun to return to customers the net favourable impact on electricity revenue net of operations, maintenance and administration (OM&A) expenses arising from the Company’s pandemic response over 2020 and 2021 of
$47 million, as part of the Ontario Energy Board (OEB) approved settlement agreement on OPG’s application for regulated prices for nuclear electricity generation for the 2022-2026 period.

The decrease in net income was partially offset by higher earnings from OPG’s portfolio of combined cycle gas turbine (combined cycle) plants in Ontario acquired in April 2020, and lower income tax expense primarily due to a higher amount of income tax expense deferred as regulatory assets compared to 2020 and the impact of lower earnings before taxes.

On November 15, 2021, the OEB issued a written decision on OPG’s application for regulated prices for nuclear electricity generation for the 2022-2026 period. The decision and subsequent order implementing the new regulated prices reflect the terms of an OEB-approved settlement agreement reached by OPG and intervenors on most of the issues in the application, provide support for the remainder of the Darlington Refurbishment project and OPG’s advancement of a SMR at the DNNP site, and complete the prudence review of the Heavy Water Storage and Drum Handling Facility (HWSF) project costs. The approved rate base amount for the HWSF is lower than the cost of the asset, which resulted in a charge to earnings before interest and taxes of $111 million in the fourth quarter of 2021. An effective date of January 1, 2022 was approved for the new regulated prices. The base regulated price for OPG’s hydroelectric electricity generation for the 2022-2026 period is frozen at the approved 2021 regulated price. The resulting average residential customer bill impact from changes in OPG’s regulated prices is less than 0.2 per cent annually or approximately $0.19 on a typical monthly residential customer bill each year over the 2022-2026 period.

About OPG

As a global climate change leader and the largest, most diverse electricity generator in the province of Ontario, OPG and its family of companies are helping lead the charge to a post-carbon economy.

Ontario Power Generation Inc.’s audited consolidated financial statements and Management’s Discussion and Analysis as at and for the year ended December 31, 2021, 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.