New Nuclear Opportunities at Point Lepreauby

Dr. Terry Thompson, Senior AdvisorMZConsulting Inc

NBSO 2008 Energy ConferenceDelta Brunswick Hotel, Saint John, NB2008 May 15-16

*BackgroundAugust 2007- government announced a Feasibility Study for new nuclear plant at Point LepreauTo be conducted and paid for by Team CANDU New Brunswick (TCNB)AECLSNC-Lavalin NuclearHitachi CanadaGE-Hitachi Nuclear Energy CanadaBabcock &Wilcox Canada

*Team CANDU New Brunswick Feasibility StudyEvaluate potential for ACR-1000 ObjectivesPrivate sector investment and riskEnergy cluster for NBJan 2008 - study submitted to government 4 Feb 2008 - NBDOE press conferenceAnnounced TCNB report received, under review

*MZConsulting Viability StudyAugust 2007- NBDOE engaged MZConsulting to perform an independent Viability StudyHigher level study than TCNB FSObjectivesFindings and Considerations for governmentWorkable business structurePath forward for successDecember 2007- report submitted to NBDOEFeb 2008 - Executive Summary released to public

*MZConsulting Viability Study

*Basis of MZC StudyAssessed:MarketProject StructuresBusiness CaseLocal BenefitsPotential Role for New Brunswick

*Key InputsKey ReferencesISO New England Scenario AnalysisRGGI Web SiteNBSO 10-Year OutlookNortheast Gas Association Market OverviewCRS Report for CongressIEA OutlookOPA IPSPCERI Report UK Nuclear ConsultationWNA Web SiteMoodys Report on Nuclear PowerLacy Report on Attitudes of Financial SectorPress Releases and Media reportsTechnical papers and other web sites

*Viability Study OutputsFindings that reflect the views and information available in the marketConsiderations for New Brunswick when reviewing the Team CANDU NB Feasibility StudyPotential Role for New Brunswick

*Market FindingsThere is a potential market for the output of an ACR-1000 plant LNG and natural gas generation is the major competition The Maritime market has the potential to take half the output of a new nuclear unitThe New England market has potentialLand transmission should be sufficient

*Project Structure FindingsA nuclear project has never been implemented on a merchant plant basis Success with this model will require long term commitments The Project cannot take significant First of a Kind ACR-1000 risk

*Business Case FindingsThe economics of the project show that under a suitable set of conditions the project can be viable The viability of the project is dependent upon the structureEnvironmental issues are becoming more prominent in both the domestic and export markets

*Economic Benefits FindingsThis project can provide an impetus to the provinces goal of creating an energy cluster.The province should receive demonstrable benefits from the project in return for hosting the First of a Kind ACR-1000.Sustainability of the jobs related directly to the implementation of the ACR-1000 will be directly related to the success of the ACR-1000 in the global market. Emphasis should be more on knowledge-based infrastructure than on fabrication.

*Potential Role for New BrunswickNB brings key attributes to the tableWorld class nuclear operatorLicensed nuclear siteCommunity supportWillingness to host the FOAK ACR-1000Should be fairly compensatedPrice for SiteLocal benefitsOption for eventual financial involvement should the long-term investment opportunity be sound

*SummaryThere is a potential market for an ACR-1000 plantboth domestic and for exportA merchant plant model has many issues Project can be economically viable NB brings a lot to the tableSignificant knowledge localization is important

*Path ForwardConsider if critical success factors can be metDemonstrated marketFOAK risks managedRobust business caseStrong project proponent to take completion riskSustainable, knowledge-based nuclear infrastructure for NB If governments conditions metSite Preparation License ApplicationEnvironmental AssessmentProposed In Service 2017

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Thank You

*Other FindingsFinancial industry sees regulation as risky as marketFirst US mover (NRG) is proposing merchant plantRegulated utilities in more advantageous position in intermediate termKey merchant plant risk is completion risk

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