Higher returns from funds set aside to deal with used nuclear fuel and decommissioned nuclear stations have helped push earnings higher at Ontario Power Generation.
The profit increase came despite declines in both the amount of power OPG produced, and the average price it received.
The company also notes in its second quarter report that costs have crept as much as $300 million higher at its project to refurbish the Darlington nuclear generating station.
The cost increase – which OPG says amounts to two or three per cent of the total cost – was disclosed last month in a report to the Ontario Energy Board.
OPG, which is owned by the Ontario government, says its net profit rose to $116 million from $73 million a year ago. All but $1 million of that flows to the province, with the remainder going to a corporation owned by the Moose Cree First Nation, which is a partner in the Lower Mattagami River hydro project.
The earnings on its nuclear funds were a big part of the increase, climbing to $217 million from $173 million.
OPG said increased output from hydro stations on the lower Mattagami River that came into service earlier this year also boosted revenue and profit.
It also says prices on power sales to neighbouring states and provinces this year have “significantly increased” this year, adding to profit. Although trading revenue isn’t broken out in the statements, the category in which it is included jumped to $34 million from $20 million a year ago.
Higher spending for maintenance during planned outages at the Darlington nuclear station offset part of the profit increase. That in turn was balanced off by higher production from the Pickering station.
The company’s sales revenue slipped to $1.098 billion from $1.19 billion a year earlier, as the amount of power OPG generated declined one per cent.
The average price OPG gets for its output also slid, to 5.1 cents a kilowatt hour from 5.6 cents a year earlier. Most of OPG’s output is sold at regulated prices considerably lower than the market rate.
The average market price for all other generators during the period was 10.7 cents a kilowatt hour, down from 11.1 cents a year earlier.
The company says it’s continuing to cut staffing, largely through attrition, to curb expenses.
The number of employees, which stood at 11,500 at the end of 2010, is now down to about 9,600.
The bump in the cost of the Darlington refurbishment is under control, OPG says. The project is still in the early stages, with work on the reactors not due to start until 2016.
“OPG remains confident that the cost of the Darlington Refurbishment project will remain less than the $10 billion high confidence estimate in 2013 dollars, excluding capitalized interest and escalation. OPG continues to assess the effectiveness of the measures taken,” the company said in a release accompanying the second quarter statements.
The $10 billion cost estimate is one way of stating what the project is likely to cost.
OPG has also said that including interest and contingency, the completion cost will be $12.9 billion.