Keith Wettlaufer has had a distinguished career in a number of industries, including automotive, retail, flight simulation, professional services, product distribution, and most recently nuclear power. He has held senior positions including CFO, CEO, and EVP, and has always played a significant role in strategic and business planning. His experience also includes a number of successful turnarounds and restructurings, where valuable lessons were learned that are applicable in any situation. And his recent work with Ontairo-based Bruce Power brought all of that background to good use.
Formed by a limited partnership between Cameco Corporation, TransCanada Corporation, BPC Generation Infrastructure Trust, the Power Workers Union, and the Society of Energy Professionals, Bruce Power provides more than 6,300 megawatts of power to southern Ontario’s expansive infrastructure. Having concluded a $4.8 billion investment program in 2012 to restart its final two units—making a total of eight split between the Bruce A and Bruce B generating stations—Bruce Powers is one of the world’s largest energy providers of its kind.
But beyond being a significant energy provider, Bruce Power’s business model is similar to a very large income trust, as described by Wettlaufer, who recently retired from Bruce Power as CFO and executive vice president of commercial services. By nature, the business is both profitable and sustainable. “In my career, I have managed many risk factors in different businesses,” Wettlaufer says. “The difference here is a nuclear risk aspect, and dissolving that risk has to do with understanding nuclear energy. Once this is explained, it’s clear to see why nuclear energy is a good place for investors to invest their money. Nuclear is a long-term proposition that requires planning 10–20 years ahead.”
Bruce Power was founded in 2001 in the wake of a restructuring of the Ontario energy market formerly dominated by Ontario Hydro, which was divided in 1998 into generation (OPG) transmission and distribution (Hydro One) and the privatization of Bruce Power, the 2,300-acre Lake Huron site, taken over by private energy investors. At that time, British Energy entered into a long-term lease for the Lake Huron site but sold its 82 percent interest in Bruce Power in 2001 to the group. In 2003, Bruce Power got underway restarting its first two of four CANDU reactors at the Bruce A generating station.
By the Numbers
Annual operating budget
Acreage of Bruce Power generating site
Megawatts of power generated by Bruce Power
Employees at Bruce Power
Number of Bruce Power generating stations
Percentage of Ontario’s power needs supplied by Bruce Power
Total generating units operated by Bruce Power
“For power generation, there is a base-load requirement that must always be met, and because nuclear power is highly reliable, stable, and emission-free, it is the best option for Ontario where eliminating its coal-fired plants is a priority,” Wettlaufer says. “This is why the company invested in restarting these units.”
Additionally, in response to intense regulation and maintenance requirements, nuclear assets require constant attention to operate safely and meet nuclear code. With base-load requirements limited to only a few options, and Bruce Power’s foresight regarding other providers’ generators in the grid nearing “end of life,” Bruce Power restarting its dormant units guarantees a larger stake in the Ontario power market. “When reactors near the end of their life, you can shut them down, or you can refurbish them to work for another 30 or 40 years, and that’s what Bruce Power has done,” Wettlaufer says.
Wettlaufer, who was with Bruce Power for seven years, came because of an opportunity to further develop the company and direct it towards future profitability. “I came to Bruce Power because it gave me an opportunity to manage and develop areas that I truly enjoy—corporate finance, power marketing, IT, supply chain, and the application of lean manufacturing,” Wettlaufer explains.
With lean manufacturing principles in mind, under Wettlaufer’s leadership Bruce Power proceeded with renewed vigour and continuous improvement. At the same time, the IT department conducted a major systems overhaul to streamline functionality in operational management, maintenance, materials management, and contracted services. This massive two-year project was completed on time and on budget. The principle of innovation also carried over to the company’s power-marketing department. By intensifying involvement in trading and hedging strategies, the department added more than one billion dollars of worth to Bruce Power’s results over the last five years.
“Part of our investment strategy has to do with capital provided by our owners, but we also have augmented that with our own independent financing,” Wettlaufer says. “We have a long-term, 23-year, $200 million financing arranged with a group of life-insurance companies, and we have also arranged $700 million of revolving credit lines and letter of credit financing that can be better used to address our business and pension-plan funding requirements.”
Nearly half of Ontario’s energy needs are supplied by nuclear power, and with all eight CANDU units now in operation, providing a total output of 6,300 megawatts, Bruce Power will be delivering more than 25 percent of Ontario’s energy needs. And while Wettlaufer has taken the success of his work at Bruce Power to begin pursuing new independent consulting efforts, he believes all of the mechanisms—including the expanded base load, streamlined internal processes, and dynamic power marketing program—are in place to ensure continued growth and profitability over the coming decades.