Wed Aug 30, 2006
GE backs Plutonic hydro scheme
Vancouver Sun
Author: Michael Kane

Plans for the biggest independent power project in British Columbia moved significantly closer to reality Wednesday with the announcement that a subsidiary of General Electric is prepared to provide financing if remaining hurdles are overcome.

Vancouver-based Plutonic Power Corp. has granted Connecticut-based GE Energy Financial Services the exclusive right to make a $100-million equity investment and provide $400 million in debt financing for its East Toba River and Montrose Creek run-of-the-river hydro project just north of Powell River.

Financing is subject to Plutonic securing key permits, agreements with first n0ations and other interested parties, and a satisfactory fixed-price contract with a builder for engineering, procurement and construction.

In return for the equity investment, Plutonic will provide GE with a 49-per-cent equity stake and 60-per-cent economic interest in the project, which is expected to produce enough power to meet the annual energy needs of more than 75,000 homes. After 35 years, the economic interests of GE will convert to 49 per cent.

GE will also have the right to match any equity investment offer that Plutonic receives for its Rainy River hydro project in Howe Sound, which could produce enough electricity for 5,000 homes.

Last month, BC Hydro agreed to buy electricity from the two renewable energy projects -- and 36 more from other companies -- to reduce the province's growing reliance on imported electricity.

Plutonic's two projects will supply about 752 gigawatt hours of energy each year by diverting water from a river at high elevations and feeding it through an underground pipe to a turbine to generate energy. The water is then returned to the river without altering existing flow or water levels.

Construction could start as early as January, Plutonic president Donald McInnes said in an interview.

"We're very excited about getting the financing in place, it's massive. It is a huge piece of the risk taken out for our shareholders because our company, at $3 a share, is valued at $55 million. We've gotten someone willing to put up $100 million of cash which means that the people who provide debt financing to this kind of project can now participate."

GE has already provided $2.5 million toward Plutonic's $12.66 million performance bond with BC Hydro "because we absolutely do anticipate that this project will proceed," Kevin Walsh, managing director and leader of GE Energy Financials' renewable energy team, said in an interview. "We have great confidence in Donald and his team."

Walsh said the project "aligns nicely with GE's ecomagination initiative to expand the company's cleaner energy products and reduce greenhouse gas emissions."

John McIlveen, a senior analyst with Dundee Securities in Toronto, hailed the deal as "definitely good news in terms that Plutonic [has] locked up the entire project financing and met [its] immediate needs. There is nothing guaranteed but it seems [it has] one major party willing to step up to the plate."

Plutonic shares closed down three cents at $2.91 on the TSX Venture Exchange Wednesday after trading as high as $3.50 on relatively heavy volumes.

mkane@png.canwest.com

(c) The Vancouver Sun 2006

Plutonic and GE will both be present at IPPBC annual conference October 29-31

As both exhibitors and sponsors.

Your can raise your company’s profile through sponsorship or exhibitor space.

See www.ippbc.com/2006_conference or call 604 461-4778