Plutonic, GE Energy Financial to develop C$4 billion B.C. projects

Plutonic Power Corp. and GE Energy Financial Services have agreed to partner on a bid to develop more than 1,000 MW of hydroelectric capacity at 21 sites in the Upper Toba Valley and Bute Inlet along British Columbia’s southwestern coast.

The companies said the joint investment, with capital costs of about C$4 billion (US$3.76 billion), would represent the largest single private sector investment in hydropower generation in Canada. The companies announced Aug. 14 the signing of a memorandum of understanding to partner on the projects.

The Upper Toba Valley project is a series of three sites with a capacity of 120 MW: 30-MW Dalgleish Creek, 50-MW Jimmie Creek, and 40-MW Upper Toba River. (HNN 2/14/08) The Bute Inlet project includes 18 sites with a capacity of 914 MW. (HNN 4/23/08) The Bute project is north of Toba Valley, where Plutonic and GE Energy Financial already are partnering on the C$660 million (US$620.4 million) 123-MW East Toba River and 73-MW Montrose Creek project. (HNN 11/12/07)

The Upper Toba Valley and Bute Inlet projects are in the permitting and review stages of the government’s environmental assessment process.

Plutonic and GE Energy Financial, a unit of GE, said they intend to jointly bid the two projects into BC Hydro’s 2008 Clean Power Call in November. The government-owned utility is calling for independent power projects to provide up to 5,000 gigawatt-hours of electricity annually of clean or renewable energy, including hydropower. (HNN 6/13/08)

If BC Hydro accepts the joint bid, GE Energy Financial intends to make an equity contribution of C$70 million (US$65.8 million) for 50 percent interest in the Upper Toba Valley project. By itself, or with other partners, GE Energy Financial plans to make an equity contribution of C$650 million (US$611 million) for a 60 percent interest in the Bute Inlet project. Plutonic could elect to repurchase another 10 percent interest in Bute Inlet by making a C$100 million (US$94 million) equity contribution to capital costs.

Final economic terms still are to be determined based on project variables such as final capital cost, energy prices awarded, and estimates of generation. GE Energy Financial also would have the right to arrange debt financing for the projects. Plutonic would be responsible for all costs of permitting, public consultation, and environmental assessment before GE Energy Financial makes its equity contribution.

Completion of the transaction is subject to conditions such as due diligence, completion of documentation, approval of investment committees and boards of directors, successful bids into BC Hydro’s Clean Power Call, senior debt financing for the projects, and regulatory approvals.

Upon acquiring an energy purchase agreement for Upper Toba Valley and Bute Inlet projects, GE Energy Financial would be granted 1 million and 4 million warrants respectively to buy common shares of Plutonic. The warrants would be exercisable at a price equal to the market price for Plutonic’s common shares at the time they are issued. Warrants would carry a five-year term and be subject to vesting provisions.

Plutonic Vice Chairman Donald McInnes said Upper Toba Valley and Bute Inlet could generate enough energy to meet the needs of more than 300,000 homes and annually offset more than 2.2 million tons of carbon dioxide emissions.

In a separate accord announced in May, Plutonic and consulting engineering firm Knight Piesold Ltd. agreed to extend a business relationship responsible for identifying projects in Plutonic’s 2,000-MW Green Power Corridor. (HNN 5/15/08)

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