GE and Canada to Make 196 MW Hydroelectric Plant - 3/5/07

GE Energy Financial Services, a unit of General Electric, will make its first equity investment in Canada and diversify its renewable energy portfolio by investing in the construction of a 196-megawatt run-of-river hydroelectric project in British Columbia, Canada, being developed by Plutonic Power Corporation.

The energy giant, through a Canadian affiliate, has agreed—subject to closing conditions—to invest up to CDN $112 million to acquire a 49 percent equity and 60 percent economic interest in Plutonic's East Toba River and Montrose Creek project, 118 miles northwest of Vancouver at the headwaters of the Toba Inlet.

This project will include a 90-mile long transmission line for interconnection to the power grid. GE Energy Financial Services is co-leading, with Manulife Financial, a CDN $466 million senior secured debt offering to finance the project.
Unlike traditional hydroelectric facilities, run-of-river projects do not require damming and storage of water. Instead, some of the water flow is diverted from the river and sent into a pipe called a penstock that feeds the water downhill to a generating station. The water leaves the generating station and is returned to the river.

The project, which will produce electrical energy sufficient to power an estimated 75,000 homes annually, helps the province of British Columbia ensure that clean or renewable electricity generation continues to account for at least 90 percent of total generation.

Crown-owned British Columbia Hydro and Power Authority (BC Hydro), serving more than 1.6 million customers in an area containing more than 94 percent of the province's population, has committed to purchase the project's output for 35 years.

In addition to investing in the hydroelectric facility, GE will make a three and a-half year CDN $30 million credit facility available to Plutonic to increase the capacity of a 230-kilovolt transmission line to be built as part of the project. This investment would pave the way for Plutonic to be able to self-finance the construction of three additional Toba Valley projects with generation capacity of 116 megawatts.

In return for this credit facility, Plutonic will grant GE the right to negotiate to finance up to an additional 200 megawatts of other hydroelectric power projects in BC, and issue to GE 650,000 two-year common share purchase warrants with an exercise price to be determined upon closing.

Since January, Plutonic has obtained a British Columbia Environmental Assessment Certificate, a positive project decision under the Canadian Environmental Assessment Act, and successfully concluded Impact and Benefits Agreements with the Klahoose and Sliammon First Nations.

The project is expected to become operational in 2010.

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