President and CEO
Max Pacific Power Inc.
Thanks for sending me the Offering Memorandum and Subscription Agreement for your company’s proposed ‘run-of-river’ hydro projects. I’ve noticed you have some critics who are aghast at the whole idea, even the labeling of them as green or clean. So let me stick up for you here, because while I’m sure you’re happy to wear the green mantle, it was BC Hydro laying down the guidelines in their recent call for clean power proposals, wasn’t it?
So why does it seem lost on your detractors that virtually every organization on the planet concerned with climate change and sustainable energy supports the general concept of run-of-river hydro development? I mean, I don’t need to list all the alternatives to generating our energy fix, do I?
It seems to me that your critics’ biggest gripe with these projects is that some private individuals are going to get rich and that our public utility BC Hydro is on the verge of selling us down the river to some foreigners from California or Calgary. So the main argument now isn’t about clean energy, it’s about who owns it, or rents it, or who sells it to whom. Politics getting in the way of fixing things if you ask me.
But Bob, I’m not writing to give you my support or sympathy, I just want to know what the chances are of getting rich here. Now I notice your latest share offering would allow ordinary BC investors an opportunity to purchase shares for only $1 each! But wow! The risks you outlined in your Offering Memorandum are enough to make all but the most adventurous investors run for the hills. Let’s see, there’s your “lack of operating history”, there’s “no assurance of any return on investment”, shares are “suitable only for investors who are able to risk a total loss of their investment.”, and “volatility in energy markets could make the Corporation’s products uneconomic”, and on and on you go about risks for another six pages or so.
Still, I think you may have glossed over the main risk for investors. Even if you do get these things up and running, what if thirty years from now the glaciers upon which so many run-of-river projects depend have melted to the point where your turbines won’t turn any more? All that infrastructure you and shareholders have built will be pretty useless, won’t it? Hope you’ve got a plan to clean it up afterwards.
And of course all energy developments bear the risk that, one day, new technologies will render them obsolete. So maybe it is best that BC Hydro is passing these risks on to the private sector, even if they did have the capital and engineering expertise to build and maintain a variety of micro-hydro, wind, solar, biomass, geothermal and tidal generation facilities, not to mention completing the task of upgrading their existing infrastructure of dams.
Anyways I checked on the most recent financials of some of your established competitors to see how rich their shareholders were getting. Canadian Hydro Developers (KHD-T) has a much more diverse portfolio of renewable energy facilities than what you have proposed, and they recently reported annual earnings of 6 cents a share. Whoopee! Plutonic Power (PCC-T) has yet to generate a microwatt of electricity or dollar of revenue from their run-of-river projects. And I’m wondering, if everyone is going to get rich on this, how come I don’t see any of BC’s major public pension funds lined up at your door to take a stake (even though they do own shares in much dirtier foreign energy companies).
Now if you could run your power generation activities with as much respect for community and the environment as, for instance, BC Hydro has shown on the Puntledge River here in Courtenay, you’ll be a long step ahead of your competition. I am encouraged by your engineering plans for ‘high head’ sites that reduce the length of pipe required, and your proactive collaboration and approval from First Nations interests. And I’m glad you weren’t so dumb as to suggest running transmission lines through a Provincial Park like your competitors did in Port Moody recently.
So Bob, although many of your ideological opponents’ views may be well intentioned, the private sector traditionally fills in when the public sector is, for whatever reason, unable to provide needed products or services, doesn’t it? But you are taking a big gamble with this. You know Bob, maybe one day as CEO of Max Pacific Power you may even earn as much as one of our Cabinet Ministers! In your case, if you do all this the right way, you might even deserve it.