>Capstone May Get Microturbine Orders Worth Up To $60M
By Pat Maio
Of DOW JONES NEWSWIRES
LOS ANGELES (Dow Jones)--Capstone Turbine Corp. (CPST) may have landed its
biggest microturbine order to date from a consortium of public agency water
suppliers in California - valued at up to $60 million, according to sources.
The Association of California Water Agencies, which is made up of 440
members who supply water to 90% of California's farms and cities, has signed
a deal with an energy consulting firm that is working to secure up to 2,000
microturbine unit orders for Capstone over the next two years.
ACWA uses up to 7% of the state's electricity on pumping stations needed to
irrigate farms, and many of its members have been hit hard financially by
the energy crisis.
Under the agreement, privately held Harza Energy LLC will buy the
microturbines from Capstone, based in Chatsworth, Calif., and install them
for ACWA's member water agencies.
"For Harza, this will end up being our largest order ever," Steve Chippas,
president of the Chicago engineering and energy consulting firm, said in a
phone interview.
Capstone marketing vice president Mark Kuntz, confirmed that his company has
had discussions with ACWA regarding the potential to sell up to 2,000
microturbines.
The 30-kilowatt units would cost up to $30,000 each - making the total deal
worth up to $60 million.
"We have every expectation that this will result in a large order," Kuntz
said. "We have made this a high priority to secure a large number of orders"
with the ACWA agencies. Representatives of about 30 of those agencies will
visit Capstone on Thursday to get a firsthand look at how a microturbine
works, he added.
Capstone said it had produced about 1,000 microturbines through last
November, its last publicly disclosed production number.
Dan Smith, director of regulatory affairs for ACWA, said public water supply
agencies are being devastated financially by California's energy crisis.
"I've been here almost 26 years, and I've seen droughts, but I've never seen
so much aggravation and concern as this problem has caused," Smith said.
He pointed to one San Diego-area agency, the Valley Center Municipal Water
District, that plans to increase its water rates 25% on Feb. 1, and another
25% on April 1. The district mainly supplies water to avocado growers, some
of whom are saying them may be forced out of business because of the rate
increases, Smith said.
ACWA also is looking at reducing power costs to its members by picking a new
wholesale supplier of electricity to replace AES Corp. (AES). Finalists are
said to include Enron Corp. (ENE) and a joint consortium of Coral Energy, a
unit of Royal Dutch/Shell (RD) and New West, an energy service supplier
owned by Salt River Project, one of the nation's largest publicly owned
energy businesses.
Microturbines are primarily fueled by natural gas and can generate from 25
kilowatts to 600 kilowatts of electricity a day. They also run on propane,
diesel fuel, kerosene, landfill gas and waste and water treatment gases.
Microturbines use just one moving part - a shaft on which a compressor
turbine and permanent magnet generator are seated. Microturbines also use
airfoil bearing technology, which eliminates the need for oil bearings. This
is why microturbines cost less to maintain than other power sources and
produce less pollution and noise.
Microturbines can be turned on during the middle of the day when power
prices are most expensive or during blackouts caused by interruptible
contracts with electric utilities. Interruptible contracts give utilities
the legal authority to turn off electricity when shortages are imminent. In
return, customers get discounted power bills.
Shares of Capstone closed Wednesday at $41, up 69 cents, or 1.7%, on Nasdaq
volume of more than 1 million shares, compared with average daily volume of
913,800.
-By Pat Maio, Dow Jones Newswires; 323-658-3776; patrick.maio@dowjones.com |
