Synex International Inc. (SXI.T) Message Board

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Gold/Mining/Energy : Synex International Inc. (SXI.T)

SXI 230.05

-1.9%

1:09 PM EST

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To: gsun who wrote ()	4/29/1998 1:21:00 AM
From: John Fairchild	Read Replies (1) of 42

Gsun, that's quite a gold mine you have. By the way it is proper protocol to announce your connection with the company on your initial post.The contract you have with BC Hydro looks pretty good. How will the future deregulation of the power industry affect this contract? I am impressed that the diversion was built ahead of schedule and under contract. I have lots of questions about the generation end of your operation. Prior to the diversion was Brown Lake a daily cycle? Is the energy purchased at a flat rate or is their an on/off peak price and if so what are these rates? It looks like you averaged ~CAN$45/MW in your last statement. I work for Ontario Hydro and use to be an operator at hydraulic stations through out the province. I currently work at the System Control Center in Toronto and we are in the process of separating from Ontario Hydro in order to become the Independent System Operator (under the Ontario Government) responsible for deployment of all resources and transmission within the province. I know that this industry is heading for major change. California appears to be leading the way on the west coast and PJM (Pennsylvania, New Jersey & Maryland) power pool is leading the way in the east. Generation costs/bids appear to have been capped by FERC (Federal Energy Regulator) for now but from what I understand the gloves come off next year and prices will be based entirely on what the market will pay. Right now in PJM they have just implemented locational market pricing. Which means that when the system becomes constrained and generation has to be loaded out of economic order to respect transmission limits that area which has the higher cost generation loaded to bias the limit will have to pay the highest system marginal cost. It also means that all generators connected to that area also get paid the higher system marginal price. I guess this is the method used to provide drivers for generator construction at those points in the system that need it. This will definitely work. Some cheap installed capacity located at those constrained parts of the system are going to make a killing. It is a lot easier to build install a NUG than it is to build new transmission. From what I can tell so far the transmission providers may end up with the short end of the stick but that could also change. I think FERC will continue to hold down transmission tariffs to promote economic dispatch of generation resources. Will your current generation be available to participate in the new market or are you solidly locked into the BC contract. Are you looking for new opportunities in a deregulated North American power industry? Use extreme caution if your looking for a marketer. Most of them will not survive and most of them do not understand the dynamics of the system or the market. Right now some deep pockets are paying big bucks to get in and those on the inside who know the game are taking full advantage. Again I do see the contract that you currently have as good because the new industry is not going to be without risk and many players are going to lose big time. I suspect your current contract is take or pay regardless of excess on the system? Hydroelectric generation has got to be the most cost effective investment anyone can make. I have controlled some small run of the river hydroelectric units that have churned out power since the turn of the century and I would hazard to guess they will be around for another hundred years with a couple days of maintenance every few years. Better than a gold mine. PS - Last Summer I saw prices on the tertiary market as high as US$350/MW. That is about 3 times higher than the most expensive generator on the system. Sorry for getting carried away - I use to love buying and selling power. It was very much like a poker game when the stakes get really high. John

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