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Gold/Mining/Energy : Synex International Inc. (SXI.T)
SXI 228.95-2.4%3:05 PM EST
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To: John Fairchild who wrote (5)4/29/1998 9:56:00 AM
From: gsun   of 42
 
John:

The Brown Lake plant uses a natural lake for storage and generation is not affected by daily water inflows and fluctuations. The McKnight diversion adds water on an annual basis and thereby increases the annual generation at the Brown Lake plant. In an average water year very little water is spilled (either before or after the McKnight diversion).

Under the BC Hydro contract, Synex may sell all its current generation (the plant was sized to maximize contract)to BC Hydro and BC Hydro must purchase the energy. However, in the event that power prices exceed the BC Hydro contract Synex may sell a portion of the power to others (BC Hydro contracts have minimum/maximum quantities with flexibility for Synex between these levels). Your energy rates are about right.

In BC, power has traditionally been priced flat (no change in on/off peak rates). This policy was because BC is primarily hydro based with large storage capacity. With the opening up of US markets, BC is now heading to on/off peak pricing although slowly.

We are always looking for new opportunities. Interestingly, I think that the biggest winners in the coming years may be the owners of the transmission systems as the approval period for new construction is very long (at least in the Pacific Northwest).

gsun
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