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Non-Tech : Bill Wexler's Dog Pound -- Ignore unavailable to you. Want to Upgrade?

To: Bob Trocchi who wrote (1558)	6/25/1999 3:09:00 PM
From: Sid Turtlman	Respond to of 10293

Bob: Thanks. I did see the article, which is a typical case of a reporter believing what he is told by people with an ax to grind, and not having the background to ask the right questions. No question that fuel cells are cleaner than conventional ways of producing power, and some of them, not the low temperature house size kind, are much more efficient. The trade off is operating costs versus capital costs. Ignoring the environmental stuff, a utility will buy a fuel cell rather than a conventional generator if the fuel savings from the higher efficiency over time seem likely to overcome the higher purchase price. A homeowner in a remote area might buy a fuel cell if its cost is less than what one must pay the utility to bring the wires in. This Texas project doesn't make a lot of sense on the face of it, because people will have to pay both a high price for the fuel cell (I predict much higher than the $6000 quoted) and also for the wires as backup. That is twice the capital cost, and PEM cells aren't that efficient. I think fuel cells will take off in the next five years for stationary power, but only in the much cheaper per kW larger sizes for utilities or larger users. In any event, according to the article, the company likely to get the Texas order for the home size fuel cells is not MKTY's Plug Power, but is Avista Labs, which is part of Avista Corp. (AVA $17), the old Washington Water Power. AVA's market cap ($687,000,000) is a lot lower than the implied market cap of Plug Power using the most conservative measure ($758,000,000), let alone the $3+ billion that it is really valued at if you take into account its deal where GE will grab most of any profits. So buying AVA you get the better fuel cell company at a cheaper price, and get to own a $3+ billion per year utility for free. I have my doubts about AVA's top management, but it has indicated that it might want to spin off or IPO Avista Labs later this year, which at anything close to Plug Power's valuation could easily be worth an extra $10 per AVA share. A long AVA, short MKTY combo makes sense, although a patient person can just be short MKTY. But I agree, right now MKTY shareholders such as our fisherman friend are in the silly fantasy phase; it could be some while yet before reality rears its ugly head.