Pristine Power announces results for the first quarter ended March 31, 2009 and updates operations, construction and development activities



    CALGARY, May 4 /CNW/ - Pristine Power Inc. ("Pristine" or the "Company")
today announced its financial results for the first quarter ending March 31,
2009 and provided updates to its operations, construction activities and
development initiatives. Pristine has filed with Canadian securities
regulatory authorities its unaudited financial statements and related
Management's Discussion and Analysis for the first quarter ended March 31,
2009. These filings are available for review on the Corporation's SEDAR
profile at www.sedar.com and on Pristine's website at www.pristinepower.ca.
    "During the quarter, the Company remained focused on executing our plans
to achieve the major milestones for 2009," commented Mr. Jeffry M. Myers,
President and Chief Executive Officer. "Since year end, at our East Windsor
site, we have started commissioning and expect to fire the first turbine next
month. Progress to date has been on track and we remain confident that the
plant will become commercially operational on time and on budget. On our
newest project, York Energy Centre, we continue to make tangible progress in
our negotiations with an EPC contractor, equipment suppliers and environmental
permitting."
    "While we remain focused on maximizing the value of our existing assets,
we also continue to seek new areas for growth. During the quarter we submitted
four bids to build four 200 MW plants in Colorado and New Mexico."

    
    HIGHLIGHTS

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    Three months ended March 31                         2009           2008
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    Net production (MWh)(1)                             6,487              -

    Revenue                                               883            179
    Expenses                                            3,513          1,730
    Net loss and comprehensive loss                    (2,541)        (1,848)
    Net loss per share - basic                          (0.08)         (0.10)
    Net loss per share - diluted                        (0.08)         (0.10)

    Cash used in operations                            (1,651)        (1,258)
    Cash used in operations per share - basic           (0.05)         (0.07)
    Cash used in operations per share - diluted         (0.05)         (0.07)

    Funds used in operations                           (2,153)        (1,267)
    Funds used in operations per share - basic          (0.07)         (0.07)
    Funds used in operations per share - diluted        (0.07)         (0.07)

    Notes:
    (1) Before non-controlling interest share.


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                                                     March 31,   December 31,
    As at                                                2009           2008
    -------------------------------------------------------------------------

    Total assets                                      176,917        181,587
    Long term debt                                    100,210        100,311
    Shareholders' equity                               53,401         55,828
    


    OVERVIEW

    Pristine is in the business of developing, owning and operating
independent power plants that will produce and sell electricity, and in some
cases, sell process steam to industrial users. The Company currently operates
two 5 MW Energy Recovery Generation ("ERG(R)") plants, Savona and 150 Mile
House, along the Spectra Energy natural gas transmission system in British
Columbia. Pristine is also managing the construction of the East Windsor
Cogeneration Centre ("EWCC"), an 84 MW natural gas-fired cogeneration facility
that will generate electricity and steam from the combustion of natural gas.
This project is expected to commence commercial operations in the third
quarter of 2009. Pristine has a 25% effective interest in all three of these
projects.
    The Company is also managing the development of the York Energy Centre
("YEC"), a 393 MW natural gas fired peaking generation facility. Construction
is expected to start in 2010 with commercial operations to commence in late
2011. The Company is expected to have a 50% interest in this project.

    HIGHLIGHTS

    During the first quarter ended March 31, 2009, the Company incurred a net
loss of $2,541,000 ($0.08 per share, basic and fully diluted) compared to a
loss of $1,848,000 ($0.10 per share, basic and fully diluted) in the first
quarter of 2008. Higher expenditures on development activities and salaries,
reflecting increased staffing levels, primarily attributed to the increased
loss in the first quarter of 2009 over the comparable period in 2008.
Increased costs were partially offset by revenues of $549,000 from power
generated at the Company's two operating plants. Cash used in operations
during the first quarter of 2009 was $1,651,000 ($0.05 per share, basic and
fully diluted) compared to $1,258,000 ($0.07 per share, basic and fully
diluted) in 2008. During the quarter, the Company spent $7,712,000 on
property, plant and equipment compared to $16,743,000 in the comparable period
in 2008. Cash used in investing activity was offset by the receipt of funds
totaling $2,320,000 previously held in trust and release of funds from
restricted cash. Proceeds from restricted cash were $638,000 in the first
quarter of 2009 compared to $10,417,000 in the first quarter of 2008. Proceeds
from restricted cash consist of funds released for construction of East
Windsor Cogeneration Centre. In the first quarter of 2009 this was offset by
cash collateral posted as security for $6,980,000 letters of credit. The
majority of such letters of credit were issued in support of the York Energy
Centre project. As a consequence, at the end of the quarter, the Company's
cash position totaled $30,936,000 compared to $37,700,000 at year end.

    Results of Operations

    During the first quarter of 2009, the Company's net interest in
electricity generated from the two plants at Savona and 150 Mile House totaled
6,487 MWh with a combined capacity factor of 62% compared to an expected
capacity factor of 82%. Power generated from these two plants is sold to BC
Hydro at fixed prices under the terms of a twenty-year contract. Production at
the beginning of 2009 was negatively affected by post-commissioning issues
related to quality control that is primarily the responsibility of the major
equipment supplier. While lost revenues are not recoverable, the cost to
rectify a significant portion of these issues is recoverable under warranty
and both plants returned to full capacity in the third week of January.
Production was also negatively impacted by lower gas flows on the Spectra
Energy natural gas transmission system due to warmer than normal weather.
These plants were under construction in the first quarter of 2008.

    Project under Construction

    Construction of the $207 million 84 MW East Windsor Cogeneration Centre
continued in the first quarter of 2009, remaining on schedule and on budget.
All major equipment is now on site and installed. During the quarter, work on
piping and the plant's electrical systems was undertaken along with the start
of initial commissioning. Commencement of commercial operations is anticipated
in the third quarter of 2009.

    
    Projects under Contract

    York Energy Centre
    ------------------
    
    In December 2008, the Company was awarded a 20 year contract by the
Ontario Power Authority to construct and operate the York Energy Centre, a 393
MW natural gas fired peaking generation facility, located in the Township of
King, Region of York, Ontario. Pristine expects to hold a 50% interest in the
project with total project costs expected to be up to $365 million. The
Company has received confirmation from municipal and regional authorities that
the facility complies with Official Plan and zoning by-law requirements.
During the quarter, the Ontario Ministry of the Environment denied all
requests for elevation of the project to a full environmental assessment.
Subsequent to the quarter end, and during the normal appeal period, appeals of
this decision were received by the Ministry of the Environment which are
currently under review by the Minister. The Company is currently completing
the necessary provincial environmental assessment, permitting and site plan
process to obtain the necessary approvals required for construction, with
completion of the permitting process expected in the last half of 2009. The
Company is also in the process of finalizing agreements with the preferred
Engineer Procure and Construct ("EPC") contractor and gas turbine supplier.
Preliminary discussions have commenced with potential lenders for long-term
non-recourse financing, with such financing expected to be in place following
receipt of all necessary environmental permits. Construction is expected to
commence in mid 2010 with completion anticipated late in 2011.

    
    Mackenzie Green Energy Centre
    -----------------------------
    
    The Mackenzie Green Energy Centre is a proposed 65 MW (thermal
equivalent) biomass fired project to be located in Mackenzie, British
Columbia. Recently, the British Columbia Ministry of Forests and Range advised
Pristine that Mackenzie Green Energy Inc.'s current energy supply contract
with BC Hydro, dated August 31, 2006, was designated as a bioenergy supply
contract under the Forest Act and accordingly could apply for a
non-replaceable forest license, supplying a portion of the necessary fuel
requirements. This is an important step in securing adequate fuel supplies for
the project. However, before this project can proceed, certainty of the
project site and mitigation of fuel price risk requires resolution.

    Submission of Bids

    Pristine submitted four bids in the first quarter of 2009. On January 16,
2009, in response to Southwestern Public Services ("SPS") requests for
proposals for up to 600 MW of dispatchable resources, the Company submitted
two bids in New Mexico for the development of two 200 MW natural gas peaking
power plants. The total cost of these projects is estimated to be
approximately US$275 million each. If awarded, Pristine expects to hold a 50%
interest in each of the projects. Should these projects be selected by SPS in
its short list of potential suppliers, a contract negotiation process would
follow.
    In January 2009, the Public Service Company of Colorado issued an All
Source Solicitation consisting of four separate requests for proposals,
seeking to acquire approximately 2,200 MW of electricity. On April 10, 2009,
in response to the request for proposals for dispatchable resources, the
Company submitted two bids for the development of two 200 MW natural gas
peaking power plants. These projects are also expected to cost approximately
US$275 million each. Pristine currently holds a 100% interest in each of these
projects.
    The Company is also awaiting announcements in regards to submissions made
to BC Hydro's Clean Power Call. In November, 2008, Kleana Power Corporation, a
company in which Pristine holds a 10% equity interest, submitted a proposal to
build a 600 MW Run of River hydroelectric project. If selected, the total
projected cost of the project is anticipated to be approximately $2.5 to $3.0
billion. An announcement of awards by BC Hydro is expected to occur in mid-
2009.

    New Developments

    On March 5, 2009, BC Hydro announced the launch of the second phase of
the Bioenergy Call for Power ("Phase II"). Phase II is expected to be
officially issued in May 2009, with submission of bids due in the Fall of 2009
and project selection expected in early 2010. Phase II will be conducted in
two streams, the first stream targeting 1,000 GWh per year from larger-scale
biomass projects and the second stream targeting at least two smaller-scale,
community-driven biomass projects.
    The province of Ontario has recently introduced the Green Energy Act, and
the Ontario Power Authority has responded to this initiative through the
proposed establishment of a Feed-in Tariff Program ("FIT"), or fixed and known
prices to promote the development of onshore and offshore wind, bioenergy and
solar resources. The objectives of the proposed FIT program are to increase
capacity of renewable energy supply to ensure adequate generation and reduce
emissions while simplifying the method to procure and develop generation.
Pristine is participating in processes to consult on establishment of the
rules of engagement for FIT, and the Company will evaluate resources and
projects to offer under the FIT program for bioenergy and other technologies.
    In the United States, the Obama administration has introduced The
American Clean Energy & Security Act of 2009 (March 31, 2009). The proposed
legislation calls for the federalization of a legally binding Renewable
Portfolio Standard and enabling the Federal Energy Regulatory Commission
(FERC) to support, coordinate and integrate regional transmission planning
efforts. In addition, the bill tasks the US Environmental Protection Agency
(EPA) with regulating greenhouse gas emissions, and administering a market
based CO(2) cap and trade program. The immediate impact on Pristine is to
continue capitalizing on opportunities for gas fired peaking generation, as
state utilities aim to meet Renewable Portfolio Standards.

    Conference Call

    Pristine (TSX:PPX) will hold a conference call on Tuesday, May 5, 2009 at
9:00 am MST (11:00 am EST) to discuss its first quarter results and provide an
update on operations. The call can be accessed at 1-800-732-6179 or
1-416-644-3416. A replay of the call will be available until May 19, 2009 at
1-877-289-8525 or 1-416-640-1917. The access code for the replay is 21304738
followed by the pound sign.

    Cautionary Statement Regarding Forward-Looking Information

    Certain statements in this news release may constitute "forward-looking
information" or "forward-looking statements" which involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company or industry results to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking information. When used in this
news release, such information uses such words as "estimates", "expects",
"plans", "anticipates" and other similar terminology. This information
reflects the Company's current expectations regarding future events, including
development and financing of the Mackenzie and York projects, development of
new projects and construction and financing of the East Windsor Project as
well as future operating performance and speaks only as of the date of this
news release. Forward-looking information involves significant uncertainties,
should not be read as a guarantee of future performance or results, and will
not necessarily be an accurate indication of whether or not such results will
be achieved. A number of factors could cause actual results to differ
materially from the results discussed in the forward-looking information.
Although the forward-looking information in this news release is based upon
what management of the Company believes are reasonable assumptions, the
Company cannot assure investors that actual results will be consistent with
this forward-looking information. This forward-looking information is provided
as of the date of this news release, and, subject to applicable securities
laws, the Company assumes no obligation to update or revise such information
to reflect new events or circumstances.

    About Pristine

    Pristine (TSX: PPX) is in the business of developing, owning and
operating independent power plants that produce and sell electricity and in
some cases, sell process steam to industrial users. Pristine capitalizes on
opportunities in the independent power market by actively pursuing the
development of dependable, cost-effective and environmentally responsible
power generation facilities utilizing technology with proven past performance.
Pristine pursues a mix of large gas-fired, bioenergy and hydroelectric
projects, and smaller replicable waste heat recovery ERG(R) and bioenergy
projects. Pristine currently has two projects in operation, one under
construction, and two under contract and in advanced development. Pristine is
developing projects in Ontario, British Columbia and the Western United
States. Visit www.pristinepower.ca for more information.



    
    PRISTINE POWER INC.
    CONSOLIDATED BALANCE SHEETS
    (Unaudited)
    (in thousands)

    As at:                                           March 31,   December 31,
                                                         2009           2008
    -------------------------------------------------------------------------

    ASSETS
    Current assets
      Cash and cash equivalents                   $    30,936    $    37,700
      Cash held in trust                                    -          2,320
      Accounts receivable                               1,576          2,581
      Prepaid expenses and deposits                       812          1,922
      Due from related parties                            288            490
      Derivative financial instruments                    155            250
      Restricted cash                                   7,754            770
    -------------------------------------------------------------------------
                                                       41,521         46,033

    Restricted cash                                    12,462         20,062
    Investments                                         2,250          2,250
    Property, plant and equipment                     120,684        113,242
    -------------------------------------------------------------------------
                                                  $   176,917    $   181,587
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    Current liabilities
      Accounts payable and accrued liabilities    $     5,865    $     7,884
      Due to related parties                              125            164
      Current portion of long-term debt                 1,461            877
    -------------------------------------------------------------------------
                                                        7,451          8,925
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    Asset retirement obligation                           326            321
    Long-term debt                                     98,749         99,434
    -------------------------------------------------------------------------
                                                       99,075         99,755
    -------------------------------------------------------------------------
    Non-controlling interest                           16,990         17,079
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
    Share capital                                      67,441         67,441
    Contributed surplus                                 2,042          1,928
    Deficit                                           (16,082)       (13,541)
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                                                       53,401         55,828
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                                                  $   176,917    $   181,587
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    PRISTINE POWER INC.
    CONSOLIDATED STATEMENTS OF NET LOSS AND COMPREHENSIVE LOSS AND DEFICIT
    (Unaudited)
    (in thousands)


    Three Months Ended March 31,                          2009          2008
    -------------------------------------------------------------------------

    REVENUES
      Power generation sales                      $       549    $         -
      Project management fees                             186            105
      Interest and other income                           148             74
    -------------------------------------------------------------------------
                                                          883            179

    EXPENSES
      General and administrative                        1,780            890
      Project development costs                           816            529
      Interest, bank, and finance charges                 220             12
      Plant operating costs                               219              -
      Stock based compensation                            114            853
      Unrealized loss (gain) on derivative
       financial instruments                               95           (369)
      Foreign exchange gain                                (5)          (198)
      Depreciation, amortization and accretion            274             13
    -------------------------------------------------------------------------
                                                        3,513          1,730
    -------------------------------------------------------------------------

    NET LOSS BEFORE NON-CONTROLLING INTEREST           (2,630)        (1,551)

    NON-CONTROLLING INTEREST                              (89)           297
    -------------------------------------------------------------------------

    NET LOSS AND COMPREHENSIVE LOSS                    (2,541)        (1,848)

    DEFICIT, BEGINNING OF PERIOD                      (13,541)        (4,118)
    -------------------------------------------------------------------------
    DEFICIT, END OF PERIOD                            (16,082)        (5,966)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    NET LOSS PER SHARE
    Basic                                         $     (0.08)   $     (0.10)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Diluted                                       $     (0.08)   $     (0.10)
    -------------------------------------------------------------------------
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    PRISTINE POWER INC.
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited)
    (in thousands)

    Three Months Ended March 31,                         2009           2008
    -------------------------------------------------------------------------

    OPERATING
      Net loss                                    $    (2,541)   $    (1,848)
      Add (deduct) non-cash items:
      Depreciation, amortization and accretion            274             13
      Stock based compensation                            114            853
      Non-controlling interest                            (89)           293
      Other                                                (6)            (3)
      Unrealized foreign exchange gain                      -           (206)
      Unrealized loss (gain) on derivative
       financial instrument                                95           (369)
    -------------------------------------------------------------------------
                                                       (2,153)        (1,267)
      Change in non-cash working capital                  502              9
    -------------------------------------------------------------------------
      Cash used in operating activities                (1,651)        (1,258)
    -------------------------------------------------------------------------
    FINANCING
      Repayment of long-term debt                         (75)             -
      Financing costs                                     (21)             -
      Advances from (to) partners                         163           (947)
      Proceeds from issuance of shares (net of
       share issue costs)                                   -         45,824
      Change in non-cash working capital                  (23)           450
    -------------------------------------------------------------------------
      Cash provided by financing activities                44         45,327
    -------------------------------------------------------------------------
    INVESTING
      Restricted cash                                     638         10,417
      Property, plant and equipment                    (7,712)       (16,743)
      Cash held in trust                                2,320              -
      Change in non-cash working capital                 (390)         4,305
    -------------------------------------------------------------------------

      Cash provided by (used in) investing
       activities                                      (5,144)        (2,021)
    -------------------------------------------------------------------------
    Unrealized foreign exchange gain on foreign
     denominated cash                                     (13)             -
    -------------------------------------------------------------------------
    Increase (decrease) in cash and cash
     equivalents                                       (6,764)        42,048
    Cash and cash equivalents, beginning of period     37,700          1,567
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of period      $    30,936    $    43,615
    -------------------------------------------------------------------------
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For further information:

For further information: Jeffry M. Myers, President & Chief Executive
Officer, Telephone: (403) 444-5571, Fax: (403) 444-6784; Geoffrey D. Krause,
Chief Financial Officer, Telephone: (403) 444-6405, Fax: (403) 444-6784

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PRISTINE POWER INC.

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