NaiKun Wind Energy Group Inc.
TSX VENTURE : NKW

NaiKun Wind Energy Group Inc.

July 30, 2009 08:43 ET

NaiKun Wind Issues Project Update

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 30, 2009) - NaiKun Wind Energy Group Inc. (TSX VENTURE:NKW) distributed a quarterly project update to shareholders after the close of markets yesterday. The content of the update appears below.

NaiKun Wind Quarterly Shareholder Update

Welcome to the NaiKun Wind Quarterly Shareholder Update for July-September 2009. The focus of this issue will be on the decision released this past Monday by the British Columbia Utilities Commission (BCUC; BC's electricity industry regulator), as our share price suffered seriously in its wake and we feel that investors may be acting on inaccurate information. In addition, we will explain progress made with several key development objectives, including our environmental assessment and strategic partnering.

Interpreting the BCUC Decision

On July 27, the BCUC released its decision on the numerous aspects of BC Hydro's long-term acquisition plan (LTAP), a set of electricity demand forecasts, conservation programs and resource acquisition recommendations. The content of the ruling came as a surprise to many in the industry. The BCUC declined to endorse several key elements of the plan, saying, "The commission panel believes that the parts of the LTAP it has rejected represent a level of individual and collective materiality that removes the underpinnings of the entire 2008 LTAP." In its next sentence, it stated that it was rejecting the plan.

What ensued was a wave of confusion among power developers and analysts regarding the future of the Clean Power Call. Unfortunately, news media and other reports emerged suggesting that the Call was in jeopardy and might be cancelled altogether. For multiple reasons, this is a misinterpretation.

Although the BCUC rejected the LTAP, it stated clearly in more than one section of its report that BC Hydro is free to move forward with the Clean Power Call and award Electricity Purchase Agreements as it sees fit. There is no ambiguity in the BCUC ruling: it rejected the LTAP and declined to provide Commission endorsement of any specific GWh target for the Clean Power Call, but did not reject the Clean Power Call or the need for clean energy. Another misinterpretation prevailing in the media is that the BCUC rejected the BC Government's Energy Plan. In fact, part of the reason the Commission rejected numerous elements of the LTAP is that they were not consistent with the policy directions of the BC Energy Plan. The Energy Plan provides guidance to the Commission in its review of BC Hydro.

Officials from the Government of British Columbia have advised NaiKun Wind that the government remains committed to moving forward with the Clean Power Call. They made it clear that the government is firmly committed to the BC Energy Plan and that development of clean energy resources in the province remains a priority. Comments to this effect are beginning to appear in the media, and the province's energy minister made the decision to speak with equity analysts covering the sector to clarify the government's position.

At over 250 pages, the BCUC report is quite long and BC Hydro will need time to assess its content and determine the next step in acquiring energy for the province. As we await a statement bringing further clarity to the process, we take confidence knowing that British Columbia's government remains committed to building on the province's legacy as a leader in the development of clean energy resources.

Environmental Assessment

NaiKun Wind's project must undergo a rigorous environmental review prior to moving into the construction stage and we spent much of 2008 and the early part of 2009 preparing our Environmental Assessment application for Phase 1 for submission to British Columbia's Environmental Assessment Office (EAO). On May 20, we received official word that our application had been accepted (no small feat) and that the assessment was officially under way.

As the assessment process moves forward in accordance with legislated timelines (180-day limit for joint assessment review by the responsible provincial and federal agencies and 45 days for provincial/federal ministers to grant approval), we are on track to receive environmental approval and permitting by the end of 2009. The environmental assessment being conducted by the Haida Nation follows a similar process and timeline.

Since acceptance of the application we have completed open houses in Prince Rupert, Masset and Queen Charlotte City (organized by the EAO to gather opinion directly from residents of Haida Gwaii and Prince Rupert) as well as Haida community meetings in Old Massett and Skidegate. NaiKun Wind representatives and its consultants who authored the environmental studies that formed part of the application were on hand at each of the open houses and community meetings to explain the project. Questions and feedback point to support for the project overall and for NaiKun Wind's program for ongoing monitoring, with clear interest from residents in being kept informed as plans evolve so everyone can be confident that the project is developing in a responsible manner that minimizes impacts and maximizes benefits.

In early August, a consultation summary report will be submitted by NaiKun Wind explaining progress with the assessment to date and what the next steps will be. Forming part of the summary report will be a table summarizing the many comments submitted to the EAO during the public comment period, which ended July 12. In addition, NaiKun Wind will prepare a response to each comment which, together with the summary report, will be publicly available on the EAO website and NaiKun's website.

Early Construction Planning

At this point in development, it is important to begin assembling the right team to plan and undertake project construction and we are speaking with several world renowned companies that would support our contracting effort as we move into the building stage. Our plan has Siemens responsible for both supply and installation of the turbines and HVDC transmission system, with other resources handling procurement and installation of turbine foundations, inter-array cables, scour protection, management of staging areas and general project oversight.

We are currently in discussions with a shortlist of companies that can assist us in management and implementation of the project as a whole and of the specialized marine construction activities. We expect to make a final decision in the near future.

Strategic Partner Selection

Another high-priority file for us over the next quarter or two is selecting a second strategic/equity partner for Phase 1. NaiKun Wind's strategy from the outset has been one of leveraging our role as project developer and we thus seek to bring a second strategic partner on board to join ENMAX Corporation and NaiKun Wind as Phase 1 owners.

Ideally, the new partner will bring specific strategic value that enhances our potential for success in important ways. We are continuing discussions with a number of parties regarding potential investment and support.

Conclusion

The NaiKun Wind team is continuing to achieve its internal development objectives on schedule and with each passing month we grow more confident in the future of our project and its potential to bring significant benefits to local communities and the province of British Columbia as a whole. We are also confident the Clean Power Call will move forward and that BC Hydro and the provincial government will soon determine how to proceed. Additionally, the government reiterating this week that it does not want to make greater use of the Burrard Thermal natural gas-fired generating facility bodes well for the size of the Call.

We are heartened that British Columbia continues to exhibit strong leadership in environmental stewardship and economic development through clean energy in the implementation of its Energy Plan. Our province is in good company to be sure, with Ontario exhibiting similar vision through its Green Energy Act, 2009 and the United States progressing with the American Clean Energy and Security Act.

NaiKun Wind continues to move forward with multiple initiatives that add value to the corporation, while at the same time conserving cash ($19.52 million as of March-end) until the day we have a power sale agreement in place. I hope you'll be watching closely as an exciting second half of 2009 unfolds for NaiKun Wind.

Sincerely,

Paul Taylor, President and CEO

NaiKun Wind Energy Group Inc.

Caution Regarding Forward-Looking Statements - This news release contains certain forward-looking statements, including statements regarding the business and anticipated financial performance of the Company. These statements are subject to a number of risks and uncertainties. Actual results may differ materially from results contemplated by the forward-looking statements. When relying on forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and should not place undue reliance on such forward-looking statements. The Company does not undertake to update any forward-looking statements, oral or written, made by itself or on its behalf.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • NaiKun Wind Energy Group Inc. - Investor Relations Enquiries
    Peter Murray
    Manager, Investor Relations
    604-631-4494
    pmurray@naikun.ca
    or
    NaiKun Wind Energy Group Inc. - Media Enquiries
    Doug McClelland
    Director, Communications
    604-631-4487
    dmcclelland@naikun.ca
    www.naikun.ca