NEW YORK, Oct. 16, 2007 (PRIME NEWSWIRE) -- MMC Energy, Inc. (Nasdaq:MMCE) announced today that on October 9, 2007, the Company was notified by its energy manager that it was suspending bidding spinning reserve services into the California Independent System Operator ("CAISO") system for the Company's three facilities (the "Facilities"), effective October 10, 2007, due to the uncertain regulatory environment surrounding the provision by the Company of these services. The Facilities are currently certified to provide spinning and non-spinning reserves to the CAISO system. Consequently, the Company has begun to bid exclusively non-spinning reserves into the CAISO system, a similar but lower priced ten minute power ancillary service, critical to the reliability of the CAISO system. As the Company previously disclosed, on June 4, 2007 the CAISO issued a white paper which called into question the Facilities' qualification to provide spinning reserves. On September 20, 2007, the CAISO issued an amendment to this white paper which more narrowly focused regulatory uncertainty on the spinning reserve services provided by facilities configured similar to the Facilities operated by the Company.
Based on historical pricing reported by the CAISO, non-spinning reserves have priced at a 32% discount to spinning prices for the twelve month period ended September 30, 2007, and at a 38% discount to spinning prices for the two year period ended September 30, 2007. As this general trend can be expected to continue, the Company expects that continued suspension of bidding spinning reserve services could have a material adverse effect on the Company's results from operations.
The Company's Chula Vista and Escondido facilities were certified by CAISO to provide spinning reserve service in June 2006, and Mid-Sun certified for spinning reserve service in June 2007. The Facilities' spinning reserve certification remains in effect. The Company is pursuing the matter vigorously, as advised by its FERC counsel, to remove the uncertainty surrounding this status with a view toward allowing its energy manager to resume bidding spinning reserves. There can be no assurance the Company will be successful in these efforts.
"MMC continues to execute on its business plan to upgrade its Chula Vista and Escondido power generation facilities, located in Chula Vista and Escondido, California, and to pursue additional acquisitions utilizing the proceeds from its recent public offering of common stock," said Karl W. Miller, Chairman and Chief Executive Officer of MMC Energy, Inc.
As previously disclosed, the Company expects that ancillary services will be less material to the Company's overall revenue stream as capacity and energy sales are expected to provide a far greater majority of future revenues upon completion of the Chula Vista and Escondido upgrades. There can be no assurance, however, that the Company will achieve these upgrades or complete additional acquisitions.
The Company also notes that each of its three facilities are expected to remain profitable and contribute positive cash flows even in the event of losing the ability to provide spinning reserves on a permanent basis. On July 5, 2007, the Company closed its public offering of common stock netting proceeds of approximately $46,088,116 of proceeds to be used for the aforementioned upgrades and acquisition projects. The Company's pro forma Balance Sheet as of June 30, 2007 adjusted for the offering is as follows:
June 30, 2007
Actual As Adjusted
--------------------------------
(Unaudited)
Cash and cash equivalents $ 2,160,943 $ 48,249,059
Total assets 11,745,141 57,833,257
Long-term debt 2,185,164 2,185,164
Total stockholders' equity 6,408,745 52,496,861
Shares issued and outstanding 4,816,437 13,859,786
Book value per share, net $1.33 $3.79
About MMC Energy, Inc.:
The Company is an energy company that acquires and actively manages electricity generating and energy infrastructure-related assets in the United States. The Company's mission is to acquire, directly or through joint ventures, a portfolio of small to mid size electricity generating assets, generally below 250 megawatts or "MW."
The Company creates long-term value for its shareholders through discounted asset acquisitions and hands on post-acquisition asset management. The Company is traded on the NASDAQ Global Market in the United States and the Deutsche Bourse in Germany.
The Company actively invests in energy assets which provide essential services to key markets such as California, which are vulnerable to energy demand spikes. To date, the Company has acquired three electricity generating assets in California, totaling 110 MW of capacity. The Company is currently in the process of upgrading two of these assets, MMC Chula Vista and MMC Escondido.
The Company is continuing to pursue an aggressive portfolio acquisition and growth strategy targeting power generation facilities and energy infrastructure assets primarily in California, Texas, the Mid-Atlantic, and the Northeastern U.S., where regulatory capacity requirements and a lack of peak energy supplies make peak power generation facilities valuable.
Forward-Looking Statements:
This press release contains 'forward-looking statements' within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, including without limitation those statements regarding the Company's ability to expand existing generating facilities and exploit acquisition opportunities. These statements are expressed in good faith and based upon a reasonable basis when made, but there can be no assurance that these expectations will be achieved or accomplished. Although the forward-looking statements in this release reflect the good faith judgment of management, forward-looking statements are inherently subject to known and unknown risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements including, but not limited to, those risks described in the Company's Annual Report on Form 10-KSB and in its other public filings. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The Company undertakes no obligation to update these forward-looking statements.