CAMBRIAN ENERGY

Company Profile

Overview

Founded in 1980, Cambrian Energy Development LLC is one of the leading landfill gas-to-energy developers in the world. Cambrian is the most successful independent developer of landfill gas-to-energy projects in the United States with more than 50 projects completed and additional projects in various stages of development.

Cambrian has also developed other biomass-fueled projects, such as those using digester gas and biosolids (sewage sludge) and has additional such projects in development.

Cambrian is taking a collaborative role in working with some of the leading carbon and other emission brokerage organizations in the world in qualifying and marketing available voluntary emission reduction credits associated with its biomass-fueled projects, including voluntary carbon emission reduction credits

Cambrian has developed or has acquired rights to advanced technologies applicable to its biomass-fueled projects that significantly enhance the economic results from its projects. These technologies include (i) internal combustion engine upgrades and modifications that lower the heat rate (improve efficiency), reduce emissions, extend maintenance intervals and increase engine-generator capacity, (ii) methodologies and equipment to enhance the rate of generation of landfill gas and digester gas and reduce the quantity of residual biomass materials (whether municipal solid waste or biosolids), and (iii) non-catalytic internal combustion engine exhaust emission reduction technology that meets existing and proposed emission requirements of the South Coast Air Quality Management District in Southern California.

Cambrian is recognized as among the most knowledgeable, innovative, creative and persistent developers in the alternative energy industry. Cambrian’s personnel possess a unique blend of engineering, legal and financial skills that have led to its success in meeting the increasingly complex challenges that are entailed in the completion of landfill gas-to-energy projects in a world of stricter environmental regulation, deregulated energy markets and sophisticated financial structures. Those areas of expertise include the following:

Ø Working experience with all of the technologies that have been or are in the process of being commercially employed to convert landfill gas to higher value energy uses:

· electric power (using reciprocating engines, gas turbines, steam turbines and organic Rankin cycle turbines)

· cogeneration (sequentially producing electric power and one or more of heat, steam, hot water and cold water)

· medium Btu gas

· high Btu gas (i.e., pipeline quality gas)

· LNG

· CO₂.

Ø Thorough understanding of operational and regulatory requirements affecting solid waste landfills which must be accommodated in the development of a landfill gas-to-energy project.

Ø Ability to identify, optimize and adapt one or more energy use technologies to the specific needs of end-use energy customers so as to provide economic advantages to both the customer or customers and to the energy project -- perhaps the most difficult feat to accomplish in an energy development project.

Ø Capability to work effectively with both regulatory permitting agencies and equipment vendors in finding technical approaches for equipment selection and implementation that will allow issuance of permits needed to meet both project needs and regulatory requirements.

· Extensive experience in obtaining conditional use permits and building permits and in assisting in meeting permitting agency and community concerns that may involve topics such as air modeling (e.g. touchdown, and emissions), noise, traffic, and the use of landscaping and berms as visual screens and as a means for noise attenuation.

Ø Drafting of all necessary legal documentation, which usually include a Landfill Gas Lease or other Resource Lease, a Site Lease and an Energy Sale Agreement, that set forth the working relationships and responsibilities of each party to the energy project and address at a minimum the following issues:

· Rights to collect and use landfill gas or other fuels (e.g. digester gas and biosolids).

· All necessary land use rights and real property title rights, including ingress and egress easements, pipeline and power line easements, existence of all property title rights and other entitlements to successfully develop and, if necessary, secure financing for energy project.

· Procedure to provide for accommodation of landfill gas collection system for commercial purposes while maintaining its ability to function to meet regulatory needs for control of landfill gas emission and migration.

· Creation of structure to fully utilize any available tax incentives for the energy project, such as Section 29 tax credits and Section 45 tax credits.

· Reservation of rights to quantify, qualify, market and realize economic value from potential voluntary carbon emission reduction credits.

· Identification of parcel of land for construction of energy production facility.

· Sale of end energy product to an energy customer on terms that provide for energy savings for the customer and sufficient economic return for the energy project.

· Provisions to allow for the limited recourse debt financing of the energy project by institutional lenders while fully protecting the underlying interests of each landfill owner or other resource owner.

Ø Understanding the requirements to qualify for and to utilize tax incentives for landfill gas-to-energy projects, such as those set forth in Section 29 and Section 45 of the Internal Revenue Code.

· Cambrian was a partner in an entity that received one of the leading published Department of Treasury private letter rulings involving Section 29 tax credits.

· Cambrian has participated in 3 major financings with a Fortune 50 U.S. company that monetized Section 29 tax credits for Cambrian and its partners.

Ø Understanding the requirements to qualify for and to realize economic value from available voluntary carbon emission reduction and other emission reduction credits associated with biomass-fueled projects, such as landfill gas, digester gas and biosolids conversion; maintaining strong working relationships with some of world’s most experienced brokerage organizations for carbon and other emission reduction credits to realize maximum economic value from the marketing of such credits.

Ø Ability to prepare detailed financial models for proposed energy projects in formats that have proved acceptable (i) to institutional equity investors, (ii) to large, publicly-held co-development partners providing equity capital to projects, (iii) to project finance lenders, (iv) to owners and operators of landfills and other energy resource owners, and (v) to industrial end-use energy customers.

Ø Credibility and ongoing long-term relationships with nationally recognized firms experienced in various facets involved in implementing landfill gas-to-energy, digester-gas-to-energy and biosolids-to-energy projects, including the following types of organizations:

· Institutional equity investors for projects developed by Cambrian

· Nationally recognized co-developers with significant capital for equity investment

· Lenders of limited recourse project financing to landfill gas-to-energy projects

· National landfill gas engineering and operating firms

· National and international carbon and other emission credits brokerage firms

· Construction contractors experienced in installing energy facilities of all types

· Construction management firms

· Air permitting specialists

· Pipeline and power line contractors

· Energy equipment manufacturers and suppliers

· National energy marketing firms (e.g., electric power and gas trading firms and LNG marketing and transporting firm)

Cambrian’s development activities have been truly national in scope. Projects have been developed in the following regions of the United States:

West California, Hawaii, Washington

Southwest Arizona, Texas

Midwest Arkansas, Kansas, Minnesota

Southeast Florida

Mid Atlantic Pennsylvania, Tennessee

Northeast New York, New Jersey, New Hampshire, Maryland

Cambrian also has experience in the development of international energy projects. It assisted in the preparation of feasibility studies, in energy sale negotiations and in energy development right negotiations for energy projects in Mexico, Nicaragua, Germany and the Philippines.

Cambrian attributes its success in developing energy projects to its adherence to a philosophy of maintaining an equitable sharing of the potential economic benefits from a project among the project participants. Cambrian believes that in implementing this philosophy, it creates working relationships that result in the greatest degree of cooperation among the interested parties in an energy project so as to enhance the likelihood for the successful long-term operation of that project.

Historical Relationships

Although Cambrian is now developing projects on its own, Cambrian historically co-developed its energy projects with a number of development partners. Most of those partners have been subsidiaries of large, publicly held utility or industrial companies. However, in instances where a particular landfill gas-to-energy project did not fit the investment profile for one of its primary development partners, Cambrian has been successful in completing the development of projects with smaller co-development partners.

During its more than 25 year history, Cambrian has co-developed its projects with four different primary development partners: Pacific Lighting Energy Systems, Solar Turbines Incorporated, NEO Corporation and the Algonquin Power Income Fund

Since 2003 Cambrian has owned and operated projects either on its own or with additional equity investments received from other equity investors

Pacific Lighting Energy Systems (1981 – 1986)

In 1981 Cambrian entered into a contractual relationship with Pacific Lighting Energy Systems (“PLES”), which was a wholly-owned subsidiary of Pacific Enterprises, a $5 billion publicly-held utility holding company that was the parent company of Southern California Gas Company. Cambrian became the exclusive marketing arm for Pacific Lighting Energy Systems in the development of energy projects in the landfill gas industry.

This relationship began shortly after the adoption of the Public Utilities Regulatory Policies Act in 1978 (“PURPA”), which was a federal statute that enabled the development of a great number of alternative energy projects that were intended to help solve the dependency on foreign oil that resulted in the energy crisis that existed in the United States at that time. In effect, PURPA compelled the regulated utilities to deal fairly with independent electric power projects in terms of both the purchase of power generated by such projects and the providing of certain other services on an equitable basis. In addition, PURPA exempted alternative energy projects that met its guidelines from regulation as utilities under federal and state law.

During its relationship with PLES, which lasted through December 1986, Cambrian and PLES accomplished a number of industry firsts. Among those were the following:

Ø Development of the largest reciprocating power plants operating on landfill gas at 9,300 kilowatts each (Toyon Canyon Landfill, California and Penrose Landfill, California).

Ø Development of the largest number of landfill gas-to-electric power projects completed during this period (12 projects).

Ø Demonstration of the first motor vehicle powered from processed and compressed landfill gas (Penrose Landfill, California, 1984).

In 1998 all of the landfill gas-to-energy projects owned and operated by PLES were acquired by Ogden Energy Corporation in connection with the necessity to meet certain regulatory requirements pertaining to non-regulated activities in connection with the merger of Pacific Enterprises, the parent of PLES, with San Diego Gas & Electric Company to form Sempra Energy. Cambrian continues to participate in the projects now operated by Ogden Pacific Energy.

Solar Turbines Incorporated (1987-1989)

In January 1987 Cambrian entered into a three-year development partnership with Solar Turbines Incorporated, which is a manufacturer of industrial gas turbines and is headquartered in San Diego, California. Solar Turbines Incorporated is a wholly-owned subsidiary of Caterpillar, Inc., which is a $19 billion in annual sales, publicly-held New York Stock Exchange company.

During its development relationship with Solar Turbines Incorporated, Cambrian co-developed five (5) landfill gas-to-energy projects, including the first project to use a recuperated gas turbine operating on landfill gas (Santa Cruz Landfill, California).

During this relationship Cambrian also developed its first cogeneration project (Kapaa Landfill, Hawaii).

NEO Corporation (1995-2001)

In 1995 Cambrian entered into a joint development relationship for landfill gas-to-energy projects with NEO Corporation, which is a wholly-owned subsidiary of NRG Energy, Inc. NRG Energy, Inc. is the seventh largest independent power producer worldwide. NRG Energy, Inc. is, in turn, a subsidiary of Northern States Power Company, which is a $2.8 in annual sales publicly-held electric power utility based in Minneapolis, Minnesota. Northern States Power Company has announced that it is merging with New Century Energies, a Denver-based publicly-held utility with more than $3.3 billion in annual sales, to form Xcel Energy, Inc.

As was the case with each of Cambrian’s prior relationships with PLES and with Solar Turbines, NEO Corporation was just beginning to develop energy projects at the time it established its relationship with Cambrian. Cambrian has become the primary co-development partner with NEO Corporation to date.

During its relationship with NEO Corporation, Cambrian co-developed 18 landfill gas-to-energy projects with NEO Corporation.

Cambrian and NEO co-developed some of the largest and most difficult landfill gas-to-energy projects that were completed since the deregulation of the energy markets. Some of the noteworthy projects or accomplishments achieved during this relationship are as follows:

Ø Appearance before the California Public Utilities Commission by Cambrian during hearings involving the implementation of Assembly Bill 1890, the California deregulation of the electric power industry, to successfully secure an Order granting to landfill gas projects the right to receive a “must take” obligation from California utilities during the transition to a Power Exchange market for wholesale purchases of electric power. This was essential in securing financing of landfill gas-to-energy projects during this transition period.

Ø Development of 12,000 kilowatt electric power project using gas turbine and steam turbine technology and 3^rd largest landfill in the United States (BKK Landfill, California – 1996)

Ø Development of (i) 6,400 kilowatt cogeneration project supplying electric power and hot water to Metropolitan Biosolids Center operated by the City of San Diego, and (ii) 3,800 kilowatt electric power project providing retail displacement of power to North City Water Treatment Plant operated by the City of San Diego, both of which facilities are operated using landfill gas from the same landfill (Miramar Landfill, California -- 1997 and 1998).

Algonquin Power Income Fund (2004 – present)

In 2004 Cambrian entered into an agreement with Algonquin Power Income Fund (“Algonquin”) to acquire, own and operate 12 landfill gas-to-energy projects from NEO Corporation, most of which were originally co-developed by Cambrian and NEO Corporation. The acquisition of those projects by an entity co-owned by Cambrian and Algonquin closed in September 2004.

Algonquin is a publicly traded Canadian unit trust with more than $800,000,000 in assets that invests solely in renewable energy and utility infrastructure projects (water and wastewater services).

Cambrian and Algonquin share the management responsibilities of the projects they acquired. Cambrian has primary responsibility for both expanding and, where beneficial, redeveloping the existing energy projects at the landfills where such projects are located.

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CAMBRIAN ENERGY

Company Profile