MicroPlanet Technology Corp. (MP-TSXV)
Interview with:
Brian Reidy, President and CEO
Business News, Financial News, Stocks, Money & Investment Ideas, CEO Interview
and Information on their
energy solutions for utilities and customers to promote more reliable power delivery and electrical energy conservation, regulating the voltage delivered to a business or home, reducing the amount of electricity needed.


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MicroPlanet Technology is bringing products to the market that improve electric power grids, both in terms of reliability and efficiency, thereby benefiting both the utility and the consumer

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Energy Technology

MicroPlanet Technology Corp.

100 South King Street, Suite 240
Seattle, WA 98104

Phone: 206-625-0851

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Brian Reidy
President and CEO

Interview conducted by:
Lynn Fosse, Senior Editor
November 3, 2005

Brian Reidy
President and CEO

Mr. Reidy is a founder of MicroPlanet and MicroPlanet, Ltd., the predecessor of MicroPlanet. Mr. Reidy has been Chief Executive Officer of MicroPlanet since 2001 and a director of MicroPlanet since 1994. From 1999 to 2001, Mr. Reidy was a practice leader for Towers Perrin, an international consulting firm. From 1995 to 1999 he worked for Hewitt Associates, an international consulting firm, where he successfully established the Calgary, Alberta office as well as the compensation consulting practice in New Jersey. From 1994 to 1995, Mr. Reidy was a Vice-President of the Chase Manhattan Bank. From 1991 to 1994, he worked as a process improvement expert and human resources strategist for Kraft General Foods. Prior to that, Mr. Reidy was a compensation consultant for The Wyatt Company and an IT Consultant for Anderson Consulting.

Mr. Reidy has a Bachelor of Science in marketing and advertising from Indiana University and a M.B.A. in finance and IT from the University of Colorado.

Company Profile:
About MicroPlanet Technology Corp.

Based in Seattle, Washington, MicroPlanet is a distributed-energy technologies company that offers least-cost energy solutions for utilities and customers to promote more reliable power delivery and electrical energy conservation. The Company manufactures and markets a proprietary line of electronic voltage regulation products. MicroPlanet's Low Voltage Regulator™ (LVR™), High Voltage Regulator™ (HVR™), Enterprise Voltage Regulator™ (EVR™) and Enterprise Voltage Regulator 3P™ (EVR 3P™), regulate the voltage delivered to a business or home, reducing the amount of electricity needed. MicroPlanet’s voltage compliance products provide electric utilities a new tool for peak load reduction, conservation, low voltage mitigation and an interface for distributed generation.

MicroPlanet is a public company whose common shares are listed for trading on TSX Venture Exchange (TSXV) under the symbol: “MP”.  The Company has approximately 21.0 million common shares outstanding.  Visit MicroPlanet at: www.microplanetltd.com and www.investorfile.com.

CEOCFO: Mr. Reidy, please tell us what was your vision when you founded MicroPlanet and where are you today?
Mr. Reidy: “MicroPlanet is a technology company that is devoted to improving the efficiency of the electric utility grid. In fact, if we look at it more broadly, MicroPlanet is in the business of improving the human condition by intelligently using technology to reduce inefficiency.”

CEOCFO: How do you improve efficency?
Mr. Reidy: “Our first foray is into electric utility infrastructure and we have a line of products in what is called ‘distributed energy technology’. MicroPlanet’s HVR, EVR and EVR 3P help improve electric power grids, both in terms of reliability and efficiency. They are point-of-service voltage regulators that use power electronics; the products integrate both digital technology (e.g., computer technology), as well as traditional physics in the form of a transformer. These ‘electronic voltage regulators’ are installed at the delivery interface between the electric grid and the each of the utilities customers. This means at the meter; most people in the United States and Canada have a meter and you would install MicroPlanet’s products at the meter.”

CEOCFO: How does your meter benefit the customer?
Mr. Reidy: “We have several different product lines, but there are two primary applications and the first one is for reliability. There are about 5 million to 10 million customers in the United States that don’t consistently get voltage within the regulatory standards, which is 114 and 126 volts. The impact to these customers is that their lights flicker and it takes a long time for hot water to boil, if ever, on an electric stove. It can also cause T.V. screens to be smaller and decrease the life span of electronic equipment. It is a very frustrating situation for people with low voltage. Our product, the LVR, installed at the meter will actually help improve low voltage and therefore improve the reliability of delivered voltage, which translates into whether or not these customers have electricity. So this first line of products from MicroPlanet deals with reliability. The product is sold to the utility and it is installed at individual customer sites to help with that problem.

The second set of products that MicroPlanet offers, help improve the efficiency of the distribution system. Both problems, poor reliability and efficiency, stem from the fact that the electric utility grid is about 50 years old. In fact the structure of the current electric grid was conceived of by Thomas Edison. Therefore, the fundamental model that we have is really 100 years old. Much of the infrastructure on the grid is 50 years old at worst and at best 20 to 30 years old, so it’s a very old system. In fact, the standard, the 114 to 126 volts, was designed and agreed upon by regulators in 1954. MicroPlanet believes that there have been an awful lot of advances in technology since 1954, and many of them improve the precision of things around us, whether it is lighting, air conditioning or a computer. Hence, the basic premise of our technology is to use new technology to improve the precision of the electric grid.

Getting back to the efficiency side, because of this 1954 standard and the old grid, most of us either get too much voltage, which translates into a higher electric bill and/or a decreased life span for your electronic equipment. MicroPlanet also has products for commercial organizations; these are mid-sized commercial organizations such as a fast food restaurant or convenience store. The product is installed at the meter and it will reduce the voltage that the utility delivers. The average voltage delivered in the United States is about 122 volts; if you reduce voltage down to 114 volts, it is a reduction of 8 volts, so you should see a savings of around 10%. I was on a call with some folks from one of the several Congressional committees that are talking about energy and the term ‘energy emergency in the United States’, is starting to by used in some of these dialogues. In the stage of crisis that we are in, 10% would be larger on the electric utility grid than almost any other adjustment that’s been made on the grid over the last 20 or 30 years. The flip side, there is a small portion of customers in the United States, 5 million to 10 million that receive too little voltage, which is a frustration for the customers.”

CEOCFO: You are selling to the electric utilities?
Mr. Reidy: “Yes, we are selling our products today to the electric utilities to help them deal with capacity shortfalls. People on the east coast would probably be familiar with the blackout experience a couple of years ago and some of the capacity problems that you ran into. On the west coast in California, we have the same kinds of problems in August and July when people are running their air conditioners. The HVR could be installed by the utilities to help resolve capacity shortfalls. It could be done in a timeframe and a cost that is less expensive than traditional infrastructure.”

CEOCFO: Since your products can save consumers 10% and help the utilities as well shouldn’t there be a rush to install them?  Don’t the utilities care?
Mr. Reidy: “I think it’s a great question; I feel the question really is why do the utilities give the appearance of not caring. The answer has to do with the two problems that I mentioned – reliability and energy efficiency. On the reliability side, the utilities care about the reliability problem; the reason they care about customer reliability is that if there are a large number of customers that complain to the Public Utility Commission in a state or local area, the utility will have a hard time getting a rate increase. Therefore, when they go in for a rate case, which happens periodically with every utility; if reliability has been a demonstrated problem in their service territory they would have to explain why. If they don’t deal with these concerns the regulatory bodies will basically, A, tell them to come back when you fix these, or B, we are not going to give you the rate increase, which could be a major problem. So they care about reliability.

The second one, energy efficiency is in direct conflict with the goals of investor owned utilities. You must understand that the utility industry is made up of about 3 or 4 different types of utilities. Most of the ones that people are serviced by are the investor owned utilities that are designed to make a profit. If we put a product in that saves energy and the regulatory incentive structure does not identify the product as a value added piece of infrastructure allowing the utility to capitalize the asset, the utilities will loose revenue and have a capital expense. So they get hit both on the revenue side and the expense side, so it’s not a rational economic decision for them to put these products in. Therefore, utility reluctance to move programs forward in some instances is very rational, because it will impact their revenue and their profitability and therefore their share price with their investors, which is a very reasonable and logical response. So the issue rests with the incentives structures that are in place today, which are essentially also 50 years old. The regulatory incentive model that we’ve always used in the United States is that you are better off to build more infrastructure, put more capital in the ground and we will pay you for doing that. When the country was growing like the Chinese or Indian infrastructure, which occurred in the US right after World War II, and until the 70’s and 80’s; that incentive structure made sense.

So the problem rests with old incentive programs that the regulators governing these industries use to drive utility industry behavior. The US electric demand is growing consistently but not at such a rapid pace that the industry should be motivated to put new infrastructure in the ground as a first response. We should be taking the infrastructure that we have and find more ways to make it efficient first, then move to build.

So in summary, I would say that the utilities care. We never have a problem motivating a utility to talk to us. Despite the lack of regulatory incentives many utilities have taken the position that they are trying pilot programs with us and looking at ways to make our products work for them, so that’s to their credit. When the regulatory environment moves around and the incentives structures are onside, I don’t think that we will have an issue with the utilities in moving product.”

CEOCFO: How does MicroPlanet, sitting on this good opportunity, get the changes you need to make it a reality?
Mr. Reidy: “First, I’d like to mention the markets that we are tackling. We have two commercial products – the EVR and EVR 3P - these products are sold directly to corporate entities. For example, while these organizations are not customers today, facilities such as a stand alone McDonalds or Exxon Mobil mini-mart are targets. In the commercial sale, we sell our product to the customer who installs it on the customer side of the meter and all of the benefits in terms of electrical usage and increased life span of invested capital accrue to the customer. That market is moving right now; we are bringing our first products out to the market today and we already have customers signed up to put them into their sites.”

CEOCFO: MicroPlanet has a very timely product!
Mr. Reidy: “I would like to tell you that we planned it that way, but it is as much luck as good planning.”

CEOCFO: What are you doing to encourage the regulators?
Mr. Reidy: “On the regulatory side, we are working with various regulators and we have had an introductory discussion with the Federal Energy Regulatory Commission that if a utility is favorably inclined to install MicroPlanet’s technology, FERC will work with the local utility and PUC to find a way to make the rate structure work. We have done some lobbying, working through the regulatory bodies in the U.S. in different parts of the country and then work with utilities that are not investor owned utilities, which are public entities. The public entities actually are less profit orientated and generally look at more ways to conserve capital and help their customers. Of the 3,200 utilities in the United States there are probably 100 or 200 that are investor owned and those are very big utilities, another 3,000 of these smaller public utilities that are not so motivated by profit. We have a very large project out in the Pacific Northwest, where we are installing 500 of the HVR units to demonstrate to the utilities and the regulators that there are savings. I can tell you that the first of those units are installed and the results are coming back, quite favorably in terms of the energy savings.”

CEOCFO: Are there competitive products?
Mr. Reidy: “There are other products that do voltage regulation, but to our knowledge there are no other companies selling an electronic voltage regulator for point of delivery or point of service. Other products exist that work at the utility line level or a substation level and there is old technology that was marketed years ago. Most of these other technologies are electro-mechanical and as a result are physically very large – the size of an electrical closet or central air conditioning unit for example. In contrast, our product is about the size of a desktop computer…there are a number of issues such as cost, footprint and target size that differentiate MicroPlanet’s products. We are not aware of any company within our target customer space. We are talking to utilities in Asia, South America, Europe, the United States and Canada, so we’ve got a pretty good global coverage from our dialogue. We suspect that if someone else was putting out a product like ours, with our major selling points, it would have been pointed out to us.”

CEOCFO: What is the financial picture at MicroPlanet today?
Mr. Reidy: “We started out originally as all early stage companies do, with support from a great group of Angel investors. There is a fairly good community of people in Seattle, who had done pretty well during the late 90’s and early 2000’s with software technology. Also, it helped that many of the people in the Pacific Northwest are inclined towards energy efficiency and conservation. As the market opportunities got bigger, we had to look for more and larger investment opportunities. In the recent past, we’ve gone out and talked to the venture capital community and had a lot of discussions, but found out that they were not ready for a product like ours just yet. So we wound up looking for alternative forms of financing. Our product is an energy play and investors have to understand both the infrastructure and then the marginal cost of energy in terms of the commodity market. There are probably two markets in North America that understand energy and related costs well - Calgary and Houston.

Since I had connections in Calgary, we went up to Calgary almost on a whim and one of the guys that I worked with who had been an early investor felt that he could pull some friends together and he did. Therefore, on a one-day trip we raised almost as much money as we did with our Angel investors over a couple of year period. We then realized that there was potential in the Canadian market and one of the investors suggested that we consider an alternative market structure in Canada called the Toronto venture exchange or the TSXV. It is a mini AMEX or mini NASDAQ that allows retail people to participate in small early stage companies. The TSXV has a structure called a Capital Pool Company that operates almost like a public venture capital firm; in a Capital Pool Company a group of business people or industrialists get together and pool their money, they look for companies to try to find a fit for their investment dollars. We found a CPC group that we liked and agreed to do a simultaneous secondary financing through the capital markets for this transaction. We closed that round in April of this year (2005) and it was about $7 million Canadian. Hence, those have been our two primary sources of financing, Angel investors and the transaction through the TSXV.”

CEOCFO: In closing, address potential investors. Why should they be interested and what should they realize that they may miss when they first look at your material?
Mr. Reidy: “There are a couple of things, first of all, this is not an R&D company. I was in a meeting with some institutional investors recently and I explained to them that we are way past the R&D stage. We are in the commercialization phase, we’ve had our first large production run; our manufacturing partner is a company called Flextronix. Further, our technology is proven, this isn’t something that is hypothetical, we have UL certification, it is a safe product to put in and it is a commercialized product. I don’t think I need to say too much about energy prices, you can make your own decision about where energy prices are going to go. If you believe they are going to go up, the economic incentive for employing our products will just keep getting better.

We have products deployed with about 20 utilities and meaning despite all of the regulatory issues, there are utilities using our technology. If an investor thinks in terms of market potential we have a pretty nice sized opportunity. Management estimates a $35 billion addressable market across the three segments in the US alone, 1) reliability for the residential segment, 2) the commercial segment and 3) the potential utility energy conservation…and the US market is small compared to China and India. In terms of the management team and the board, one of the gentlemen that was involved in the development of Department of Energy is on our board and has been for a couple of years. We’ve got a very senior board of directors and our team is made up of utilities engineers, which includes one person that actually helped write the standard for the inter connection of distributed energy, things like small fuel cells. Therefore, we have a very senior team, both on the board and on the management team. We understand the industry and we see ourselves as working from the inside out, which offers a lot of opportunity to drive the market.”


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“There are about 5 million to 10 million customers in the United States that don’t consistently get voltage within the regulatory standards, which is 114 and 126 volts. The impact to these customers is that their lights flicker and it takes a long time for hot water to boil, if ever, on an electric stove. It can also cause T.V. screens to be smaller and decrease the life span of electronic equipment. It is a very frustrating situation for people with low voltage. Our product, the LVR, installed at the meter will actually help improve low voltage and therefore improve the reliability of delivered voltage, which translates into whether or not these customers have electricity. So this first line of products from MicroPlanet deals with reliability.” - Brian Reidy


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