The past dozen months have been as much fun as electro-shock therapy. But Maxim Power Corp. CEO John Bobenic reports that, like Sir Elton John, he and the Calgary-based electricity producer are still standing.

Maxim shareholders aren’t so sure. They emerged with bloody noses after a scarifying ride through the wind tunnel of Alberta’s deregulated power market.

Bobenic believes the four-year-old micro-cap has come through relatively unscathed, maybe even stronger for the experience. Sadly, the same can’t be said for the price of shares in the tiny independent (MXG-X).

In May 2001, Maxim’s share price reached $2.30 on the TSX Venture Exchange. Canadian Business Magazine toasted it as the fourth best-performing stock in Canada.

Dave Olecko, Business Edge
Maxim Power Corp. CEO John Bobenic is wired over what he calls the "new carbon economy."

But last week, that rosy picture remained shrouded in thorns. Have you got a couple of Canadian dimes? Step up and buy a Maxim share.

“It’s all part of growing up,” reasoned Bobenic, a former chief financial officer for Enmax who assumed leadership of Maxim in the summer of 2000, six months before deregulation kicked in.

That first euphoric year, electricity sold for an average $133 per megawatt-hour on the under-supplied Alberta power grid. By last summer, the average 2002 price had drooped to $40, though the market has been showing signs of renewed vigour.

“I’m not particularly proud of what the corporation had to endure,” admitted Bobenic.

Maxim tried to profit from spot sales in a crazily volatile market. The company got royally roasted, like so many others. “It was a risk and it hurt us. We were like the Calpines (i.e. troubled California producer Calpine Corp.) of the world, anticipating a stronger forward curve,” said the CEO.

“There have been a lot of failures around us. We’re fortunate to still be here,” Bobenic rightly observed.

Still, revenue climbed significantly last quarter. And not all investors ran scared when North American power markets evaporated.

Last April, Finning International Inc. showed faith, spending $15 million for a 35-per-cent stake in Maxim Power. And the endorsement of the Vancouver-based construction giant couldn’t have come at a more opportune moment.

The two companies have entered into active partnership, teaming on deals such as the Vancouver Landfill Gas Cogeneration Project. Finning provides equipment and construction services for the term of 20-year power purchase agreements with B.C. Hydro and CanAgro Produce Ltd.

Bobenic calls Finning the “perfect big brother” for Maxim Power. “It’s a great partnership for a small company like us,” he said. “Our relationship with Finning gives us tremendous leverage to enter European markets with strong technology, plus access to financial support.”

For such a pee-wee producer – total generating capacity: a bit less than 60 megawatts (MW) – Maxim has stirred major interest from the start. It’s because, instead of coal or natural gas, it uses alternative fuels to fire many of its power generators: waste methane gas from decomposing landfills or flare gas from producing wells.

Bobenic calls it the “new carbon economy. We have 10 MW of assets which carry essentially zero fuel costs,” he said. “When your carbon costs you little or nothing, you’re always competitive.”

Symbiotic ventures such as the Vancouver landfill project serve to illustrate. Maxim/Finning plan to pipe landfill gas from suburban Delta into reciprocating gas engines at the site of a “cogeneration” plant at a tomato hothouse, run by CanAgro.

“The landfill gas spins the generators, and the electricity that’s produced is sold to B.C. Hydro,” explained Bobenic. “Exhaust heat and waste heat from the cooling system is recovered and recycled to heat the hothouse. So CanAgro gets low-cost heat and we get low-cost carbon to generate electricity.”

About 25 MW of Maxim’s generating capacity is tied up in similar joint ventures in France, Germany and Asia. Almost 35 MW is produced in Ralph’s World.

But though Bobenic anticipates gradual improvement in the Alberta market, the company seeks opportunity farther afield. “With the exception of B.C., we’re not focusing any significant new investment in (the region),” he said. “Most of our focus in 2003 will be Europe and Latin America.”

Maxim ventures in Germany and France are long-term, low-risk and well-leveraged. He believes they offset the risk of operating in Alberta.

Maxim has another ace in the hole. It won’t get stuck with non-profit power plants cluttering up the bald prairie.

“The technologies we typically employ are modular and portable,” Bobenic explained. “If everything goes to hell in a handbasket in Alberta, we’ll just pick up the units and move ’em to France.”

Once bitten, twice shy.