ELECTRIC SERVICE
AGREEMENT
BETWEEN
IDAHO POWER COMPANY
AND
HOKU MATERIALS, INC
THIS AGREEMENT FOR ELECTRIC SERVICE is executed
on ___ 9/17/2008 _____ by HOKU MATERIALS, INC, a Delaware
Corporation (“Hoku”) and IDAHO POWER COMPANY, an Idaho
Corporation (“Idaho Power”). In consideration of the
mutual covenants hereinafter set forth, the parties hereby agree as
follows:
SECTION 1 - SPECIAL
CONTRACT
1.1 This Agreement is a Special Contract as
described in Idaho Power’s Schedule 19.
SECTION 2 -
DEFINITIONS
When used in this
Agreement:
2.1. “Commission” shall mean the Idaho
Public Utilities Commission or its successor agency.
2.2. “Construction Agreement” shall mean
that certain Agreement for Construction of Hoku Electric Substation
and Associated Facilities dated as of December 28, 2007, by and
between Hoku and Idaho Power, as such may be amended from time to
time.
2.3. “Contract Load Factor” shall mean
90 percent for purposes of establishing the energy blocks for
monthly billing.
2.4. “Embedded Date” shall mean June 1,
2013.
2.5. “Embedded Rate” shall mean the
demand and energy rates detailed in the Company’s
then-effective Schedule 19T.
2.6. “Excess Demand” shall mean the
average kilowatts supplied during the coincident
15-consecutive-minute period of maximum use each day, adjusted for
Power Factor, which exceeds the Total Contract Demand.
2.7. “Excess Energy” shall mean any
kilowatt-hours of energy supplied to the Hoku Facility during the
monthly billing period as measured by the metering equipment
located at the Points of Delivery that exceeds the sum of the First
Block Energy and the Second Block Energy.
2.8. “First Block Contract Demand” shall
mean the monthly number of kilowatts Idaho Power has agreed to make
available to the Hoku Facility in accordance with the Scheduled
Contract Demand in Section 6.
2.9. “First Block Energy” shall mean the
kilowatt-hours determined by multiplying the First Block Contract
Demand by the number of hours in the billing period multiplied by
the Contract Load Factor.
2.10. “Hoku Facility” shall mean the Hoku
Polysilicon Production complex located on One Hoku Way, Pocatello,
Idaho.
2.11. “Interconnection Facilities” shall
mean all facilities which are reasonably required by Prudent
Electrical Practices and the National Electric Safety Code to
interconnect and deliver electrical power and energy to the Hoku
Facility, including, but not limited to, transmission facilities,
substation facilities and metering equipment.
2.12. “Minimum Billed Energy” shall mean
the number of kilowatt-hours determined by multiplying 50% of the
Total Contract Demand for the billing month by the number of hours
in the billing month at the Contract Load Factor.
2.13. “Points of Delivery” shall mean the
locations specified in paragraph 5.2 where the electrical
facilities owned by Hoku are interconnected to the electrical
facilities owned by Idaho Power and where power and energy are
delivered by Idaho Power for the purpose of providing electrical
service for the operations of the Hoku Facility.
2.14. “Power Factor” shall mean the
percentage obtained by dividing the maximum demand recorded in kW
by the corresponding kilovolt-ampere (kVa) demand established by
Hoku.
2.15. “Prudent Electrical Practices”
shall mean those practices, methods and equipment that are commonly
and ordinarily used in electrical engineering and utility operation
to operate electrical equipment and deliver electric power and
energy with safety, dependability, efficiency and
economy.
2.16. “Schedule 19” shall mean the
Company’s then effective Idaho Retail Tariff Schedule
19T.
2.17. “Schedule 32” shall mean the Hoku
tariff schedule of rates and charges or its successor
schedules.
2.18. “Scheduled Contract Demand” is
defined in Section 6.1.1 below.
2.19. “Second Block Contract Demand”
shall mean 25,000 kilowatts.
2.20. “Second Block Energy” shall mean
the total kilowatt-hours supplied to the Hoku Facility during the
monthly billing period as measured by the metering equipment
located at the Points of Delivery less the First Block Energy, but
no greater than 25,000 kilowatts multiplied by the number of hours
in the billing period multiplied by the Contract Load
Factor.
2.21. “Total Contract Demand” shall mean
the sum of the First Block Contract Demand and the Second Block
Contract Demand as specified in Section 6, and as such may be
modified pursuant to Section 6.2 below.
2.22. “Transformer Losses” shall mean
energy losses resulting when a transformer changes the voltage
level of alternating current electricity. Transformer losses will
be accounted for in the initial metering installation.
SECTION 3 - TERM OF
AGREEMENT
3.1 This Agreement shall become effective as
provided in paragraph 15.1 and remain in effect through the
Embedded Date and will be automatically renewed thereafter until
either Hoku or Idaho Power terminates this Agreement as provided in
paragraph 4.1.
3.2 It is the intention of the parties that
following the Embedded Date, the parties shall enter into a new
Special Contract whereby Hoku shall pay energy and demand rates
that are equal to the lesser of the then-applicable Schedule 19
rate or the average of the contract rates in Idaho Power’s
then-effective other “Special Contracts”. These Special
Contract rates will remain in effect on an interim basis until the
next final Commission order in a general rate case
proceeding.
3.3 Service under this Agreement will commence June
1, 2009.
SECTION 4 -
TERMINATION
4.1 Notice of Termination: After the Embedded Date,
either party to this Agreement shall have the right to terminate
this Agreement by delivering written notice of termination to the
other party. The effective date of termination will be specified in
the termination notice, but such effective date cannot be earlier
than 12 months after the date of the delivery of the notice of
termination. If both parties give notice of termination, the
earliest effective date will prevail. If the effective date of a
termination occurs before the new Special Contract is effective
between the Parties as described in Section 3.1 above, then the
applicable energy and demand rates shall be the Embedded
Rate.
SECTION 5 - SERVICES TO BE
PROVIDED
5.1 Supply Obligation: In accordance with Prudent
Electrical Practices and the provisions of this Agreement, Idaho
Power will furnish Hoku’s total requirements for electric
power and energy at the Hoku Facility. Hoku will not resell any
portion of the power and energy furnished under this
Agreement.
5.2 Points of Delivery: Electric power and energy
shall be delivered by Idaho Power at each point generally described
as the load side terminals of the substation transformer 13.8
kilovolt disconnect switches at the Hoku Facility.
5.3 Adjustment for Transformer Losses: Metering on
the load side of the substation transformers will be adjusted for
Transformer Losses.
5.4 Description of Electric Service: Idaho Power
shall supply three-phase, 60 hz alternating current at nominal
13,800 volts, with a maximum steady state variation of plus or
minus five percent (5%) under normal system conditions. Consistent
with Prudent Electrical Practices, Idaho Power will operate within
the capability of its existing system to minimize voltage level
fluctuations, the normal frequency variation to be within plus or
minus 0.05 hz on a 60 hz base.
5.5 Available Capacity: Idaho Power will make power
available to Hoku in an amount equal to the kilowatts of Total
Contract Demand shown in Section 6.1.1.
5.6 Request for Proposals: During the initial term
of the agreement, at Hoku’s request, Idaho Power will use
commercially reasonable efforts to obtain proposals to supply power
to meet Hoku’s summer loads not served by Idaho Power. Idaho
Power will customize such supply request to match Hoku’s
requirements. These additional purchases are subject to Idaho
Power’s ability to deliver the power to Hoku and Hoku’s
acceptance of the price and terms of the proposals. Hoku is
responsible for the full costs of these purchases and any
associated transmission and ancillary service expense to transport
such purchases to the Hoku Facility.
5.7 Release of First Block Energy: With adequate
notice and the written consent of Idaho Power, Hoku may request a
release of all or part of its First Block Energy purchase
commitment in return for credit on its First Block Energy Charge.
The value of the credit will be determined by mutual agreement and
will take into consideration the timing of the notice and Idaho
Power’s ability to manage any supply commitments made on
Hoku’s behalf.
SECTION 6 - CONTRACT
DEMAND
6.1 Contract Demand Provisions prior to the
Embedded Date: The following provisions apply during the period of
time from June 1, 2009 to the Embedded Date, while Hoku is changing
its load at the Hoku Facility.
