BC HYDRO AND ZELLSTOFF CELGAR LIMITED PARTNERSHIP ELECTRICITY PURCHASE AGREEMENT

Power Purchase Agreement

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MERCER INTERNATIONAL INC. | ZELLSTOFF CELGAR LIMITED PARTNERSHIP

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Title: BC HYDRO AND ZELLSTOFF CELGAR LIMITED PARTNERSHIP ELECTRICITY PURCHASE AGREEMENT
Date: 3/2/2009
Industry: Paper and Paper Products Sector: Basic Materials

BC HYDRO

AND

ZELLSTOFF CELGAR LIMITED PARTNERSHIP

ELECTRICITY PURCHASE AGREEMENT, Parties: mercer international inc. , zellstoff celgar limited partnership

Exhibit 10.17

BC Hydro Bioenergy Call for Power (Phase I) EPA

CERTAIN NON-PUBLIC INFORMATION HAS BEEN OMITTED FROM THIS AGREEMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 2, 2009. SUCH NON-PUBLIC INFORMATION HAS BEEN FILED WITH THE SEC ON A CONFIDENTIAL BASIS. THE LOCATION OF THESE OMISSIONS HAS BEEN NOTED BY [*]

BC HYDRO

AND

ZELLSTOFF CELGAR LIMITED PARTNERSHIP

ELECTRICITY PURCHASE AGREEMENT

BIOENERGY CALL FOR POWER – PHASE I

Effective Date: January 27, 2009

- 1 -

BC Hydro Bioenergy Call for Power (Phase I) EPA

TABLE OF CONTENTS


	Page No.
1. INTERPRETATION		1
1.1 Definitions		1
1.2 Appendices		1
1.3 Headings		2
1.4 Plurality and Gender		2
1.5 Governing Law		2
1.6 Industry Terms		2
1.7 Statutory References		2
1.8 Currency		2
1.9 Reference Indices		2
1.10 Conversions		2
1.11 Acknowledgement		3
1.12 Additional Interpretive Rules		3
1.13 General Partner		3

2. TERM		3
2.1 Term		3

3. REGULATORY REVIEW		4
3.1 Regulatory Review Termination		4
3.2 Regulatory Filing		4
3.3 EPA Support		4
3.4 Termination		4
3.5 Effect of Termination		4
3.6 Exemption		4

4. DEVELOPMENT		5
4.1 Development and Construction of the Incremental Seller’s Plant		5
4.2 Permits		5
4.3 Development Reports		5
4.4 Buyer Cost Responsibilities		5
4.5 Changes to Seller’s Plant before COD		5

5. COMMERCIAL OPERATION DATE		6
5.1 Guaranteed COD		6
5.2 Requirements for COD		6
5.3 Buyer Right to Observe		7
5.4 COD Disputes		7
5.5 Early COD		8
5.6 No Liability for Delay		8
5.7 Early Network Upgrades		8
5.8 Postponement of Guaranteed COD		8

6. OPERATION OF SELLER’S PLANT		8
6.1 Owner and Operator		8
6.2 Standard of Operation		8

Celgar Green Energy

BC Hydro Bioenergy Call for Power (Phase I) EPA


	Page No.
6.3 Planned Outages		9
6.4 Records		9
6.5 Reports to the Buyer		10
6.6 Changes to Seller’s Plant		12
6.7 Exemption from Utility Regulation		12
6.8 Disclosure of Information by FortisBC and Transmission Authority		12

7. PURCHASE AND SALE OBLIGATIONS		13
7.1 Pre-COD Energy		13
7.2 Post-COD Sale of Energy		13
7.3 Post-COD Purchase of Energy		13
7.4 Exclusivity		13
7.5 Custody, Control and Risk of, and Title to, Energy		14
7.6 Price and Payment Obligation		14
7.7 Limitations on Delivery and Acceptance Obligations		14
7.8 Deemed Deliveries		15
7.9 Modification to Seasonally Firm Energy Amount		15
7.10 Modification to Seasonal GBL		16
7.11 Buyer Capacity Right		16

8. ENVIRONMENTAL ATTRIBUTES		17
8.1 Transfer of Environmental Attributes		17
8.2 Exclusivity		17
8.3 Representations and Warranties		18
8.4 EcoLogo ^M Certification		18
8.5 Alternate Certification		18

9. METERING		18
9.1 Installation of Metering Equipment		18
9.2 Operation of Metering Equipment		19
9.3 Duplicate Metering Equipment		19
9.4 Delivery Verification		19

10. STATEMENTS AND PAYMENT		20
10.1 Statements		20
10.2 Payment		20
10.3 Taxes		20
10.4 Billing Guideline		20
10.5 Set-off		21

11. INSURANCE/DAMAGE AND DESTRUCTION		21
11.1 Insurance		21
11.2 Damage or Destruction of the Seller’s Plant		22

12. FORCE MAJEURE		22
12.1 Invoking Force Majeure and Notice		22
12.2 Exclusions		23

13. LIQUIDATED DAMAGES		24
13.1 COD Delay		24
13.2 Delivery Shortfalls (Seasonal)		24

Celgar Green Energy

BC Hydro Bioenergy Call for Power (Phase I) EPA


	Page No.
13.3 Capacity Call Delivery Shortfalls (Hourly)		25
13.4 Hourly Firm Credit Table		26
13.5 Exclusive Remedies for Buyer		27
13.6 Exclusive Remedies for Seller		27
13.7 Limits of Liability		27
13.8 Consequential Damages		27

14. PERFORMANCE AND INTERCONNECTION SECURITY		28
14.1 Delivery		28
14.2 Return		28
14.3 Enforcement		29
14.4 Form		29
14.5 Replenishment		29
14.6 Right to Withhold Payment		30
14.7 Letter of Credit Failure		30

15. SUSPENSION		30
15.1 Buyer Suspension		30
15.2 Seller Suspension		30
15.3 Resuming Deliveries		30

16. TERMINATION		30
16.1 Termination by the Buyer		30
16.2 Termination by the Seller		31
16.3 Effect of Termination		32
16.4 Payment on Termination by the Buyer		33
16.5 Payment on Termination by the Seller		33
16.6 Calculation of Gains, Economic Losses and Costs		34
16.7 Interconnection Costs Payable on Termination		35
16.8 Termination Payment Date		35
16.9 Exclusive Remedies		35

17. ASSIGNMENT		36
17.1 Assignment		36
17.2 Preconditions to Assignment		36
17.3 Assignment to Facility Lender		37
17.4 No Implied Consent to Exercise of Rights		37
17.5 Costs		37
17.6 No Assignment Before COD		37

18. INSPECTION AND AUDIT		37
18.1 General Inspection and Audit Rights		37
18.2 Inspection and Audit Rights Regarding Environmental Attributes		38
18.3 Consents Regarding Clean or Renewable Electricity		38

19. REPRESENTATIONS AND WARRANTIES		38
19.1 By Seller		38
19.2 By Buyer		39

20. INDEMNITIES		40
20.1 Seller Indemnity		40

Celgar Green Energy

iii

BC Hydro Bioenergy Call for Power (Phase I) EPA


	Page No.
20.2 Buyer Indemnity		40
20.3 Indemnification Conditions		41
20.4 Third Party Beneficiary Conditions		41

21. CONFIDENTIALITY		41
21.1 RFP Confidentiality Agreement		41
21.2 Additional Confidentiality Obligation		41
21.3 Freedom of Information and Protection of Privacy Act		42
21.4 Exemption from Disclosure		42

22. GENERAL PROVISIONS		43
22.1 Independence		43
22.2 Enurement		43
22.3 Notices		43
22.4 Entire Agreement and Amendment		43
22.5 No Waiver		44
22.6 Dispute Resolution		44
22.7 Eligible Financial Contract/Forward Contract		44
22.8 Further Assurances		45
22.9 Severability		45
22.10 Counterparts		45

APPENDIX 1 DEFINITIONS

APPENDIX 2 ENERGY PROFILE

APPENDIX 3 ENERGY PRICE – SEASONALLY FIRM

APPENDIX 4 SELLER’S PLANT DESCRIPTION

APPENDIX 5 FUEL PLAN

APPENDIX 6 COD CERTIFICATE

APPENDIX 7 SAMPLE FORM PERFORMANCE SECURITY / INTERCONNECTION SECURITY LETTER OF CREDIT

APPENDIX 8 SAMPLE FORM LENDER CONSENT AGREEMENT

APPENDIX 9 SAMPLE FORM DEVELOPMENT PROGRESS REPORT

APPENDIX 10 ADDRESSES FOR DELIVERY OF NOTICES

APPENDIX 11 RFP CONFIDENTIALITY AGREEMENT

Celgar Green Energy

BC HYDRO

ELECTRICITY PURCHASE AGREEMENT

THIS ELECTRICITY PURCHASE AGREEMENT (“ EPA ”) is made as of , 2008 (the “ Effective Date ”)

BETWEEN:

ZELLSTOFF CELGAR LIMITED PARTNERSHIP , a limited partnership formed under the laws of British Columbia represented by its general partner, Zellstoff Celgar Limited, a corporation incorporated under the laws of British Columbia (the “ General Partner ”), with its head office at Suite 2840, PO Box 11576, 650 West Georgia Street, Vancouver, BC V6B 4N8

(“ Seller ”)

AND:

BRITISH COLUMBIA HYDRO AND POWER AUTHORITY , a corporation continued under the Hydro and Power Authority Act , R.S.B.C. 1996, c. 212, with its head office at 333 Dunsmuir Street, Vancouver, BC V6B 5R3

(“ Buyer ”).

WHEREAS:

A. The Buyer issued a Bioenergy Call for Power (Phase I) — Request for Proposals on February 6, 2008 for the supply of electrical energy to the Buyer generated from Forest-based Biomass by projects located in British Columbia.

B. A Proposal in respect of the Project was submitted in response to the RFP.

C. The Seller desires to sell to the Buyer, and the Buyer desires to purchase from the Seller, Eligible Energy from the Seller’s Plant on the terms and conditions set forth in this EPA.

1. INTERPRETATION

1.1 Definitions — Appendix 1 sets out or references the definitions applicable to certain words and phrases used in this EPA.

1.2 Appendices — Attached to and forming part of this EPA are the following Appendices:

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