U.S. Geothermal Plans Enhanced Power

U.S. Geothermal, a renewable energy development company in the process of developing a geothermal power project at Raft River, Idaho, announced changes in its existing power purchase agreements (PPA).

On May 8, 2006, Idaho Power confirmed that U.S. Geothermal will be allowed to bid the Raft River phase 1 project into Idaho Powers’ recently issued geothermal Request for Proposal (RFP) for Geothermal Power. If Idaho Power selects U.S. Geothermal, the company expects that under a revised PPA, the phase 1 power plant will be allowed to sell its full output capacity of 13 MW annual average, instead of being capped at 10 MW monthly average, as mandated under the current PPA. This 30% increase in plant output would be achieved with no additional capital investment over that required for 10 MW, and is expected to decrease the operating cost per kilowatt-hour. As a result of increased PPAs, U.S. Geothermal has elected to withdraw its phase 2 Idaho Power PPAs, and will not submit them to Idaho Power Utility Commission for approval. With the concurrence of Idaho Power, the two 10 MW contracts that were not submitted to the IPUC have been voided, without further obligation on either party. U.S. Geothermal has received a letter of intent from Eugene Water and Electric Board (EWEB), of Eugene, Oregon, for EWEB’s purchase of the full 13 MW electrical output from the second planned power plant. The parties have exchanged a draft PPA and intend to complete it by the end of July. Upon execution of the EWEB PPA, and if the phase 1 is successful in the Idaho Power Request for Proposal, then the total output from phases 1 and 2 of the Raft River power plants will be 26 MW from two plants, instead of the originally planned 30 MW from three plants, resulting in substantial capital and operating cost savings through improved economies of scale. Additionally, strong regional interest in geothermal power has resulted in several utilities from California to Washington entering into discussions with U.S. Geothermal to purchase the electrical power output from the third planned power plant. Subject to drilling confirmation of the availability of sufficient geothermal resource, the output from all three power plants at Raft River could be 39 MW, instead of the maximum 30 MW under the previous PPA provisions.
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