Idaho Public Utilities Commission

Case No. IPC-E-10-22, Order No. 32573

July 2, 2012

Contact: Gene Fadness (208) 334-0339, 890-2712

Developer of failed biomass project, utility propose settlement

Idaho Power Company and the developer of a biomass power project that was to have been built near Emmett are proposing a settlement regarding the project’s failure to meet scheduled operation dates.

Under the proposed settlement, Montana-based Yellowstone Power would pay Idaho Power $200,000 in non-performance damages in exchange for Idaho Power’s agreement to not draw on a current $450,000 Letter of Credit against the project. If Yellowstone fails to make the payment, then it agrees to allow Idaho Power to draw on the Letter of Credit.

Yellowstone Power developer Richard Vinson and Idaho Power reached a sales agreement in May 2004 under which Idaho Power would buy the energy from a 17.5-megawatt power generation project at the site of the former Boise Cascade Plant near Emmett. The project was a biomass-fueled combined heat and power plant to be co-located with the sawmill. Energy would be generated from the steam created by the controlled burning of the woody biomass fuel.

When that project failed to meet its scheduled operation date, the parties agreed to a smaller 11.5-MW project at the same site when the Emerald Forest Products sawmill opened in May 2010. That agreement, approved in August 2010, stipulated that $106,804 in non-performance damages from the previous project was to be offset against the energy payments Yellowstone was to receive from the smaller project.

In May this year, Idaho Power sent Yellowstone a Notice of Material Breach for failing to meet the Dec, 31, 2011, online date for the smaller project. Yellowstone Power claimed a force majeure event – the failure of the sawmill to continue operations – as the reason for not meeting its online date.

The commission is taking comment on the proposed settlement through July 9. Comments are accepted via e-mail by accessing the commission’s homepage at www.puc.idaho.gov and clicking on "Comments & Questions About a Case." Fill in the case number (IPC-E-10-22) and enter your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID 83720-0074 or faxed to (208) 334-3762.

A full text of the commission’s order, along with other documents related to this case, is available on the commission’s Web site at www.puc.idaho.gov. Click on “File Room” and then on “Electric Cases” and scroll down to the above case number.

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