HomeMy WebLinkAbout20120614Termination Notice.pdfPOWER® RE c' r , r-
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JASON B. WILLIAMS -
Corporate Counsel
jwilIiams(idahopower.com UTL IIIES C0MM.3S
June 14, 2012
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Re: Case No. IPC-E-10-44
Hidden Hollow Energy 2 LLC Firm Energy Sales Agreement - Termination
of Agreement
Dear Ms. Jewell:
Please be advised that Idaho Power Company ("Idaho Power") has terminated
the Firm Energy Sales Agreement ("FESA") with Hidden Hollow Energy 2 LLC ("Hidden
Hollow") that was approved by the Idaho Public Utilities Commission ("Commission") in
Final Order No. 32180.
Enclosed please find the May 3, 2012, Notice of Failure to Meet the Scheduled
Operation Date in the Firm Energy Sales Agreement sent by Idaho Power to Hidden
Hollow. This Notice advised Hidden Hollow that it had failed to meet the required
Scheduled Operation Date of February 28, 2012, contained in theFESA. The Notice
further advised that if Hidden Hollow did not achieve an Operation Date by June 1,
2012, (within 90 days of the Scheduled Operation Date), that Delay Liquidated
Damages in the amount of $144,000 would be due and payable to Idaho Power, and
that Idaho Power may terminate the FESA at that time.
Also enclosed please find the June 14, 2012, Termination Notice from Idaho
Power to Hidden Hollow advising that Hidden Hollow has failed to achieve its Operation
Date within 90 days of the Scheduled Operation Date pursuant to its obligations
contained in the FESA, that the FESA is now terminated, and Delay Liquidated
Damages referenced above are now due and payable to Idaho Power. This Notice of
Termination also notifies Hidden Hollow that if payment in full of the Delay Liquidated
Damages is not received with 7 days, that Idaho Power will draw those funds from the
Delay Security provided by Hidden Hollow under the FESA.
1221 W. Idaho St. (83702)
P.O. Box 70
Boise, ID 83707
Jean D. Jewell
June 14, 2012
Page 2 of 2
This letter and its attachments are being sent to the Commission for inclusion as
part of the Commission's file and record, evidencing the Notice and Termination of this
Commission-approved Firm Energy Sales Agreement.
Sincerely,
Jason B. Williams
JBW:csb
Enclosures
cc: Kristine A. Sasser (w/encls.)
Rick Sterling (w/encls.)
.ILAAA k
An IDACORP Company
May 3, 2012
Thomas J. Gesicki
Hidden Hollow Energy 2 LLC
One North Lexington Avenue
White Plains, NY 10601
Original: Via Certified Mail, Return Receipt Requested
E-mail Copy: Lew Staley - lstaley@fortistar.com
Re: Hidden Hollow, Firm Energy Sales Agreement
February 7, 2012 Claim of an Event of Force Majeure
Notice of failure to meet Scheduled Operation Date
Dear Mr. Gesicki:
Idaho Power has received your letter dated February 7, 2012, in which you have claimed an event of Force
Majeure has occurred pursuant to the Firm Energy Sales Agreement (FESA) dated December 8, 2010.
Force Majeure is defined in the FESA as, "any cause beyond the control of the Seller or of Idaho Power
which, despite the exercise of due diligence, such Party is unable to prevent or overcome." FESA, Article
14.1. Force Majeure contemplates such things that were unforeseeable and outside of either parties control
such as "acts of God, fire, flood, storms, wars, hostilities, civil strife, strikes and other labor disturbances,
earthquakes, fires, lightning, epidemics, sabotage, or changes in law or regulation occurring after the
Operation Date, which, by the exercise of reasonable foresight such party could not reasonably have been
expected to avoid and by exercise of due diligence, it shall be unable to overcome. Force Majeure does not
include short-term disruptions or curtailment of the Facility's fuel supply." The event of Force Majeure
must be an event which, "by the exercise of reasonable foresight such party could not reasonably have been
expected to avoid and by the exercise of due diligence, it shall be unable to overcome."
The events described are disruptions in your fuel supply which do not constitute an event of Force Majeure
as defined in the FESA. Your letter states that landfill gas collected by the County contained hydrogen
sulfide at concentration levels higher than allowed by its existing permit, which led to loss of a permit and is
in the process of being rectified. The existence of the proper permitting and varying levels of hydrogen
sulfide are known, foreseeable, and anticipated issues in the operation of a landfill gas supplied generation
facility. An event of Force Majeure occurs when there is an event of effect that can neither be anticipated
nor controlled. Because your fuel supplier's air quality permit concerns are a foreseeable, anticipated
occurrence with this type of project and constitute a short-term disruption or curtailment of the fuel supply,
Idaho Power does not agree that an event of Force Majeure has occurred.
Furthermore, please be advised that you have passed your Scheduled Operation Date of February 28, 2012,
without bringing the project online and operational. Please let this letter service as notice that if you fail to
achieve the Operation Date by June 1, 2012, pursuant to Article 5.4 of the FESA, such failure is a Material
Breach and Idaho Power may terminate the FESA at that time. Additionally, please be advised that if you
fail to achieve the Operation Date by June 1, 2012, Delay Liquidated Damages in the amount of $144,000
will be due and payable to Idaho Power pursuant to Article 5.3.2. If these Delay Damages are not paid
within seven days of Idaho Power's presentation of a billing for such amount, then pursuant to Article 5.5,
Idaho Power will draw funds from the Delay Security that you have provided
If you have any additional questions, please feel free to contact me.
Sincerely,
/4 C. az~ak
Randy C. Aliphin
Idaho Power Company
IHO PIVER®
An IDACORP Company
June 14, 2012
Hidden Hollow Energy 2 LLC
C/o Fortistar Methane Group LLC
Attn: David Wentworth
One North Lexington Avenue
White Plains, NY 10601
Original: Via Certified Mail, Return Receipt Requested
E-mail Copy: Lew Staley lsta1ey@fortistar.com
Thomas Gesicki tgesicki@foristar.com
Re: Hidden Hollow Energy 2 LLC Firm Energy Sales Agreement
Notice of:
Termination of Firm Energy Sales Agreement
Collection of Delay Liquidated Damages
Dear Mr. Wentworth:
As Idaho Power advised in our letter dated May 3, 2012 to Mr. Gesicki, as of June 1, 2012 Hidden
Hollow Energy 2, LLC is in Material Breach of the Firm Energy Sales Agreement between Idaho Power and
Hidden Hollow Energy 2 LLC dated December 8th, 2010 ("FESA").
This Material Breach is a result of the project failing to achieve its Operation Date within 90 days of
the Scheduled Operation Date of February 28th, 2012 and Article 5.4 of the FESA states that Idaho Power
may terminate this FESA at any time as result of this Material Breach. Therefore as of the date of this letter
this FESA has been terminated.
In addition as a result of the project failing to achieve its Operation Date Idaho Power is issuing this
request for payment of Delay Liquated Damages calculated pursuant to within Article 5.3 of the FESA to be
$144,000. As specified in Article 5.5 of the FESA the Seller must pay these Delay Liquidated Damages
within 7 days of when Idaho Power presents this billing to the Seller. Thus this payment in the amount of
$144,000 is due and payable to Idaho Power no later than 5:00 PM, Mountain Standard Time, June 21st,
2012. Failure to make this payment by that time will result in Idaho Power exercising it rights to draw funds
from the Delay Security provided by the project.
1
As you are aware, Hidden Hollow Energy 2 LLC has provided various documents to Idaho Power claiming
that a Force Majeure had occurred that prevented the project from achieving its Operation Date. Idaho
Power has denied all of these claims as these claims do not meet the criteria to be an event of Force Majeure
and/or they are specifically excluded from being a Force Majeure (i.e. - Article 14.1 "...Force Majeure does
not include short-term disruptions or curtailment of the Facility's fuel supply")
If you have any additional questions, please feel free to contact me.
Sincerely,
4 e. aa~~7 -
Randy C. Aliphin
Idaho Power Company
Cc: Donovan Walker (IPCo)
Jason Williams (IPC0)
Hidden Hollow Energy 2 LLC
C/o Fortistar Methane Group LLC
Attn: Thomas J. Gesicki
One North Lexington Avenue
White Plains, NY 10601