20120413Decision Memo.pdf

2.8. "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.
2.9. "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.
2.10. "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.
2.11. "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.
2.12. "Hoku Facility" shall mean the Hoku Polysilicon Production
complex located on One Hoku Way, Pocatello, Idaho.
2.13. "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.
2.14. "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.
2.15. "Modified Minimum Billed Energy Charge" shall mean Eight-
Hundred Thousand Dollars ($800,000).
2.16. "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.
2.17. "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.
2.18. "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.
2.19. "Schedule 32" shall mean the Hoku tariff schedule of rates and
charges or its successor schedules.
2.20. "Scheduled Contract Demand" is defined in Section 6.1 .1 below.
221. "Second Block Contract Demand" shall mean 25,000 kilowatts.
2.22. "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.
2.23. "Termination Date" shall be 12:01 a.m. Mountain Time on
December 1, 2014.
2.24. "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.
2.25. "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 Termination Date subject to the provisions of this
Agreement.
3.2 Service under this Agreement will commence December 1, 2009.
ECTION 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, 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.
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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 Powers 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 December 1, 2009 to the
Embedded Date, while Hoku is changing its load at the Hoku Facility.
6.1 .1 Scheduled Contract Demand: Except as otherwise
provided for in Section 6A - DEFERRAL PERIOD PAYMENTS, Hoku agrees to contract
for, and Idaho Power agrees to provide power made available to the Hoku Facility in the
following amounts expressed in kilowatts (the "Scheduled Contract Demand"):
First Block Second Block
Time Contract Contract Total Contract
Period Demand Demand Demand
121112009 - 12/31/2009 .......1,000 25,000 26,000
11112010 - 1/31,2010............ 8,000 25,000 33,000
2/1/2010-2/28/2010............ 17,000 25,000 42,000
3/1/2010-4/30/20W............ 19,000 25,000 44,000
51112010 - 6/15/2010............ 32,000 25,000 57,000
6/16/2010 - 8/15/2010.......... 18,000 25,000 43,000
811612010 - 9/1512010.......... 42,000 25,000 67,000
9/16/2010- 1213112010 .......57,000 25,000 82,000
1/1/2011-6/15/2011............ 57,000 25,000 82,000
6116/2011 - 8/15/2011.......... 18,000 25,000 43,000
8/16/2011-9/15/2011..........42,000 25,000 67,000
0
9116)2011 - 1201/2011 ....... 57,000 25,000 84000
11112012 - 611512012 ............57,000 25,000 82,000
6(16(2012 - 8/15/2012 18,000 25,000 43,000
8/1612012 - 9115/2012 ...........42,000 25,000 67,000
911612012 - 12/31/2012 .......57,000 25,000 84000
11112013 - 12/1/2013 ............57,000 25,000 82,000

6.2 Contract Demand Provisions after Initial Expansion: After the
Embedded Date, Hoku has the option to increase or decrease Its Total Contract
Demand level as follows:
6.2.1 Increases to Total Contract Demand: Under the terms of
this Agreement, Hoku may increase the Total Contract Demand above 82,000 kilowatts
by increasing the First Block Contract Demand in increments of 1,000 to 10,000
kilowatts per year up to a Total Contract Demand of 175,000 kilowatts. Hoku will notify
Idaho Power in writing of the additional capacity requirements at least one year in
advance. The new Total Contract Demand will be in effect for a minimum of One year.
Increases to Total Contract Demand are subject to the availability of adequate capacity
in Idaho Powers facilities to provide the requested service.
6.2.2 Decreases to Total Contract Demand: After the Embedded
Date, Hoku may decrease the Total Contract Demand by reducing the First Block
Contract Demand in decrements of 1,000 kilowatts. Total Contract Demand may not be
decreased below 25,000 kilowatts. Hoku will notify Idaho Power in writing of the
decrease in capacity requirements at least one year in advance. The new Total Contract
Demand will be in effect for a minimum of one year.
6.3 Excess Demand: Prior to the Embedded Date, and subject to
Section 6.2.1 above, the availability of power in excess of the Total Contract Demand is
not guaranteed, and if the average kilowatts supplied at the Hoku Facility during the 15-
consecutive-minute period of maximum use each day, adjusted for power factor,
exceeds the Total Contract Demand, Idaho Power may curtail service to the Hoku
Facility. Idaho Power reserves the right to install, at any time, at Hoku's expense, any
device necessary to protect Idaho Powers system from damage which may be caused
by the taking of Excess Demand. Hoku will be responsible for any damages to Idaho
Powers system or damages to third parties resulting from the taking of Excess Demand.
Hoku agrees to use its best reasonable efforts to monitor its electric loads and to advise
Idaho Power as soon as possible of the potential for Excess Demand at the Hoku
Facility. Excess Demand will be subject to the Daily Excess Demand Charge and the
Monthly Excess Demand Charge specified in Schedule 32.

6.4 Proration: Billings during months that contain a change in the
Scheduled Contract Demand will be prorated.
SECTION 6A - DEFERRAL PERIOD PAYMENTS
6A.1 During the Deferral Period and so long as Hoku's monthly Total
Contract Demand does not exceed 20,000 kilowatts, Hoku shall pay Idaho Power the
Modified Minimum Billed Energy Charge which shall be first allocated to Idaho Powers
First Block Demand and Second Block Demand charges, which shall be applied in
accordance with Section 6.1.1. above, Section 8 below and Schedule 32, and the
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remaining amount of the Modified Minimum Billed Energy Charge shall be allocated as
First Block Energy charges. In addition to the Modified Minimum Billed Energy Charge,
Hoku shall pay to Idaho Power the applicable Conservation Program Funding Charge
("Rider") charge as applied to the Modified Minimum Energy Charge. Further, Hoku
shall pay to Idaho Power any applicable franchise fees assessed by the City of
Pocatello, Idaho which shall be assessed to First Block Demand and Second Block
Demand charges and against the actual amount of energy consumed by Hoku with such
energy being billed at the applicable First Block Energy or Second Block Energy rates.
6A2 Hoku agrees to cap at 20,000 kilowatts its monthly Total Contract
Demand during the Deferral Period. Hoku may increase this monthly cap provided that
(1) it first provides Idaho Power with a firm, 12-month forward-looking ramp-up schedule
at least 6-months in advance of any increase in monthly energy consumption more than
20,000 kilowatts; and (2) Idaho Power must receive from Hoku any additional required
deposits at least thirty (30) prior to Idaho Power providing such additional energy and
capacity. Hoku understands and agrees that failure to comply with the ramp-up
schedule and/or any additional deposit requirements described herein relieves Idaho
Power of the obligation to provide Hoku with the additional requested energy. In
addition, Hoku shall provide Idaho Power at least thirty (30) days prior written notice of
when Hoku's monthly energy consumption is expected to exceed 10,000 kilowatts for
twelve (12) consecutive months.
6A.3 In the event Hoku uses more than 20,000 kilowatts of energy in
any given month during the Deferral Period, Hoku shall be obligated to pay, for the
month in which Hoku's Total Contract Demand exceeded 20,000 kilowatt and for each
remaining month of the term of this Agreement until the Termination Date, the higher of
either the Minimum Billed Energy charge or for the amount of energy actually consumed
and billed pursuant to Sections 6.1 and 8 and Schedule 32.
6A.4 During the Deferral Period, Idaho Power shall track the Balancing
Mechanism that starts at zero and which shall not exceed a cap of $16.5 million. All
amounts allocated to the Balancing Mechanism shall accrue interest at six percent (6%).
During the Deferral Period, no monthly adjustment to the Balancing Mechanism will
occur if Hoku's monthly payment for services (excluding the First Block Demand and
Second Block Demand charge components) equals or exceeds the First Block Energy
charge portion of the Minimum Billed Energy charge. Beginning with its January 2014
invoices for services rendered for December 2013, Idaho Power shall charge Hoku, in
addition to the then-applicable monthly demand and energy charges, an amount equal to
the amortization of the total Balancing Mechanism balance over twelve (12) months plus
six percent (6%) interest. One-hundred percent (100%) of the payments made by Hoku
to pay down the Balancing Mechanism shall be allocated to Idaho Power's Idaho
jurisdictional customers via Idaho Power's Power Cost Adjustment ("PCA") mechanism.
The Parties expressly understand and agree that the amounts tracked by the Balancing
Mechanism do not represent a liability or obligation of Idaho Power to its customers until
such final, non-refundable amounts are received by Idaho Power from Hoku and applied
as described herein.
6A.5 In consideration for Idaho Power granting Hoku the Deferral
Period, Hoku shall pay to Idaho Power, in addition to any other amounts payable under
this Agreement, an amount equal to Three-Million Eight-Hundred Thousand Dollars
($3,800,000.00) ("Up-Front Payment") as follows: a) Idaho Power has immediately
applied $2 million of the existing $4 million deposit previously paid by Hoku to the Up-
Front Payment as of the effective date of Order No. 32486; and b) Hoku shall pay to
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Idaho Power as part-of and in addition to its monthly invoice for services provided under
this Agreement an amount equal to One-Hundred Thousand Dollars ($100,000.00) per
month for a period of eighteen (18) months beginning with the invoice issued in February
2012 for services provided in January 2012. Idaho Power shall record the $3.8 million
Up-Front Payment to the same account as the Second Block Energy charge
SECTION 7- FACILITIES FOR DELIVERY TO HOKU FACILITY

7.1 Additional Facilities: The parties acknowledge that they have
separately entered into the Construction Agreement, pursuant to which Hoku has paid
Idaho Power to construct the Interconnection Facilities necessary to provide the Total
Contract Demand under this Agreement Idaho Power represents and warrants to
Hoku that none of the charges set forth in Schedule 32 include any cost reimbursement
or adjustment that has already been paid by Hoku pursuant to the Construction
Agreement, and that such Interconnection Facilities are sufficient to supply the
Scheduled Contract Demand. To the extent that additional transmission and/or
substation Interconnection Facilities are required to provide additional service pursuant
to Section 6.2.1 above, special arrangements will be made in a separate Agreement
between Hoku and Idaho Power.

7.2 Operation and Maintenance: Idaho Power will operate and
maintain Interconnection Facilities necessary to provide service to the Hoku Facility.
Such Interconnection Facilities Include Interconnection Facilities paid for by Hoku,
Including those paid for by Hoku pursuant to the Construction Agreement. Idaho Power
shall operate and maintain such Interconnection Facilities in accordance with Prudent
Electrical Practices.
SECTION 8- CHARGES TO BE PAID BY HOKU TO IDAHO POWER

8.1 Rates and Charges: The rates and charges for electrical power,
energy and other services provided by Idaho Power to the Hoku Facility are identified by
component in Schedule 32. The total amount to be paid by Hoku for electric service to
the Hoku Facility will be the sum of the components identified on Schedule 32.

8.2 Power Factor: When the Hoku Facility's Power Factor is less than
95 percent during the 15-consecutive-minute period of maximum use for the monthly
billing period, Idaho Power will determine the Total Billing Demand by multiplying the
metered demand in kilowatts by 0.95 and dividing that product by the Power Factor.

8.3 Billing and Metering Provisions: Idaho Power will install and
maintain suitable metering equipment for each Point of Delivery so that coincident
demand and energy consumption can be determined for the billing period.

8.4 First Block Contract Demand Charge: The First Block Contract
Demand Charge is fixed and is not subject to change through the Embedded Date. After
the Embedded Date, the Contract Demand Charge is subject to change and revision by
order of the Commission. After the Embedded Date, Idaho Power will advocate for
Commission acceptance of the ratemaking treatment for the Special Contract described
in Section 3.2 above.

8.5 First Block Energy Charge: The First Block Energy Charge and
Excess Energy Charge are fixed and are not subject to change through the Embedded
Date. After the Embedded Date, the First Block Energy and First Block Contract
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Demand charges shall be modified to equal the then-current Second Block Contract
Demand and Second Block Energy charges.
8.6 Second Block Charges: The Second Block Contract Demand
Charge and the Second Block Energy Charge will increase or decrease uniformly with
any base rate change authorized by the Commission that is applicable to Idaho Power's
Tariff Schedule 32 through the Termination Date. After the Embedded Date and except
as otherwise provided for herein, the Second Block Contract Demand Charge and the
Second Block Energy Charge are subject to change and revision by order of the
Commission.
8.7 Power Cost Adjustment: The PCA rate as defined under Idaho
Power's Tariff Schedule 55 will be applied to the Second Block Energy only. The PCA
rate will not apply to the First Block Energy or to Excess Energy until after the
Embedded Date. After the Embedded Date, any PCA rate adjustments will apply to the
First Block Energy, Second Block Energy and Excess Energy components.
8.8 Conservation Program Funding Charge: Except as otherwise
provided for in Section 6A - DEFERRAL PERIOD PAYMENTS, the Rider as specified in
Idaho Power's Tariff Schedule 91 for Schedule 32 will be applied to the sum of the First
Block Demand and Energy Charges, Second Block Demand and Energy Charges,
Excess Demand Charges, and Excess Energy Charges.

8.9 Minimum Energy Charges: Except as otherwise provided for in
Section 6A - DEFERRAL PERIOD PAYMENTS, each month Hoku will be billed for the
actual metered kilowatt-hours of energy, but no less than the Minimum Billed Energy
amount defined in Section 2.14.
SECTION 9- PAYMENT OF BILLS/SETTLEMENTS

9.1 Billing Data: Hoku shall pay Idaho Power for all services provided
under this Agreement. Invoices for payment for electric services shall be prepared and
submitted to Hoku monthly. All invoices or bills shall contain such data as may be
reasonably required to substantiate the billing.

9.2 Payment Procedure: All bills or accounts for electric service owed
by Hoku to Idaho Power hereunder shall be due and payable within fifteen (15) days
following Hoku's receipt of a bill Payment will be made by electronic transfer of funds
Idaho Power will provide Hoku with current ABA routing numbers and other necessary
instructions to facilitate the electronic transfer of funds.
SECTION 10- ACCESS TO PREMISES
10.1 During the term of this Agreement, and for a reasonable period
following termination, Idaho Power shall have access to the Hoku Facility premises at all
times for the purposes of reading meters, making installations, repairing and removing
Interconnection Facilities and Idaho Power equipment and for other proper purposes
hereunder.
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SECTION 11- ASSIGNMENT
11.1 This Agreement shall be binding upon the heirs, legal and
personal representatives, successors and assigns of the parties hereto.
SECTION 12- LIABILITY
12.1 Each party agrees to protect, defend, indemnify and hold
harmless the other party, its officers, directors, and employees against and from any and
all liability, suits, loss, damage, claims, actions, costs, and expenses of any nature,
including court costs and attorney's fees, even if such suits or claims are completely
groundless, as a result of injury to or death of any person or destruction, loss or damage
to property arising in any way in connection with, or related to, this Agreement, but only
to the extent such injury to or death of any person or destruction, loss or damage to
property is not due to the negligence or other breach of legal duty of such other party;
provided; however, that each party shall be solely responsible for claims of and payment
to its employees for injuries occurring in connection with their employment or arising out
of any workman's compensation law.
12.2 Limitation of Liability: Neither party shall, In any event, be liable to
the other for any special, incidental, exemplary, punitive or consequential damages such
as, but not limited to, lost profits, revenue or good will, or interest, whether such loss is
based on contract, warranty, negligence, strict liability or otherwise.
SECTION 13- MODIFICATIONS OF CONTRACT
13.1 This Agreement may not be modified except by writing, duly
signed by both parties hereto.
SECTION 14- COMMISSION JURISDICTION
14.1 This Agreement and the respective rights and obligations of the
parties hereunder, shall be subject to (1) Idaho Power's General Rules and Regulations
as now or hereafter in effect and on file with the Commission and (2) to the jurisdiction
and regulatory authority of the Commission and the laws of the State of Idaho.
14.2 The terms, conditions, and rates set forth in this Agreement and
Schedule 32 are subject to the continuing jurisdiction of the Commission. The rates
under this Agreement are subject to change and revision by order of the Commission
upon a finding, supported by substantial competent evidence, that such rate change or
revision is just, fair, reasonable, sufficient, nonpreferential, and nondiscriminatory. It is
the parties' intention by such provision that the rate making standards to be used in
making any revisions or changes in rates, and the judicial review of any revisions or
changes in rates, will be the same standards that are applicable to Idaho Power's
intrastate tariff rates.
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SECTION 15- COMMISSION APPROVAL
15.1 This Agreement shall become effective upon the approval by the
Commission of all terms and provisions hereof without change or condition.
IDAHO OWER COMPANYfi.
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SECTION 15- COMMISSION APPROVAL
15.1 This Agreement shall become effective upon the approval by the
Commission of all terms and provisions hereof without change or condition.
IDAHO POWER COMPANY
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