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Hoku solar plant in Idaho may have power shut off

BOISE, Idaho >> Idaho Power Co. told a struggling southeastern Idaho solar-industry manufacturer that the utility could shut off its power by Jan. 3 if it doesn’t pay its $1.9 million electricity bill from November.

Honolulu-based polysilicon maker Hoku Corp., which has survived so far with help from Chinese financiers, lodged a formal protest with Idaho Public Utilities Commission regulators after getting a termination of service notice on Dec. 22. The company’s Hoku Materials unit told Idaho Power that it can’t pay its November power bill until January due to cash flow problems.

Hoku says losing electricity would delay its Pocatello plant’s commissioning and expose infrastructure to freezing just as winter sets in, causing "material harm." Southeastern Idaho’s hopes that Hoku’s $390 million plant will eventually add hundreds of green-energy jobs to the local economy have been replaced by uncertainty over whether the project will survive.

"If service is terminated, these high value systems may freeze, causing irreparable and material damage to Hoku’s plant assets," Hoku lawyers told Idaho utility regulators in the complaint. "Any damage would need to be repaired, at additional cost, prior to continuing with the commissioning and operation of the plant."

Hoku announced it had hooked up to Idaho Power’s substation only in November, the same month it couldn’t pay its power bill.

"With the addition of permanent power, we are able to start-up the plant," Hoku Chief Executive Officer Scott Paul said on Nov. 21.

Now, it wants Idaho Power to use some of the $4 million Hoku had previously deposited with the utility as security for its power bills to cover the November charges, according to its filing.

In Idaho Power’s response filed Friday afternoon with the regulator, however, the utility said Hoku actually owes it millions more in security.

The utility’s lawyers contend Hoku has delayed payment of an additional $1.8 million until March 2, 2012, an agreement Idaho Power accepted only "so long as Hoku remained current on payments."

When Hoku missed the payment due Dec. 21, Idaho Power sent a notice that power would be shut off on Jan. 3 — unless Hoku came up with the money.

"The fact of the matter is, Hoku has missed a payment it owes to Idaho Power and has failed to provide … any assurance that such a payment will be forthcoming," Idaho Power wrote, demanding that commissioners dismiss Hoku’s complaint. "Idaho Power has concerns that if the commission allows the Hoku complaint to run the usual course…Hoku could potentially become millions of dollars delinquent in amounts it owes."

Hoku, which produced its first polysilicon in Pocatello earlier this year with a small pilot project, had prompted high hopes in the region with its plans to hire hundreds of workers in Idaho to help make the energy-producing material that goes into solar panels.

The plant was originally supposed to be operational in 2008, but it struggled to raise funds to complete the facility as the economy soured.

In March, Hoku received the second installment of a $50 million loan from majority owner Tianwei New Energy Holdings Co. of China that has helped keep the company afloat.

As the company’s share price has plunged to well below $1, from a 52-week high of $3.24, the company’s management has been in turmoil, too.

Earlier this month, Hoku announced that its chief financial officer was resigning. Its net loss for the three months ending Sept. 30 increased four-fold from the year earlier to nearly $8 million, as costs to commission the plant rose and it paid $3.5 million to Idaho Power to fulfill its electrical service agreement.

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