The minimum monthly energy bill that Hoku Corp. is paying to Idaho Power Co. has temporarily been reduced by more than half.
Honolulu-based Hoku, which is building a polysilicon plant in Pocatello, Idaho, and Idaho Power said Tuesday they had reached an agreement to reduce the monthly charge to about $800,000 from approximately $2 million.
Polysilicon is the primary raw material in solar cells used for solar power generation.
Hoku signed a four-year contract in June 2009 to buy electricity from Idaho Power to run its polysilicon plant. The contract obligated Hoku to begin making minimum monthly payments to Idaho Power in May 2011. Hoku wasn’t able to finish construction of the $390 million polysilicon plant by May, but was required to pay the minimum monthly electric bill.
The plant is still not finished, and Hoku has been trying to renegotiate the contract with Idaho Power to reduce its bill.
Hoku didn’t pay a $1.9 million bill from Idaho Power due on Dec. 21, and the utility threatened to cut off electricity, which Hoku needed to complete construction of its plant.
In January the Idaho Public Utilities Commission ordered Idaho Power to renegotiate its contract with Hoku for future electric bills.
The $800,000 monthly charge is retroactive to Jan. 1 and continues through June 30, 2013. The minimum payments of $2 million per month will resume on July 1, 2013. Hoku also will make an additional one-time payment of $3.8 million to Idaho Power to amend the contract.
Cash-strapped Hoku paid the Dec. 21 electric bill last month after receiving approval to borrow up to $10 million from a Chinese bank.
"The terms of the stipulation more fairly reflect a payment structure based on the amount of power we are actually consuming," Hoku CEO Scott Paul said. "This allows us to allocate our resources more effectively while maintaining stable, permanent power as we ramp toward production at our polysilicon plant."
Hoku, which reported earlier this month that its fiscal third-quarter loss more than tripled to $10.6 million in the period ended Dec. 31, said it anticipates beginning production of polysilicon at the plant this summer.
