SOURCE: Hoku Corporation

Hoku Corporation

February 21, 2012 07:30 ET

Hoku Materials and Idaho Power Reach Agreement on Electric Service Contract, File Stipulation

BOISE, ID--(Marketwire - Feb 21, 2012) - Hoku Materials, Inc., a wholly owned subsidiary of Hoku Corporation (NASDAQ: HOKU) that plans to produce, market and sell polysilicon for the solar industry from its facility under construction in Pocatello, Idaho, today announced that it and Idaho Power Company (Idaho Power), a wholly owned subsidiary of IDACORP, Inc. (NYSE: IDA), have reached an agreement to amend their electric service contract, and have filed a stipulation with the Idaho Public Utilities Commission (IPUC) requesting approval of the amendment. The amendment is the result of negotiations between Idaho Power and Hoku Materials following Hoku's petition with the IPUC to reduce the minimum payments that are being charged for electrical service in excess of Hoku's actual power consumption at its polysilicon plant.

The key terms of the amendment are:

  • Hoku's monthly billed minimum energy charge is reduced from approximately $2 million to approximately $800,000, retroactively effective January 1, 2012 and continuing through June 30, 2013. This 18-month period is referred to as the "Deferral Period."
  • Hoku will pay Idaho Power an additional one-time payment of $3.8 million to amend the contract. The first $2 million will be paid by deducting it from the $4 million deposit previously paid by Hoku, and the remaining $1.8 million balance will be paid in equal installments over 18 months.
  • On July 1, 2013, the minimum payments of approximately $2 million per month will resume.

According to the amendment, Idaho Power will create a balancing account during the Deferral Period for the difference between the monthly billed energy under the current, amended electric service agreement and the monthly billed energy that results from the stipulation once approved by the Commission. The maximum charge is capped at $16.5 million and will be balanced against Hoku's actual energy consumption during the Deferral Period. Repayment of the Balancing Account will begin in January 2014 at an additional charge equal to approximately 1/12th of the total amount until the balance reaches zero.

"The terms of the stipulation more fairly reflect a payment structure based on the amount of power we are actually consuming," said Scott Paul, chief executive officer of Hoku Corporation. "This allows us to allocate our resources more effectively while maintaining stable, permanent power as we ramp toward production at our polysilicon plant."

During the Deferral Period, the contract power demand of 82 megawatts is still available to Hoku if needed; however, Hoku has agreed to provide six months' prior notice and additional deposits if its power demand will exceed 20MW. Paul confirmed that 20 megawatts is sufficient for executing the Company's plan of scaled commercial production, and that it could provide six months of advance notice to Idaho Power without delaying its ramp-up plans.

"We are pleased that through the negotiation process we have been able to reach an equitable agreement that is reasonable and evenhanded for all, not only Hoku and Idaho Power, but all ratepayers," said Mr. Paul.

The stipulation is available at http://www.puc.idaho.gov/internet/cases/summary/IPCE1202.html.

About Hoku Corporation

Hoku Corporation (NASDAQ: HOKU) is a solar energy products and services company with three business units: Hoku Materials, Hoku Solar, and Tianwei Solar USA. Hoku Materials manufactures, markets and sells polysilicon for the solar market from its plant currently under construction in Pocatello, Idaho. Hoku Solar markets and installs turnkey photovoltaic systems and provides related services. Tianwei Solar USA markets and sells photovoltaic modules manufactured by Tianwei New Energy. Hoku Corporation is a majority owned subsidiary of Tianwei New Energy Holdings Co., Ltd. For more information, visit www.hokucorp.com.

Hoku, Hoku Solar, and the Hoku Corporation logo are trademarks of Hoku Corporation, and Hoku Materials is the trademark of Hoku Materials, Inc., all rights reserved. All other trademarks, trade names and service marks appearing in this press release are the property of their respective holders.

© Copyright 2012, Hoku Corporation, all rights reserved.

Forward-Looking Statements

This press release contains forward-looking statements that involve many risks and uncertainties. In some cases, you can identify forward-looking statements by terms such as "anticipate," "believe," "can," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "would" and similar expressions intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements about the Company's future growth, completion and operations of its polysilicon production plant, the timing and completion of polysilicon production plant construction and commissioning, the renegotiation of the Company's agreement with Idaho Power, and the approval of the stipulation by the Idaho Public Utilities Commission, and the timing of when the Company will ramp-up its production of polysilicon. These statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, the Company's ability to secure additional financing necessary to complete its polysilicon production facility in Pocatello, Idaho; the Company's ability to complete commissioning of the first 2,500 metric tons of capacity and begin commercial delivery; the Company's ability to ramp its production capacity for manufacturing and up to 4,000 metric tons of capacity in accordance with its operating plan; the Company's ability to meet the obligations and commitments outlined in the stipulation with Idaho Power, and the risks, uncertainties and other factors disclosed in the Company's most recent Form 10-K and Form 10-Q filed with the Securities and Exchange Commission. Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. In evaluating these statements, you should specifically consider the risks described in the Company's filings with the Securities and Exchange Commission, as applicable. Except as required by law, the Company assumes no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

Contact Information

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    Hoku Corporation
    Tel: 808-682-7800
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