PUC approves settlement between biomass project, Idaho Power

State regulators have approved a settlement between Idaho Power Company and the developer of an Emmett biomass power project regarding the project’s failure to meet scheduled operation dates.

Under the settlement, Montana-based Yellowstone Power will pay Idaho Power $200,000 in non-performance damages in exchange for Idaho Power’s agreement to not draw on a current $450,000 Letter of Credit against the project.  If Yellowstone fails to make the payment, then it agrees to allow Idaho Power to draw on the Letter of Credit.

“The settlement stipulation acknowledges Yellowstone Power’s default under the terms of the agreement, recognizes the complications in calculating actual damages and avoids costly litigation,” the Idaho Public Utilities Commission said.

Yellowstone Power developer Richard Vinson and Idaho Power reached a sales agreement in May 2004 under which Idaho Power would buy the energy from a 17.5-megawatt power generation project at the site of the former Boise Cascade Plant near Emmett. The project was a biomass-fueled combined heat and power plant co-located with the sawmill. Energy would be generated from the steam created by the controlled burning of the woody biomass fuel.

When that project failed to meet its scheduled operation date, the parties agreed to a smaller 11.5-MW project at the same site when the Emerald Forest Products sawmill opened in May 2010. That agreement, approved in August 2010, stipulated that $106,804 in non-performance damages from the previous project was to be offset against the energy payments Yellowstone was to receive from the smaller project.

In May this year, Idaho Power sent Yellowstone a Notice of Material Breach for failing to meet the Dec, 31, 2011, online date for the smaller project.  Yellowstone Power claimed a force majeure event – the failure of the sawmill to continue operations – as the reason for not meeting its online date.