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W A T E R I E N E R G Y ! L t f E RIVERSIDE PUBLIC UTILITIES Board Memorandum P U B L I C U T I L I T I E S BOARD OF PUBLIC UTILITIES DATE: October 15, 2010 ITEM NO: 12 SUBJECT: MODIFICATION OF SHOSHONE RENAISSANCE LLC GEOTHERMAL POWER PURCHASE AGREEMENTS ISSUE: Consideration of the following proposed agreements related to RPU's existing power purchase agreements with Shoshone Renaissance LLC: 1) Amended and Restated Unit Contingent Power Purchase Agreement; and 2) Termination Agreement to Unit Contingent Power Purchase Agreement 11. RECOMMENDATIONS: That the Board of Public Utilities recommend that the City Council: 1. Approve the Amended and Restated Unit Contingent Power Purchase Agreement ("Amended PPA") between Riverside and Shoshone Renaissance LLC; 2. Approve the Termination Agreement to Unit Contingent Power Purchase Agreement II ("Termination Agreement") between Riverside and Shoshone Renaissance LLC; 3. Authorize the City Manager, or his designee, to execute both agreements; and 4. Authorize the City Manager, or his designee, to execute any necessary documents to modify the project development milestones contained in the Amended PPA, and to terminate the Amended PPA as provided therein if any such milestones, including those milestones modified by the City Manager or his designee, are not met. BACKGROUND: Riverside entered into two Unit Contingent Power Purchase Agreements ("PPAs") with Shoshone Renaissance LLC in 2008. The agreements are individually referred to as PPA I and PPA 11. Together, the PPAs would provide 96 MW of baseload renewable power from geothermal resources to be constructed in Utah. PPA 1 would provide 64 MW and PPA 11 would provide 32 MW. The commercial operation dates were anticipated to be May 1, 2010 and May 1, 2012 under PPAs I and 11, respectively. Both PPAs have been extended several times in the past 18 months to allow Shoshone Renaissance additional time to obtain financing and develop the project. However, due to the unprecedented financial crisis, Shoshone Renaissance continues to be unable to obtain project financing. Shoshone Renaissance has missed the PPA I commercial operation date of May 1, 2010 due to the lack of financing, and is anticipated to miss the PPA 2 commercial operation date of May 1, 2012. At this time, the estimated commercial operation date for PPA 1 (assuming that financing can be obtained) is April 1, 2014, almost a four-year delay. The PPA 11 commercial operation date cannot be reasonably predicted.