Hoku Materials has signed an electric service agreement with the Idaho Power Company for the purchase of power to support Hoku's planned polysilicon production capacity of 4,000 metric tons per year, and the amendment of a substation construction agreement that would provide the necessary infrastructure to deliver the power.

According to the terms of the electric service agreement, Hoku has secured guaranteed amounts of power capacity at a negotiated blended fixed and industrial tariff rate for four continuous years beginning in June 2009.

After this initial four-year term, the price of electricity would revert to the utility’s standard tariff rates in effect at that time for large industrial power purchasers.

The guaranteed amount of power is expected to be enough to support 4,000 metric tons of polysilicon production per year, after accounting for reductions in the available power during the summer months, when Hoku plans to reduce operations for routine annual maintenance.

The amended substation construction agreement increases the planned substation capacity to 82MW of continuous load, which is expected to be sufficient for the production of 4,000 metric tons of polysilicon per year. The substation facilities are scheduled to first come on line in May 2009, with additional facilities being phased in until final completion in August 2009.

This timeline is consistent with Hoku’s planned polysilicon production ramp-up schedule. The agreement also provides that Idaho Power will provide temporary power, which would be separately invoiced, to enable Hoku’s earlier reactor demonstration, and initial start-up and commissioning activities.