Under the terms of the contemplated transaction, the project will be owned and developed by Ram Power’s to-be-formed subsidiary that will enter into a market based power purchase agreement (PPA) with IID to sell 49.9MW of power.
The PPA will provide for an option for IID to pre pay a portion of the project’s output upon the project reaching commercial operation. A portion of the output may be purchased by other members of the Southern California Public Power Authority. IID will also have the option to acquire an ownership interest in the project after seven or ten years from commercial operation, depending on tax incentives utilized by the project.
The term sheet will be used as the basis for the PPA, the geothermal lease and other associated agreements between Ram Power and IID. The prepaid option in the PPA allows IID to provide the equivalent of debt financing to the project at IID’s low bond financing interest rate.
IID is a community-owned utility, providing irrigation water and electric power to the lower southeastern portion of California’s desert.
