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Ram Power signs term sheet on Imperial Valley project

Motel at Salton Sea's East shore, Imperial Valley, California (source: flickr/Omar Omar, creative commons)
Alexander Richter Alexander Richter 7 Apr 2010

Ram Power, Corp. ahas signed a term sheet with the Imperial Irrigation District ("IID") for a public-private partnership to develop one or more 49.9 MW geothermal projects on IID owned lands in the Imperial Valley, California.

In a release by the company, “Ram Power, Corp. announced that its subsidiary Ram Power, Inc. has signed a term sheet with the Imperial Irrigation District (“IID”) for a public-private partnership to develop one or more 49.9 MW geothermal projects on IID owned lands in the Imperial Valley, California (the “Project”). 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 with IID to sell 49.9 MW of power (the “PPA”).

The PPA will provide for an option (but not an obligation) for IID to pre pay a portion of Project’s output upon the Project reaching commercial operation. A portion of the output of the Project 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 7 or 10 years from commercial operation, depending on tax incentives utilized by the Project.

The term sheet, which was approved by IID’s board of directors, is the culmination of IID’s Request for Proposal No. 703 initiated in 2009. Ram Power’s proposal was selected from several competing offers by other geothermal developers. 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.

In making the announcement, Dan Schochet, Ram Power’s Executive Vice President, said, “This Project, which is structured to benefit from various federal incentives, represents the first step for Ram Power to join in a true public-private joint venture to utilize the strengths of IID as a publically owned utility along with the experience of Ram Power to develop the vast amount of base load, cost effective geothermal energy resources in the Imperial Valley.” Schochet went on to say that, “This Project, as well as others planned to follow, will provide significant benefits to the residents of the Imperial Valley by creating high paying jobs and contributing to the overall economic development of the region.”

About the Imperial Irrigation District: IID is a community-owned utility, providing irrigation water and electric power to the lower southeastern portion of California’s desert.”

Source: company announcement via Marketwatch