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Hoku Materials Files Complaint Against Idaho Power to Amend Electric Service Agreement(January 09, 2012)
POCATELLO, ID -- (Marketwire) -- 01/09/12 -- Hoku Materials, Inc., a wholly owned subsidiary of Hoku Corporation (NASDAQ: HOKU), that is constructing a polysilicon production facility in Pocatello, Idaho, today announced the filing of a formal complaint with the Idaho Public Utilities Commission (the PUC), seeking to amend its electric service agreement with Idaho Power Company. On December 30, 2011, Hoku filed a complaint with the PUC asking that the commission stop Idaho Power from disconnecting Hoku's electrical service until the parties can resolve their dispute about the amounts that Idaho Power is charging Hoku. Today, Hoku answered Idaho Power's various allegations in response to Hoku's first complaint, and filed this additional complaint to amend the contract that was signed in 2009.
According to the complaint filed today, Hoku is alleging that Idaho Power is unfairly charging Hoku approximately $2 million each month for power not being consumed by Hoku's Idaho facility, while also demanding that Hoku pay a $5.8 million security deposit. To date, Hoku alleges that it has paid more than $11 million since April 2011 for power it did not consume, and has also paid a $4 million deposit to Idaho Power. Hoku was not connected to Idaho Power's grid until November 2011, and during its commissioning activities, Hoku only used the equivalent of less than $1,000 of power each day. Instead, Hoku alleges that it is being charged $65,000 per day. Hoku also claims to have paid more than $18 million to construct the high-voltage power lines and the substation to service its polysilicon production facility.
In Hoku's complaint, the company is asking the PUC for the following relief:
1. Elimination of the minimum payments that are due each month under the electric service agreement;
2. Monthly bills be limited to the power actually consumed by Hoku's facility;
3. Reduction of the deposit to only $4 million, eliminating the additional $1.8 million that is being requested by Idaho Power;
4. Continued electrical service; and
5. A refund of some, or all, of the amounts that were previously paid by Hoku to Idaho Power.
"We believe that Hoku is being treated unfairly by Idaho Power, and we are asking the Idaho Public Utilities Commission to help us resolve this inequity," said Scott Paul, CEO of Hoku Corporation. "When we first signed our contract with Idaho Power, we expected to be ramping-up our operations in late 2009. The financial crisis delayed our construction completion and our ramp-up plans in 2009. Now, as we are closer to beginning operations, the polysilicon market is experiencing a cyclical swing downward. We believe this to be temporary, but prudence requires that we reassess our ramp-up schedule to position the Company for long-term success in Idaho. Paying $2 million each month for power that is not being used is unsustainable for Hoku Materials, as it would be for most businesses. We feel that it is fair to seek an amendment to the contract based on the dramatic difference between the amounts we are paying for power, the amount of power we are actually consuming, and our understanding of the minimal cost that the utility is incurring to provide service to Hoku."
About Hoku Corporation
Hoku Corporation (NASDAQ: HOKU) is a solar energy products and services company with three business units: Hoku Materials, Hoku Solar, and Tianwei Solar USA, Inc. Hoku Materials markets and sells polysilicon for the solar market from its plant under construction in Pocatello, Idaho. Hoku Solar markets and installs turnkey photovoltaic systems and provides related services. Tianwei Solar USA markets and sells photovoltaic modules manufactured by Tianwei New Energy. Hoku Corporation is a majority owned subsidiary of Tianwei New Energy Holdings Co., Ltd. For more information, visit www.hokucorp.com.
Hoku, Hoku Solar, and the Hoku Corporation logo are trademarks of Hoku Corporation, and Hoku Materials is the trademark of Hoku Materials, Inc., all rights reserved. All other trademarks, trade names and service marks appearing in this press release are the property of their respective holders.
©Copyright 2012, Hoku Corporation, all rights reserved.
This press release contains forward-looking statements that involve many risks and uncertainties. In some cases, you can identify forward-looking statements by terms such as "anticipate," "believe," "can," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "would" and similar expressions intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements about the Company's contract with Idaho Power and its matter before the Idaho PUC. These statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, uncertainty regarding the decisions of the Idaho PUC with respect to the company's complaints as well as the risks, uncertainties and other factors disclosed in the Company's most recent Form 10-K and Form 10-Q filed with the Securities and Exchange Commission. Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. In evaluating these statements, you should specifically consider the risks described in the Company's filings with the Securities and Exchange Commission, as applicable. Except as required by law, the Company assumes no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
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