U.S. Geothermal Inc. (TSX: GTH)(NYSE: HTM), a leading renewable energy company focused on the development, production and sale of electricity from geothermal energy, announced that its subsidiary USG Oregon LLC (the Company) received an award letter approving its application for payment in the amount of $35,870,253 from the U.S. Department of Treasury. The cash grant is for Specified Energy Property in Lieu of Tax/Credits relating to the Neal Hot Springs geothermal power plant under Section 1603, Division B of the American Recovery and Reinvestment Act of 2009.
The Section 1603 award letter states that, pursuant to the requirements of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, payments issued under Section 1603 of the American Recovery and Reinvestment Tax Act of 2009 for specified energy property in lieu of tax credits are subject to sequestration. As a result, the amount of the award was reduced by the sequestration reduction rate of 8.7 percent resulting in a payment in the amount of $32,749,541. The proceeds of the cash grant will be used to fund $8.5 million in plant and well field cash reserves. Approximately $13.3 million of the grant is expected to pay down the outstanding project loan with the balance available for distribution to the equity partners.
The Section 1603 award letter affirms that the payment should be received in the Company bank account within seven business days.
From January 1 thru March 21, 2013, the Neal Hot Springs power plant produced and sold 42,324 megawatt hours. Electrical energy from the new power plant is being sold under the terms of a 25-year power purchase agreement with Idaho Power Company. The new plant is projected to generate up to 183,000 megawatt hours of electrical power each year. Between 30% and 40% of the Company is owned by Enbridge Inc., subject to final calculations.