Ormat Announces New 5-Year SCE Agreements

ORMAT Technologies Inc., (NYSE: ORA) has announced that three of its indirect wholly-owned subsidiaries have entered into five-year Agreements Addressing Renewable Energy Pricing relating to Power Purchase Agreements with Southern California Edison (SCE).

These agreements fix the energy rates payable by SCE for the five (5) year period beginning May 1, 2007 for Ormat’s Ormesa, Heber 1, and Heber 2 geothermal projects located in Imperial County, California.

Under the new Agreements, the geothermal energy produced by these projects will be sold at an average fixed energy rate of $62.74/MWh, starting with a rate of $61.50MWh for the first year, with an annual escalation of 1.0% thereafter. The new Agreements will come into effect when the current Renewable Energy Pricing Agreement terminates on April 30, 2007. The new average energy rate of $62.74/MWh will replace the existing rate of $53.70/MWh.

As a result of these Agreements, Ormat’s revenues from the Ormesa and Heber projects for the first year are expected to increase by approximately $7.9 million. The capacity payment and capacity bonus under the respective power purchase agreement for each of the projects remain unchanged. The Agreements also set the energy loss adjustment factor (ELAF) at 1.0, which benefits projects that are located remotely from load pockets, and assigns the environmental attributes associated with the energy to SCE. The Agreements are subject to approval by the California Public Utilities Commission (CPUC).

Dita Bronicki, Ormat President and CEO commented, “We are very pleased with the new Agreements which bring further stability and predictability to our operations in California. These Agreements eliminate the natural gas price volatility associated with SCE’s SRAC which, under the current formula, is heavily dependant on the price of natural gas. Moreover, the Agreements also eliminate heat-rate calculations and any uncertainty associated with a possible change to the SRAC methodology currently under review by the CPUC in California.”