Judging by the numerous requests which I have received from readers to comment on the Hydropower Purchase Agreement (PPA) between GPL and Amaila Falls Hydropower Inc (AFH Inc) this seems to be, by far, the public’s most troubling concern about the Amaila Falls Hydropower Project (AFHP). This is not surprising since the PPA contains the negotiated average price ($US per kilowatt hour) at which AFH Inc commits to sell and GPL commits to buy, agreed amounts of hydroelectricity as per arrangements contained in the PPA.
At present, I do not know what this average price will be. However, I am aware, as reported in previous columns that GPL has publicly stated its plans to sell electricity, after the introduction of hydropower, at 25 to 40 per cent cheaper than today’s price. Indeed this lower selling price is one of the principal reasons it advances in favour of the project.
Power purchase agreements
At this stage a discussion of PPAs would be helpful for readers. Schedule I below indicates the main items a typical PPA would contain. While the listed items should not be construed as fixed or immutable, they nevertheless represent substantially the contents of