Projects

The Windstar Project is a 120 MW wind project on 1,850 acres of land owned by the Company in Tehachapi, California. The project is fully financed and currently completing construction by the Company's Engineering, Procurement, and Construction contractor, RMT, Inc. ("RMT").

As of the date of this document, the 120 MW Windstar wind project has completed all of the construction, consisting of 60 Gamesa G80 and G87 2 MW wind turbine generators (120 MW). Sixty (60) of the turbines are fully erected, including the foundation, tower, nacelle and rotor.

In December 2010, the Company signed a $204.5 million Senior Secured Note Purchase Agreement with various institutional lenders and a letter of credit financing agreement with Rabobank for up to $55 million to finance the Windstar project. The notes are secured by a first lien on all the project assets and the line of credit provided through the financing agreement is secured by a first lien on the proceeds of the 30% cash grant from the US Treasury Department and a second lien on all the assets of the Windstar project. The $55 million credit agreement with Rabobank will be paid upon receipt of the US Treasury cash grant.

Under the power purchase agreement ("PPA") with Southern California Edison ("SCE"), the Company will supply the output from a 120 MW facility, with initial operations to begin no later than December 31, 2011. The Company is not currently aware of any other risks associated with the contract with SCE and expects initial operations for the 106MW to commence in December 2011.

The project will deliver power to SCE via the Wilderness and Sagebrush Lines to SCE's Vincent Substation pursuant to three Large Generator Interconnection Agreements ("LGIA") with Sky River, LLC, Sagebrush, and the California Independent System Operator ("CAISO").

The Company previously expensed property carrying costs such as property taxes, liability insurance costs and mortgage interest prior to financial close. In December 2010 the Company started capitalizing carrying costs and continues to capitalize power project development and construction costs which include costs related to zoning and permitting, geotechnical, engineering and interconnection studies and legal fees related to transmission, financing, power purchase and regulatory matters.