RESTRICTED CASH AND SECURITY BOND RESERVES

6 Months Ended

Jun. 30, 2016

RESTRICTED CASH AND SECURITY BOND RESERVES [Text Block]

NOTE 3 – RESTRICTED CASH AND SECURITY BOND RESERVES

Under the terms of the loan agreements with the Department of Energy and Prudential Capital Group, various bond and cash reserves are required to provide assurances that the power plants will have the necessary funds to maintain expected operations and meet loan payment obligations. Restricted cash balances and bond reserves are summarized as follows:

Current restricted cash and bond reserves :

		June 30,		December 31,
Restricting Entities/Purpose		2016		2015
Idaho Department of Water Resources, Geothermal Well Bond	$	260,000	$	260,000
Bureau of Land Management, Geothermal Lease Bond- Gerlach		10,000		10,000
State of Nevada Division of Minerals, Statewide Drilling Bond		50,000		50,000
Bureau of Land Management, Geothermal Lease Bonds- USG Nevada		150,000		150,000
Oregon Department of Geology and Mineral Industries, Mineral Land and Reclamation Program		400,000		400,000
Prudential Capital Group, Cash Reserves		318,678		2,259
Prudential Capital Group, Debt Service Reserves (USG Nevada LLC)		1,598,111		1,595,555
Bureau of Land Management , Geothermal Rights Lease Bond		10,000		10,000
U.S. Department of Energy, Debt Service Reserve		2,055,258		2,118,193
State of California Division of Oil, Gas and Geothermal Resources, Well Cash Bond		100,000		100,000
Prudential Capital Group, Debt Service Reserves (Idaho USG Holdings LLC)		1,703,174		-
CAISO, Transmission Interconnection Escrow Deposits		1,000,320		-
	$	7,655,541	$	4,696,007

Long-term restricted cash and bond reserves:

		June 30,		December 31,
Restricting Entities/Purpose		2016		2015
Nevada Energy, PPA Security Bond	$	1,468,898	$	1,468,898
Prudential Capital Group, Maintenance Reserves (USG Nevada LLC)		1,035,627		708,300
Prudential Capital Group, Well Reserves (USG Nevada LLC)		632,895		314,590
Prudential Capital Group, Maintenance Reserves (Idaho USG Holdings LLC)		1,807,890		-
Prudential Capital Group, Capital Expenditure Reserves (Raft River Energy I LLC)		2,943,141		-
U.S. Department of Energy, Operations Reserves		270,000		270,000
U.S. Department of Energy, Debt Service Reserves		2,466,270		2,542,058
U.S. Department of Energy, Short Term Well Field Reserves		4,507,969		4,507,110
U.S. Department of Energy, Long-Term Well Field Reserves		5,070,001		4,966,543
U.S. Department of Energy, Capital Expenditure Reserves		2,471,689		2,718,290
	$	22,674,380	$	17,495,789

The well bonding requirements ensure that the Company has sufficient financial resources to construct, operate and maintain geothermal wells while safeguarding subsurface, surface and atmospheric resources from unreasonable degradation, and to protect ground water aquifers and surface water sources from contamination. Other future costs of environmental remediation cannot be reasonably estimated and have not been recorded. The debt service reserves are required to provide assurance that the Company will have sufficient funds to meet its debt payment obligations for the terms specified by the loan agreements. The maintenance and capital expenditure reserves are required by the lending entities to ensure that funds are available to acquire and maintain critical components of power plants and related supporting structures to enable the plants to operate according to expectations. Except for the PPA Security Bond, all of the restricted funds consisted of cash deposits or money market accounts held in commercial banks. Portions of the cash deposits are subject to FDIC insurance. During the first quarter of 2016, the Company entered into an interconnection agreement with CAISO that required escrow deposits of $1,000,069 for funding costs at our WGP Geysers Project. In May 2016, the Company’s wholly owned subsidiary (Idaho USG Holdings LLC) entered in to a loan agreement with Prudential Capital Group. The terms of the loan agreement required the initial funding of three reserve accounts that totaled $6,454,205. The funding requirements of the new loan are based upon the operations and financial conditions of USG Oregon LLC and Raft River Energy I LLC. The PPA Security Bond is held by the power purchaser. All of the reserve accounts were considered to be fully funded at June 30, 2016 and December 31, 2015.