Ormat Technologies Inc. (ORA) said Thursday that its contract to sell power to NV Energy Inc. (NVE) from a Nevada geothermal power plant was terminated after the project ran into permitting delays.

Ormat, a leading U.S. developer of geothermal power plants, which use underground heat to generate electricity, said permitting delays kept it from making progress on the power project and affected the development plan and economics of the project.

Spokesmen at Ormat and NV Energy declined to comment.

Ormat obtained a $350 million government loan guarantee earlier this year to help finance three geothermal power plants in Nevada. The company said it planned to sell the electricity from those plants to NV Energy through long-term power contracts.

The terminated contract was tied to a different project, called Carson Lake, that was not among those backed by the loan guarantee.

NV Energy had agreed to jointly develop the 31.5 megawatt project and buy the electricity it generated, under a contract signed in 2006.

Ormat said it paid NV Energy a termination fee of $1.7 million and that it would continue working on the project.

-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468; cassandra.sweet@dowjones.com

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