exv10w8



 






EXHIBIT
10.8




	 	 	 
	[U.S. Energy Logo

	 	U.S. Energy, Services, Inc.
	     Our Bias is You.]

	 	1000 Superior Blvd.
	 

	 	Wayzata, MN 55391-1873
	 

	 	ph:952-4300 fax:952-473-1224






March 22, 2005




Mr. Bill Couser

President

Lincolnway Energy

975 West Lincoln Highway, Suite B

Nevada, Iowa 50201




RE: Energy Services Agreement




Dear Mr. Couser:



The purpose of this letter is to set forth the understanding and agreement
between U.S. Energy Services, Inc. (“U.S. Energy”) and Lincolnway Energy,
LLC (Lincolnway).



PROJECT DESCRIPTION: Lincolnway intends to develop a 50 million
gallon per year ethanol plant (“Plant”) located near Nevada, Iowa. Lincolnway
desires to contract with U.S. Energy to provide services as listed below.



U.S. ENERGY RESPONSIBILITIES: U.S. Energy will provide consulting and
energy management services for supplies of coal and electricity for the Plant.
These services will be provided during the construction of the Plant
(“Construction Period”), and after the Construction Period when the Plant has
been placed in service (“Operation Period”). The Operation Period shall be that
period following the start-up of the plant. These services will include but not
be limited to the following:



A. Energy Infrastructure Advisory Services during the Construction Period





	1.	 	Lincolnway intends to use coal as the fuel source to generate steam for processing and drying.
There are several service components associated with reliable and economic coal delivery to the
plant. Those services include coal procurement from a mine, rail transportation (power, rail cars
and rail service), terminal and transload services and truck delivery to the plant. Williams Bulk
Transfer Inc. (WBT) has proposed to provide these services on a bundled basis. U.S. Energy will
evaluate each of the service components included in WBT’ s proposal to insure the pricing is
reasonable.




 









 











U.S. Energy Initials TDO




LINCOLNWAY Initials                    





	 	2.	 	U.S. Energy will prepare a report that discusses each service component included in
WBT’s proposal. The report will specifically identify the method used to set service
pricing and to the extent possible “benchmark” the price to market prices.
	 
	 	3.	 	U.S. Energy prepare a strategic coal sourcing plan that identifies future service
alternatives and steps that should be taken to insure that Lincolnway is able to minimize
cost and maximize service reliability for future contracting periods.
	 
	 	4.	 	Provide advisory services to Lincolnway regarding electric pricing and service
agreements.






	 	a.	 	Analyze the electric service proposals along with primary, secondary and
generation options and recommend an electric sourcing strategy and plan. This step
will specifically include evaluating the steam turbine proposal from Alliant Energy
Generation.
	 
	 	b.	 	Negotiate final electric service agreements that meet the pricing and
reliability requirements of Lincolnway.
	 
	 	c.	 	Prepare and implement a regulatory strategy, if required and if an alternative
power supplier is selected. Any attorney fees required for the specific purpose of
obtaining regulatory approval for an alternative power supplier, if any, will be over
and above U.S. Energy’s monthly fee herein, and must be pre-approved by Lincolnway.






	 	5.	 	Evaluate the proposed electric distribution infrastructure (substation) for reliability,
future growth potential and determination of the division of ownership of facilities
between the utility and the Plant.
	 
	 	6.	 	Investigate economic development rates, utility grants, equipment rebates and other
utility programs that may be available.




B. On-Going Energy Management Services during Operation Period



U.S. Energy will provide the following services at Lincolnway’s request:





(These services will be determined if U.S. Energy and Lincolnway choose to extend services
beyond the initial one-year term.)


TERM: The initial term of this Agreement shall commence on April 1, 2005 and continue
until twelve (12) months after that date. The Agreement shall be month-to-month after the initial
term. This Agreement may be terminated by either party effective after the initial term upon
thirty (30) days prior written notice. Following termination, Lincolnway shall remain responsible
for payment and performance associated with any and all transportation, supply, and storage
transactions entered into by U.S. Energy and authorized by Lincolnway during the term of this
Agreement.




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U.S. Energy Initials TDO




LINCOLNWAY Initials                    



FEES: U.S. Energy’s fee for services described above during the initial term of
this Agreement shall be $2,900 per month, plus preapproved travel expenses.



BILLING AND PAYMENT: On the first of each month, U.S. Energy shall invoice Lincolnway for
that the fee for the previous month and Lincolnway shall pay U.S. Energy within fifteen (15) days
of receipt of invoice. U.S. Energy will also provide to Lincolnway a consolidated invoice of the
Plant’s energy costs.



TAXES:. Lincolnway will be responsible for payment of all taxes including,
but not limited to, all sales, use, excise, BTU, heating value and other taxes associated with
the purchase and/or transport of natural gas or electricity and the provision of services
hereunder.



CONFIDENTIALITY: The parties agree to enter into a mutually agreeable Mutual Non
Disclosure Agreement.



NOTICES,: Any formal notice, request or demand which .a party
hereto may desire to give to the other respecting this Agreement shall be in writing and shall be
considered as duly delivered as of the postmark date when mailed by ordinary, registered or
certified mail by said party to the addresses listed below. Either party may, from time-to-time,
identify alternate addresses at which they may receive notice during the term of this Agreement
by providing written notice to the other party of such alternate addresses.




	 	 	 	 	 
	Lincolnway Energy, LLC:	 	Mr. Bill Couser
	 

	 	 	 	Lincolnway Energy
	 

	 	 	 	975 West Lincoln Highway, Suite B Nevada,
	 

	 	 	 	Iowa 50201
	 
	 	 	 	 
	U.S. Energy:	 	U.S. Energy Services, Inc.
	 

	 	(Payment)
	 	c/o US Bank SDS 12-1449 Account
	 

	 	 	 	#: 173100561153 P.O. Box 86
	 

	 	 	 	Minneapolis, MN 55486
	 
	 	 	 	 
	 

	 	(Notices):
	 	U.S. Energy Services, Inc:
	 

	 	 	 	1000 Superior Blvd, Suite 201
	 

	 	 	 	Wayzata, MN 55391
	 

	 	 	 	Attn: Contract Administration





ASSIGNMENT OR AMENDMENT: The Agreement may not be assigned or amended without the written
consent of U.S. Energy and Lincolnway, which consent shall not be unreasonable withheld.





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U.S. Energy Initials TDO




LINCOLNWAY Initials                    



APPLICABLE LAW: The Agreement shall be construed in accordance with the laws of
the State of Minnesota.



ENTIRE AGREEMENT,: This Agreement constitutes the entire Agreement among the
parties pertaining to the subject matter hereof and supersedes all prior Agreements and
understanding pertaining hereto.



If the above correctly sets forth Lincolnway’s understanding of the Agreement, please sign both
originals where indicated below and return to U.S. Energy, Attention: Gail McMinn



Sincerely,




	 	 	 	 	 
	U.S. ENERGY SERVICES, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Todd D. Overgard          (Sign)
	 	 
	 

	 	 	 	 
	 
	Name:

	 	      Todd
D. Overgard          (Print)	 	 
	 
	 	 	 	 
	Title:

	 	VP- Operations	 	 
	 
	 	 	 	 
	Date:

	 	4/6/05	 	 






ACCEPTED AND DTATE TO THIS                    

DAY OF                                         , 2005.




	 	 	 	 	 
	LINCOLNWAY ENERGY, LLC	 	 
	 
	 	 	 	 
	By:

	 	/s/ William D. Couser          (Sign)
	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Name:

	 	      William
D. Couser          (Print)	 	 
	 
	 	 	 	 
	Title:

	 	President	 	 
	 
	 	 	 	 
	Date:

	 	4/4/05	 	 






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	[U.S. Energy Logo

	 	U.S. Energy, Services, Inc.
	     Our Bias is You.]

	 	1000 Superior Blvd.
	 

	 	Wayzata, MN 55391-1873
	 

	 	ph:952-4300 fax:952-473-1224






Lincolnway Energy

Workplan for US Energy Services

March 22, 2005



U.S. Energy Services will manage, investigate, and report on the following tasks during the
initial 12 month term of this agreement. This is not intended as an all-inclusive list, but is
provided as a roadmap for Lincolnway which will also serve as a progress measurement tool regarding
key energy issues.





	 	 ̈	 	Review electric service territory boundaries to determine if an electric cooperative
might be permitted to serve Lincolnway, or if the site must be served by Alliant. The
following action items assume Alliant is the only realistic electric provider. These
action items will be revised if service by an electric cooperative is permitted and
viable.
	 
	 	 ̈	 	Request Alliant’s electric design schematic for Lincolnway, evaluate proposed
configuration, and advise Lincolnway on adequacy of design.
	 
	 	 ̈	 	Work with Fagen/ICM to develop monthly kWh plant profile to be used for economic
analysis, both with and without steam turbine generator.
	 
	 	 ̈	 	Arrange conference call discussion with Alliant to review electric service options
including available electric tariffs and impact of fuel clause adjustment charges. Perform
analysis of the proposed 1400 kW steam turbine generator under available rate scenarios and
make recommendation to Lincolnway based on project economics.
	 
	 	 ̈	 	Perform analysis of primary versus secondary voltage service from Alliant which
compares benefits and costs of available alternatives.
	 
	 	 ̈	 	Prepare 12 month pro forma electric budget based on tariff recommendations and
including impact of steam turbine generator.
	 
	 	 ̈	 	Request equipment list from Fagen/ICM in order to determine eligibility for
electric rebates. Work with motor suppliers if necessary to facilitate process.
	 
	 	 ̈	 	Work with Alliant on potential rebates in order to maximize rebate payments to
Lincolnway. Any rebates paid are directly received by Lincolnway since US Energy’s sole
compensation is the monthly retainer fee. Early and active involvement is critical
regarding Alliant rebates, since equipment specifications are required according to a
specified timeframe or rebate dollars may be forfeited. Provide on-going management as
required by rebate application process.
	 
	 	 ̈	 	Provide electric technical expertise as necessary (example: recent ethanol project
involved large HP motors which the utility suggested required either soft-starting
circuitry or variable frequency drives. US Energy Services participated in discussions
and helped the plant navigate through technical requirements).
	 
	 	 ̈	 	Request detailed breakout of coal delivery costs by component from Williams Bulk
Transfer Inc. (WBT), including the 3 Ts discussed in our 3/18/05 presentation: Train,
Terminal, and Trucking.
	 
	 	 ̈	 	Discuss with WBT the process used to determine the components listed above.
Examples: Was a competitive bid process used to arrive at the estimate for trucking
costs? Are the rail rates used equivalent to posted tariff rates?
	 
	 	 ̈	 	Prepare a report for the Lincolnway Board that identifies and compares component costs
and service alternatives (where choices exist). Include the spot price of Powder River
Basin coal in the comparison.