Hu Honua Asks PUC to Investigate HELCO and HECO, PPA Termination Ignored RPS and Numerous Ratepayer Benefits





PPA Termination Ignored RPS and Numerous Ratepayer Benefits

(HONOLULU, MAY 19, 2016) – Today, Hu Honua Bioenergy, LLC (Hu Honua) filed a pleading with the state Public Utilities Commission (the Commission), asking the Commission to investigate HELCO’s attempts to terminate the Hu Honua PPA.

Specifically, Hu Honua asked the Commission to investigate HELCO and HECO for (1) refusal over the past 14 months to provide Hu Honua with reasonable milestone extensions to construct its plant, (2) their improper attempt to terminate Hu Honua’s Commission-approved PPA, which will deprive ratepayers of renewable power de- linked from volatile fossil fuel prices, and (3) claims that Hu Honua’s proposed pricing concessions provide no benefit to consumers, despite failing to provide any analysis, explanation or facts to support those claims.

When Hu Honua’s PPA docket was reopened in February 2016 and information was submitted by the utility, the Division of Consumer Advocacy and Hu Honua, HELCO, without waiting for the Commission to act on these submissions, terminated the Hu Honua PPA on March 1.

On the heels of the termination of Hu Honua’s PPA, HELCO filed an updated power supply improvement plan on April 1, 2016, proposing a HELCO-owned 20 MW biomass power plant on Hawaii Island with an estimated completion date in either 2024 or 2027. Had the PPA not been terminated, Hu Honua’s biomass facility could have been completed and operational by mid-2017. HELCO has failed to tell the PUC how the community HELCO serves on Hawaii benefits from HELCO’s effort to prevent the completion of Hu Honua’s facility in favor of its own biomass power plant that won’t be built for decade.

Principal Investor Jenny Johnson noted, “Instead of allowing the Hu Honua renewable energy plant to be completed and come on line in 2017, HELCO has chosen to delay for several years the deactivation of its power plants that burn lower-grade fuel oil which produce higher levels of pollution. These levels exceed federal Mercury and Air Toxics Standards (MATS) but are not subject to these standards because the plants each produce less than 25 MW of power. That choice is clearly not in the best interest of the residents of Hawaii.”

In both its February 16 Status Update to the Commission and its March 1 termination letter to Hu Honua, HELCO failed to identify a single fact to support its oft-repeated claim that the termination was beneficial to its customers and elected not to share with the Commission the following undisputed facts:

  • The Hu Honua project is approximately 50 percent complete ($137 million to date), has $125 million of capital committed to the completion of the facility, and can be ready to begin operations within14 months.
  • When completed, the Hu Honua project will offer HELCO’s customers all of the benefits identified by the Commission, including protection from volatility in the cost of electricity, with oil prices currently rising the past three months, and a modernized plant providing firm power that would help stop the power outages being experienced on Hawaii Island.
  • Throughout 2015, Hu Honua proposed, and continues to propose, a pricing concession that would reduce the fuel component of Hu Honua’s pricing formula to a flat rate of 14 cents per KWh at dispatch levels above 10 MW. Hu Honua calculates that this price reduction would result in additional customer savings of approximately $60 million over the 20-year life of the PPA, as compared to the previous Commission-approved pricing and dispatch levels provided by HELCO in the PPA application.
  • In attempting to show that Hu Honua’s price reduction proposal did not benefit its customers, HELCO’s Status Update to the Commission analyzed the wrong pricing proposal. And although Hu Honua’s Response to HELCO made the utility aware that it had used the wrong pricing proposal, in its subsequent correspondence filed with the Commission, HELCO failed to correct its pricing analysis error and never informed the Commission about Hu Honua’s proposed reduced pricing and the significant customer benefits that would be realized.

Johnson added, “Yesterday, we submitted our latest pricing proposal to HELCO and are proud that the energy price we presented, if approved, would be the lowest of any renewable facility in the state. We are hopeful that the PUC will support us.”

About Hu Honua

Hu Honua Bioenergy, LLC is located in Pepeekeo on the Hamakua Coast of the island of Hawaii. The company is locally managed and a team of local business leaders has recently taken positions with the company, including advisory board members Walter Dods, Duane Kurisu and Dennis Teranishi, as well as John Komeiji who serves on the board of directors.

When completed, the Hu Honua facility will be able to produce up to 30 MW of clean renewable baseload power 24 hours a day, seven days a week. When operating at capacity, Hu Honua will be able to produce approximately 14 percent of Hawaii Island’s electricity needs and displace approximately 250,000 barrels of oil per year.

For more information, visit the Hu Honua Bioenergy website:

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