State regulators rejected Thursday a controversial plan by Hawaiian Electric Co. to buy 16 million gallons of locally produced biofuel a year for electricity generation, saying the high cost of the alternative fuel was too much for ratepayers to bear.

The Public Utilities Commission estimated the difference between the cost of the biofuel — made from plants — and the petroleum-based fuel it was intended to replace would have resulted in utility customers paying at least $100 million more over the 20-year life of the contract.

The ruling was a blow to HECO’s effort to generate 40 percent of its electricity from renewable sources by 2030. Officials at HECO said they were studying the ruling and did not have an immediate comment. The decision does not affect two other pending applications HECO has before the PUC to buy locally produced biofuel made from waste restaurant oil and algae.

HECO had sought permission from the PUC to buy biofuel to be produced on Hawaii island by a company called Aina Koa Pono and spread the cost between ratepayers on that island and Oahu. Aina Koa Pono planned to harvest existing wild plants and trees on 13,000 acres of land in the Kau district. The plants were to be converted into liquid fuel. Once the wild plants were exhausted, the company was to plant sweet sorghum as a feedstock.

The plan was to have the biofuel initially burned at a power plant in Kona operated by Hawaii Electric Light Co., a subsidiary of Honolulu-based HECO. The utility said it planned to eventually ship the fuel by barge to Oahu where it would be burned in HECO power plants.

The three-member PUC rejected the plan in a unanimous 74-page ruling. The three PUC members are Hermina Morita, John E. Cole and Michael E. Champley.

"Specifically, the Commission finds and concludes that the contract price for the AKP-produced biofuel is excessive, not cost-effective, and thus is unreasonable and inconsistent with the public interest," the commissioners wrote.

"In effect, from a real world, bill-paying perspective, the HECO companies seek the commission’s approval to consistently charge affected ratepayers a premium for HELCO’s purchase and use of AKP-produced biofuel under the terms of the 20-year contract," according to the ruling. "Such a result is unreasonable and not in the public interest."

The commissioners emphasized that their ruling was based on the cost of the AKP contract, and was not the result of any inherent bias against biofuels. "Indeed, state law, which recognizes the use of cost-effective biofuels as a renewable electricity resource, reflects the state’s overall policy of reducing its reliance and dependence on fossil fuels," the commissioners wrote.

The PUC did not give an exact figure for what the extra cost would be for the biofuel. However, it did say the premium would be an "eight-figure amount" in the first year of the contract and a "nine-figure amount" over the life of the 20-year contract.

HECO had said earlier that it expected the extra cost would result in a surcharge of $1.75 per month for a typical resident on Hawaii island and a $2.10 per month surcharge for Oahu customers.

Honolulu-based environmental group Life of the Land applauded the PUC’s decision.

"Every energy source has good and bad aspects," said Henry Curtis, the group’s executive director. "They must be weighed against each other. There are good and bad renewables. In this case the proposal simply did not pencil out, from an economic perspective, from an environmental perspective and from a social perspective."