Green-energy firm sues power utilities

A Big Island bioenergy facility is suing Hawaiian Electric Industries and NextEra Energy Inc. over $555 million in damages from a contract ended in March.

In a complaint filed Wednesday in U.S. District Court in Honolulu, Hu Honua Bioenergy said Hawaii Electric Light Co., HEI’s subsidiary, illegally terminated Hu Honua’s contract with the facility. Hu Honua claimed HELCO’s right to terminate over Hu Honua’s failure to meet a project milestone had expired and that the utility ended the contract to dampen competition.

Hu Honua said NextEra — the company that was trying to acquire HEI at the time — approved the termination of the contract in a conspiracy to monopolize electrical power generation on Hawaii island.

“Defendants’ actions caused injury to Hu Honua and injury to competition,” Hu Honua said.

Hu Honua said it has been damaged in the amount of its investment in the construction of the plant totaling $120 million as well as $435 million in lost profits. If the defendants are found guilty of violating federal antitrust laws, which promote fair competition, the award potentially could triple to $1.6 billion.

Hu Honua was building a 30-megawatt power station that would convert biomass into electricity.

When ending the contract, HELCO said it was in the best interest of customers to terminate the agreement with Hu Honua because the company failed to meet deadlines and provide assurances that it can be relied upon as a renewable generation provider.

At a meeting Jan. 15, HELCO delivered a letter to Hu Honua that said it planned to terminate the contract with Hu Honua because the bioenergy facility failed to meet the “pass boiler hydro test” milestone in July 2015. Hu Honua said HELCO’s right to terminate the contract because of that failed milestone expired in December 2015.

The letter said the termination would be effective Jan. 18 unless Hu Honua agreed to a list of conditions. Hu Honua signed the letter, which gave HELCO the immediate right to terminate the contract and waived Hu Honua’s right to contest HELCO’s termination. HELCO terminated the contract in March.

Hu Honua said the letter was a “loaded gun to the head,” claiming HELCO was required to give Hu Honua 30 days’ notice of any termination.

Hu Honua said that despite NextEra’s buyout of HEI still pending, NextEra was controlling the Big Island utility. The merger agreement between NextEra and HEI required HEI’s utilities to get approval from NextEra before entering, terminating or changing any material contracts.

NextEra’s participation in ending Hu Honua’s contract was a “conspiracy to restrain trade in and monopolize the electrical power generation, dispatch and ancillary services markets on the Island of Hawaii,” according to the suit.

HECO spokesman Jim Kelly said the utilities reviewed the complaint and believe it has no merit.

“Hu Honua breached its contract and failed to perform, and that’s why the contract was terminated,” Kelly said. “Hu Honua is trying to shift the blame for its long-standing troubles onto Hawaii Electric Light, and we’re confident we can demonstrate that we have acted in good faith and in the best interests of our customers.”

In February, then-Consumer Advocate Jeff Ono said HELCO was justifiable in terminating the contract.