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The owners of a biomass facility and Hawaii Electric Light Co. have a lot riding on a state Public Utilities Commission decision expected to come at month’s end.
Hu Honua Bioenergy LLC and HELCO submitted a revised contract in May with the PUC requesting approval for the utility to purchase electricity from the biomass facility at 22.1 cents a kilowatt-hour over 30 years. HELCO and Hu Honua submitted the revised application, following Hu Honua suing HELCO for $555 million in damages for ending the previous contract in 2016.
HELCO allowed its contract with Hu Honua to end, saying Hu Honua failed to meet deadlines and provide assurances that it could be relied upon as a renewable-energy provider for Hawaii island. The facility, meant to burn eucalyptus trees to create energy, was half built at the time that the contract ended.
Hu Honua representatives said Thursday they are optimistic that the new contract will be approved.
“The plant is going to be up and running, ready to go by the end of December (2018),” Harold Robinson, president of Island Bioenergy, said Thursday at an editorial board meeting at the Honolulu Star-Advertiser. Island Bioenergy is the parent company of Hu Honua.
In November, Hu Honua sued HELCO for lost profits after the utility ended its contract with the bioenergy company, which had received approval from the PUC in 2013. The settlement resolving all claims by Hu Honua against HELCO is contingent upon the state’s approval of the revised contract.
“If the (contract) is not approved, the lawsuit will move forward,” said spokesman Jim Kelly of Hawaiian Electric Co., a sister utility to HELCO.
Hu Honua questioned whether NextEra Energy Inc., the Florida company that attempted and failed to buy the parent company of HELCO for $4.3 billion, had a role in the cancellation of the project. HECO ended Hu Honua’s project as well as three utility-scale solar projects on Oahu during state regulators’ review of NextEra’s bid to purchase Hawaiian Electric Industries Inc.
Hu Honua’s contract to provide 21.5 megawatts of energy, power enough for roughly 14,000 homes, is expected to increase customer bills in its first 11 years, according to a filing submitted by HELCO to the PUC. Over the life of the 30-year project, customers’ electrical bills would go down, according to HELCO estimates.
Residents would save about $298.80 over the life of the contract, or roughly 83 cents a month in consumer bills. HELCO said customers would see a $5.29 increase every month in the first year and a monthly increase of $1.52 in the second year. The following years would see smaller increases until 2031, after which bills would decrease. Residents would see a $10.95 monthly reduction the final four years of the contract.
In its June 30 filing, HELCO said the projected savings and costs to customers aren’t guaranteed.
“The planning environment has become increasingly uncertain. … The utility’s true avoided costs has become increasingly complex,” HELCO said in the filing.
Robinson said the facility’s benefits are twofold, providing firm renewable power and creating more jobs.
“We don’t think (HELCO has) necessarily taken into account all the benefits Hu Honua can provide,” Robinson said.
Hu Honua will add 190 permanent jobs to Hawaii island in plant operations, forestry and transportation and indirect employment, according to an economic analysis conducted by Honolulu consulting firm Plasch Econ Pacific LLC. The construction of the facility is expected to create 480 jobs. Hu Honua will generate additional property tax revenue of about $1.4 million per year and an additional $2.2 million per year in state tax revenue, Plasch Econ Pacific said.
Hu Honua’s half-built facility is in Pepeekeo on the Hamakua Coast.
Robinson said Hu Honua has contracts for land with Kamehameha Schools and Parker Ranch. The land will be used for growing eucalyptus trees. Robinson said the contracts would give the facility roughly one-third of the 15,000 to 30,000 acres the facility would need. Robinson said the facility would replenish the 2,000 acres of trees it uses every year.
Senate Transportation and Energy Committee Chairwoman Lorraine Inouye (D, Kaupulehu-Waimea-North Hilo), Sen. Kai Kahele (D, Hilo), Rep. Chris Todd (D, Hilo-Waiakea-Keaukaha), Rep. Mark Nakashima (D, Kohala-Hamakua-North Hilo) and Rep. Cindy Evans (D, Kaupulehu-Waimea-Halaula) have all come out in support of the project.
Correction: If approved by the Public Utilities Commission, the proposed Hu Honua Bioenergy plant is expected to be operational by December 2018, not this December, as reported in a earlier version and in Friday’s print edition. Customers are expected to see increases in their monthly bills in the first 11 years of the 30-year contract, not the first 26 years. Also, company officials say the facility would replenish the 2,000 acres of trees it uses every year, not 2,000 trees.
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