An on-and-off effort by the owner of an idle Hawaii island renewable energy power plant to obtain damages in federal court from Hawaiian Electric is on again and seeks over $1 billion.
Hu Honua Bioenergy LLC last week sought permission in U.S. District Court in
Hawaii to reopen a case it filed against the state’s largest regulated utility company in 2016 and settled conditionally in 2017.
The bioenergy firm has been working for over a decade to produce electricity by burning eucalyptus trees growing along the Hamakua Coast as well as other woody plants, but the project has been beset by a host of struggles involving construction, regulatory approvals, legal challenges
and other things.
Hu Honua’s plan was to convert an old power plant at the former Pepeekeo sugar mill, where sugar cane waste and coal were burned to make electricity, and sell power from burning wood to Hawaiian Electric subsidiary Hawaii Electric Light Co. The 30-megawatt project was to produce around 10% of the island’s electricity needs and offset an estimated 250,000 barrels of oil burned annually for power generation.
The two companies signed a 20-year power purchase agreement in 2012, and the state Public Utilities Commission approved the deal in 2013.
Building the project, however, didn’t go according to plan. With the plant only about half done in 2016,
Hawaiian Electric claimed that Hu Honua had defaulted on terms of the agreement by failing to meet construction milestone deadlines.
“The project has had many delays and has no ability to begin operations in the near future,” Darren Pai, a spokesperson for Hawaiian Electric, said at the time. “They’ve also not provided adequate assurances that they have the ability to complete the project.”
The utility company terminated the agreement, and Hu Honua, which had invested about $120 million in the project to that point, responded with a lawsuit contesting the termination. A settlement was reached in 2017 after the two parties agreed to a revised power purchase agreement that included cost savings for Hawaiian Electric customers, among other things.
Conditions to the legal settlement included regulatory approval of the revised power purchase agreement, which itself became the subject of litigation involving the PUC.
The three-member commission initially approved the amended agreement
in 2017, but nonprofit
environmental organization Life of the Land challenged the approval by contending that the PUC had violated state law by not considering how the project would affect the state’s goal of reducing greenhouse gas emissions.
In 2019 the Hawaii Supreme Court ruled that the greenhouse gas issue needed to be considered, and so the PUC started over with a new review.
After public hearings that included expert witness testimony from involved parties including Hawaiian Electric, Hu Honua and Life of the Land, the PUC in 2022 rejected the project in a 2-1 decision that in part concluded Hu Honua’s power plant would emit substantially more carbon than it sequestered through trees for at least the first 25 years of operation and would end up raising ratepayer prices during that time.
The commission also dismissed Hu Honua’s claim of eventually achieving carbon neutrality as speculative at best and, in the end, contrary to the public interest.
Hu Honua, which completed the power plant at
a cost of $520 million, appealed the decision to the Hawaii Supreme Court, and in March the court upheld the PUC’s ruling.
Hu Honua is now reviving its claim against Hawaiian Electric, faulting the utility for the project’s downfall as part of an “anticompetitive scheme” to avoid competition and preserve what Hu Honua calls a monopoly, or near monopoly, generating firm power on Hawaii island.
“Hu Honua’s newly constructed facility would bring reliable, renewable energy to Hawaii Island at a competitive price, but sits idle today solely due to Hawaiian Electric’s predatory and
anticompetitive conduct, which it has ruthlessly wielded to entrench and
expand its monopoly over Hawaii’s power sector,”
Daniel Swanson, an attorney with Gibson, Dunn &Crutcher LLP in California representing Hu Honua, said in a statement.
Hawaiian Electric declined to comment on the
renewed litigation.
The utility buys considerable electricity on Hawaii
island from various independent producers of intermittent wind, solar and hydroelectric power, and from one firm power producer, Puna Geothermal Venture.
As such, Hu Honua claims that Hawaiian Electric wields monopoly power and operates in a monopsony, or a market where there is only one buyer.
Hu Honua argues that
the utility should pay for at least 30 years of lost profits, and that damages of no less than $600 million could become $1.8 billion after trebling.
