Utility seeks OK to alter units to use natural gas

Hawaiian Electric Co. asked the state to approve a $458 million plan to convert its power generating units on Oahu, Maui and Hawaii island to liquefied natural gas.

In a filing with the Public Utilities Commission on Wednesday, HECO said it expects using LNG will save customers between $850 million and $3.7 billion over 20 years. The amount is dependent on future oil prices, the utility said.

Ron Cox, vice president for power supply at HECO, said using LNG will help the state get closer to its 100 percent renewable energy goal as LNG is a better fuel for generation. Cox said it will keep electric service reliable as the utility adds more variable renewables like solar and wind.

“As we make this transition, LNG is a cleaner-burning alternative that potentially can provide billions of dollars in savings and stabilize electric bills for our customers compared to continuing to rely on imported oil with its volatile prices,” Cox said in a news release.

Depending on PUC approval, the utility said it expects to begin using LNG as soon as 2021. HECO has a 20-year contract with Fortis Energy Hawaii Inc. to bring natural gas from northeastern British Columbia. The state has a goal of using 100 percent renewable energy for electric power by 2045.

“Sooner we can do it (convert to LNG), sooner we can save customers money,” Cox said.

HECO said savings could be as much as $390 a year for customers on Oahu, $100 per year for customers on Hawaii island and $15 per year for customers on Maui.

HECO’s LNG plan includes converting generating units to use natural gas at Kahe Power Plant on Oahu, Maalaea on Maui, and Keahole and Hamakua Energy Partners on Hawaii island. The units would have small storage tanks of LNG on site and the liquid would be converted to gas on site. Because of the small amount of LNG at the plants, trucks would travel daily to deliver more LNG for each generator. The trucks would transfer the LNG to the generator sites after getting the fuel from a barge, which would transfer the tanks from a ship that holds about a 15-day supply.

The total cost for HECO to convert plants across its three territories is $341 million. The cost to bring in the LNG containers is $117 million.

In August, Gov. David Ige said he was opposed to the use of LNG because it is a distraction from the state’s 100 percent renewable goal and that his administration would actively oppose it.

“We agree with Gov. Ige,” said Isaac Moriwake, attorney for Earthjustice. “This is just a distraction from our clean energy goals. HECO will profit, and customers and the environment will have to bear the costs.”

Jeff Mikulina, executive director at Blue Planet Foundation, said HECO’s filing is “outrageous” because the utility is not respecting the process of engaging with the community. HECO held a meeting with the energy community Tuesday about its 30-year power supply plan, which includes looking into using LNG as a bridge fuel.

“It’s outrageous because we’re essentially in the middle of the planning process and HECO is seeking stakeholder engagement and this just demonstrates that there is no interest in a stakeholder process — to jump the gun and file the application to presume the outcome. They just had this dialogue about analyzing LNG and then they just go right ahead and apply,” Mikulina said.

“The filing is premature,” said Henry Curtis, executive director of Life of the Land. “The proposal puts the cart before the horse. First the PUC needs to analyze the HECO Companies Power Supply Improvement Plans. PUC-approved plans should guide the utility.”

Cox said the filed contract provides the governor, the energy community and the public a much more concrete plan to consider.

Mikulina said that real transitional efforts to 100 percent renewable are energy-efficiency initiatives, demand-response programs and energy storage.

“A real bridge to renewables is one that starts to put the pieces in place to reach our destination,” he said. “We are just going to saddle our future with fossil fuel investments.”

Marti Townsend, executive director of the Sierra Club Hawaii Chapter, said she was disappointed with HECO’s decision.

“Once again HECO demonstrates its unwillingness to evolve to more sustainable and truly cost-competitive alternatives, opting instead to double down on dying technology,” Townsend said. “The ones who really suffer here are the ratepayers who are forced to pay for this distraction.”

The PUC could rule soon on a proposal from Florida-based NextEra Energy Inc. to buy HECO’s parent company, Hawaiian Electric Industries, for $4.3 billion.

If the buyout is not approved, Cox said HECO is still interested in pursuing LNG.

In a separate filing with the PUC on Wednesday, HECO asked to modernize its Kahe Power Plant, which would cost $859 million.

HECO said it wants to upgrade three steam units at the plant, which would be deactivated by 2020. The upgrades would make the plant more efficient and able to ramp up and down faster to work with renewables. HECO said the modernized system would be 30 percent more efficient than the retired generators.

If the PUC approves its LNG plans, the utility would still need to apply for building permits for the new infrastructure and file a environmental impact statement.