(BIVN) – A participant in the proceeding to approve a new deal between Hu Honua Bioenergy, LLC and the Hawaii Electric Light Company is studying the revamped proposal that would bring the old Pepeekeo power plant back to life as a biomass facility.
“HELCO made it clear that it’s up to Hu Honua to prove why … they deserve an agricultural preferential rate, and why this rate makes sense to pay them in the first place,” Henry Curtis told Big Island Video News in a recent phone interview.
Curtis, who covers Hawaii energy news on his Ililani media blog, is vice president of Life Of The Land, which has been involved in nine biofuel and biomass proceedings before the Hawaii Public Utilities Commission.
On May 10, 2017, Hu Honua announced it reached a new agreement with HELCO on an amended power purchase agreement. If the PUC approves the deal (docket 2017-0122), Hu Honua says it can resume construction on its half-completed facility on Hawaii’s Hamakua Coast and begin delivering clean, firm renewable energy by the end of 2018.
“It’s a big win for Hu Honua, Hawaii Electric Light and the people of Hawaii Island to have an amended agreement,” said Harold “Rob” Robinson, president of Hu Honua’s parent company Island BioEnergy. “We are hopeful the PUC will recognize the project’s value in terms of economic benefits and energy stability.”
A previous Hu Honua PPA with HELCO was approved by the PUC in December 2013, but then Hu Honua spent months mired in litigation with previous contractor, Hawaiian Dredging Construction Company. HELCO cited missed deadlines in its decision to terminate the agreement, and said at the time that it did not appear the project would achieve commercial operations in the near future. HELCO even said they had no confidence Hu Honua “is being forthright in its disclosures to Company and/or that Seller has a sound business plan in place that is in the best interest of customers and makes sense financially for Seller’s investors.”
Hu Honua Bioenergy rebounded, adding prominent Honolulu business leaders to its corporate lineup, and announcing investors had committed $125 million to complete work on the plant.
One year ago, Hu Honua officials took part in a two day blitz of media releases and filings with the Hawaii Public Utilities Commission, hitting back at HELCO, saying the utility should be investigated for its cancellation the PPA.
Hu Honua then filed a federal antitrust lawsuit against HELCO and its parent companies.
That lawsuit was settled last month, at the same time the new PPA agreement was reached. The terms of the settlement have not been made public.
“The lawsuit is on hold,” Curtis said, “pending the outcome of this (new PUC proceeding). It’s not clear whether the lawsuit would continue if this whole thing falls apart, but that’s my understanding.”
Along with Life Of The Land, wind-energy company Tawhiri Power LLC and Hamakua Energy Partners are also participants in the latest Hu Honua-HELCO docket.
The proposed $84.5 million sale of Hamakua Energy Partners’ fossil-fuel power plant to HELCO was rejected by the PUC on May 4.
“It’s unclear at this point how supportive of the (Hu Hona) project HELCO is,” Curtis said.
Curtis said that according to the analysis submitted by HELCO, the new Hu Honua agreement will require a rate increase. “Customer rates will go up for the first 20 years of the 30-year contract,” Curtis said, “and then they’ll slightly go down. But overall, this is a higher cost than the existing average rate charged by the utility.”
Curtis said the project has a benefit to cost ratio of 0.9, which means for every dollar HELCO ratepayers give to Hu Honua, they’ll get 90 cents of electricity back.
“It’s a losing proposition for ratepayers,” Curtis said, “however the legislature said that if you’re promoting agriculture, it’s up to the PUC to determine what an appropriate agricultural preference rate is.”
“You could argue that planting trees and chopping down trees is an agricultural issue,” Curtis said. “But if they’re just chopping down trees … simply removing trees from the existing forest … that would be less agricultural to me.”
Curtis said HELCO “really wants to dump a lot of the fact-finding onto Hu Honua”, and added Hu Honua wants to harvest eucalyptus trees, and then they’re going to plant leucaena.
“My understanding is leucaena is an invasive and they’re going to be taking these trees from the Pahala area and transporting them 70 miles to their power plant” in Pepeekeo,” Curtis said.
“The traffic study they did is only on what the impacts are right at Sugar Mill Road and the highway,” Curtis said. “It is not it is not where they’re chopping down the trees and bringing them out onto the highway and Pahala.”
If completed, the Hu Honua facility will be able to produce up to 30-megawatts (MW) of renewable baseload power. When operating at capacity, Hu Honua will be able to produce approximately 14 percent of Hawaii Island’s electricity needs and displace approximately 250,000 barrels of oil per year.