East Hawaii News

Hawai’i Electric: Hu Honua’s Complaint ‘Woefully Inaccurate’

May 21, 2016, 10:23 AM HST
* Updated May 20, 4:43 PM
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The site of the Hu Honua project site in Pepe'ekeo. Hu Honua photo.

The site of the Hu Honua project site in Pepe’ekeo. Hu Honua photo.

Hawai’i Electric Light president Jay Ignacio is calling Hu Honua Bioenergy’s claims of a future biomass power plant being owned by the utility and other concerns “woefully inaccurate and misleading.”

Ignacio responded to a release issued by Hu Honua on Thursday, stating that it has asked the Public Utilities Commission to open an investigation against Hawai’i Electric Light and its parent company, Hawaiian Electric, over the utility company’s attempt to strike down a Power Purchase Agreement between the two sides. Hu Honua also claims that Hawai’i Electric Light used incorrect price proposals in paperwork submitted to the PUC.

“We have worked with Hu Honua for many years on the development of this project. However, they encountered many delays and missed critical construction milestones, raising serious questions about their ability to complete construction and begin commercial operations,” Ignacio said. “We also have significant concerns about the troubling history of this project. The project experienced a $30 million judgment for failing to pay for work provided by its contractor. Hu Honua was locked out of its project site for more than a year, eventually leading to the loss of its financing for the project. Hu Honua now estimates the project cost has more than doubled to over $200 million.”

Harold Robinson, president of Island Bioenergy and a member of Hu Honua’s board of directors, responded to Ignacio’s statement during a press conference held Friday at the company’s project site in Pepe’ekeo, which was attended by a number of elected officials at the local and state level, among other dignitaries. Robinson called the concerns over the cost of the Hu Honua project  “a smokescreen,” and adding that when  “a utility builds a power plant, that cost is passed to ratepayers. This is not the case for us. We decided to invest in increasing generation capacity from 21 to 36 megawatts, but that has no impact on the price to consumers or the ratepayer. The financial risk of the project cost is ours.”

“Hu Honua approached us in 2015 requesting to explore changes to the terms of their contract so that they could obtain the financing that they had lost,” Ignacio continued. “We explored options that might have been able to work for them and provide benefit to our customers. None of those options explored were viable. All of the proposals offered by Hu Honua would have led to price increases to Hawai‘i Electric Light customers at today’s fuel and purchase power prices. Thus, the contract was terminated in March of this year, a decision that the State Consumer Advocate agreed with.”

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“We have provided the utility with a pricing proposal that significantly reduces HELCO’s costs,” said Robinson. “More importantly, we believe Hu Honua will provide a hedge against rising oil prices, which have historically whipsawed Hawai’i Island consumers.

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“The public should know that despite what HELCO claims, Hu Honua’s proposals will deliver value to ratepayers. Our project will have more than 200 workers on site during construction. After completion, the community will benefit from more than 180 new jobs and the formation of an invigorated forestry industry. There will also be environmental benefits when old HELCO power plants are deactivated and replaced with renewable energy from Hu Honua in 2017.”

Ignacio says in his statement that while Hawai’i Electric Light has attempted to end the Power Purchase Agreement, it has not closed the door on working with Hu Honua.

“Recently, Hu Honua approached us and asked us about restarting the project. We agreed to meet as long as Hu Honua would provide enhanced terms and conditions for the benefit of our customers,” Ignacio explained. “In the interests of developing more renewable energy for our customers, we worked extensively to provide Hu Honua with information so they could determine whether they were able to make an offer that would benefit our customers. We thought we were making progress and are extremely disappointed by their public statements and allegations.

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“Hu Honua mistakenly states that our recently filed Power Supply Improvement plan specifies a Hawai‘i Electric Light-owned biomass power plant. The plan contains a biomass power plant in future years, but it does not specify Hawai‘i Electric Light ownership. Hawai‘i Electric Light is already at 48% renewable generation levels, leading the entire state, so it is clear that our commitment to the use of renewable energy is real and earnest.

“We just received an offer from Hu Honua on Tuesday of this week and are in the process of evaluating that offer. We are still willing to meet to discuss these issues with Hu Honua despite their disturbing public comments.”

Among the elected officials that voiced their support for Hu Honua’s project was State Senator Kaiali’i Kahele, who said that “if a catastrophic event happens on the West Coast, we’re stuck because we are out here in the middle Pacific, heavily reliant on fossil fuels and food imports. We must come up with creative solutions to address those issues.”

Also in attendance at Friday’s press conference was County Councilwoman Valerie Poindexter, who said that “Hu Honua would revitalize the culture and lifestyle of the sugar days, and create jobs so people don’t have to travel so far to work.”

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