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PUC Approves HELCO-HU HONUA Amended, Restated PPA

Plant Will Be Completed in 2018 and Provide Dependable Renewable Energy

Yesterday, the state Public Utilities Commission (PUC) informed Hu Honua Bioenergy, LLC it had approved its amended and restated power purchase agreement with Hawaii Electric Light Company (HELCO).

Hu Honua site courtesy Hu Honua

Hu Honua will be a state-of-the-art bioenergy facility, providing firm, renewable, dispatchable energy. The Pepeekeo-based power plant will be completed in December 2018 and support the state’s clean energy goals, revitalize East Hawaii’s agricultural sector, and bring hundreds of new jobs to Hawaii Island.

The Commission conducted a detailed review of the Hu Honua project’s benefits and approved Hu Honua’s original Power Purchase Agreement with the HELCO in 2013. The amended, restated PPA provides HELCO customers with the same advantages as the original PPA but at a lower cost.

“We couldn’t be more pleased with the PUC’s decision,” said Harold Robinson, president of Island Bioenergy, parent company of Hu Honua. “Now we can begin employing hundreds of additional workers from the building trades to accelerate construction and complete the plant by the end of 2018. We will also make arrangements to start forestry operations, including logging and transporting eucalyptus trees that will fuel our facility.”

The amended, restated PPA extends two contract milestones to allow Hu Honua to finish its half-completed biomass facility, and reduces and restructures the contract’s pricing and term.

Because the original PPA was already approved, the Commission limited its review of the amended, restated PPA to whether HELCO met its burden of proof for the following three issues:

  1. Request to waive Hu Honua’s project from the PUC’s framework for competitive bidding
  2. Whether the power costs to be paid by HELCO reflect the cost of biomass fuel supply and whether HELCO’s purchase power arrangements under the PPA are in the public interest
  3. Request for preferential rates for the purchase of renewable energy produced in conjunction with agricultural activities pursuant to Hawaii Revised Statutes § 269-27.3.

According to HELCO’s own analysis, Hu Honua will reduce its customers’ monthly bill by $1.21 per month over the term of the PPA, relative to HELCO’s current long-term projections. A separate independent analysis by PA Consulting showed Hu Honua will save ratepayers as much as $4.24 per month over the term of the PPA. PA Consulting’s analysis also shows Hu Honua would save ratepayers more than $1.3 billion over the course of the 30-year PPA relative to HELCO’s existing portfolio of fossil fuel plants, which is the benchmark the Commission used to determine the original PPA was in the public interest.

Hu Honua will provide foundational 30-year demand for the forestry sector that Hawaii policymakers and community leaders have long sought. Hu Honua will create more than 200 jobs in construction, 30 in plant management and operations, 90 in forestry and trucking, and an additional estimated 100 indirect jobs on Hawaii Island and statewide. Hu Honua is working with community partners on workforce development educational and internship opportunities.

A June 2017 independent scientific survey conducted by Anthology Research Group found that 75 percent of East Hawaii residents feel “very or somewhat favorable” about the completion of the Hu Honua Facility, and only 10 percent feel unfavorably about its completion. The margin of error for the survey is 5.06 percent.

About Hu Honua
Hu Honua Bioenergy, LLC is located in Pepeekeo on the Hamakua Coast of the island of Hawaii. When completed, the Hu Honua facility will be able to produce up to 30-megawatts (MW) of firm, baseload renewable power, which means the plant can deliver reliable power that can be dispatched 24 hours a day, seven days a week. When operating at capacity, Hu Honua will be able to produce approximately 15 percent of Hawaii Island’s electricity needs and displace approximately 280,000 barrels of imported oil per year.
For more information, www.huhonua.com

Hu Honua Bioenergy Files Federal Complaint

Hu Honua Bioenergy, LLC, a baseload 24/7 biomass electric plant on the Hamakua Coast on Hawaii Island, filed a civil antitrust complaint in federal court against Hawaiian Electric Company, Hawaii Electric Light Co., NextEra Energy Resources, and Hamakua Energy Partners, Wednesday (Nov. 30, 2016).

hu-honua

Hu Honua had a Public Utilities Commission-approved power purchase agreement with Hawaii Electric Light, which was unlawfully terminated as a result of actions by the defendants.

“Hu Honua regrets that the matter has come to this,” said Harold Robinson IV, president of Island BioEnergy, a majority owner of Hu Honua, “we’d rather have a power plant than a lawsuit. For almost two years we have unsuccessfully attempted to obtain Hawaiian Electric Light’s agreement to our reasonable requests to extend two milestone dates. Hawaiian Electric Light’s refusal to provide these extensions has left us with no recourse but to file suit to recover our substantial damages of $120 million that was invested in our 50 percent complete biomass power plant and our lost profits of $435 million.”

The complaint was filed Wednesday in the U.S. District Court, Hawaii District, by the legal teams of Bronster Fujichaku Robbins of Honolulu and Manatt, Phelps & Phillips, LLP of San Francisco.

The detailed allegations and the project’s complex history are outlined in the complaint, which alleges violations of the Sherman Antitrust Act and Hawaii unfair competition laws, as well as breach of contract and breach of fiduciary duty, and seeks to recover actual and treble damages. Hu Honua asks for a jury trial.

Robinson noted that “the concerted effort to monopolize electricity generated on the Big Island has not only blocked the state’s progress toward the achievement of its energy self-sufficiency mandates set by Hawaii Law, but also stunted the creation of almost 200 local jobs at the facility, in agriculture and ancillary services.”

Hu Honua Filing to PUC Addresses HELCO Misstatements

Hu Honua Bioenergy (HHB) filed its response with the Hawaii Public Utilities Commission (PUC) to provide a project update as well as address incomplete and misleading information in Hawaii Electric Light Company’s (HELCO) Status Report.
Hu Honua

The Status Report was required by the PUC in light of missed milestone schedule dates in the HHB power purchase agreement (PPA) approved by the PUC in December 2013.

In its filing, Hu Honua expressed disappointment with HELCO over not processing its milestone date extension request submitted more than 12 months ago. HHB requested the extension following a variety of disputes with its former contractor that disrupted the project’s construction schedule, and to provide the replacement contractor sufficient time to complete the biomass-fueled, renewable energy facility in Pepeepeko on Hawaii Island.

At HELCO’s urging, Hu Honua submitted a proposal to reduce the energy price in its PPA to 14 cents for energy purchased above the 10-megawatt (MW) minimum level for economic dispatch. Even with the price reduction, HELCO did not process Hu Honua’s milestone date extension requests, despite the fact Hu Honua’s pricing is delinked from the cost of fossil fuel, making it a natural hedge against future increases in oil prices.

HHB has invested $100 million to date in the biomass-to-energy project, which is approximately 50 percent complete. HHB has arranged full financing from its investor base and the plant can be operational in approximately 12-16 months.

At completion, the plant will be able to supply Big Island residents with firm, baseload, dispatchable renewable power at reasonable pricing, complementing intermittent resources such as wind and solar, and helping the state meet mandated clean energy goals.

In its filing, HHB asserts the value of the plant today to Hawaii Island’s electricity system is as great or greater than December 2013 when the PUC approved the HHB PPA.

HELCO’s threat to terminate Hu Honua’s PPA as a result of missed milestones was announced just days before parts of Hawaii Island experienced blackouts due to insufficient firm generating capacity; firm, reliable power is what Hu Honua’s bioenergy plant would provide.

Hu Honua’s filing to the PUC addressed incomplete and misleading statements in HELCO’s Status Report, including:

“Hu Honua does not have the ability to achieve commercial operation in the near future.”

  • Hu Honua has fully committed financing up to $125 million to complete the project, with $20 million having been invested since November 2015.

“Hu Honua failed to meet PPA obligations.”

  • HELCO’s statement appears to refer to the boiler hydro test date. Unlike solar and wind projects, Hawaii law requires high pressure/high temperature steam boiler projects to follow rigorous inspection, approval and documentation protocol throughout construction before successive work can begin. As a result of disputes with its former contractor, HHB did not have ready access to prior documentation needed to perform successive work, which resulted in disruption and delays to schedule.

“Hu Honua failed to justify a milestones extension.”

  • As early as October 2014, HHB alerted HELCO that its milestone dates could be delayed because of certain factors beyond its control, including the circumstances underlying the dispute with its former contractor.

  • In January 2015, well in advance of project milestone dates, HHB approached HELCO to proactively discuss revised milestones dates in light of circumstances. Throughout discussions over revised milestones, HELCO reported a need for pricing reductions as an exchange for milestone date relief. HHB revised pricing arrangements on three separate occasions—February, April and May 2015.


Hu Honua looks forward to working with HELCO and the PUC to resolve its milestone date extension request, along with HHB’s proposal to reduce the energy price in its PPA to 14 cents for amounts purchased above the 10-MW minimum threshold for economic dispatch.

A completed Hu Honua power plant will provide a modern, renewable, biomass fueled source of electricity that will complement Hawaii Island’s electrical system as well as provide between 100-150 jobs for the local community.