Hawaii PUC nixes Hawaiian Electric bid to purchase oil power plant
- The Hawaii Public Utilities Commission rejected an application by Hawaii Electric Light Co. to purchase a 60 MW power plant for $86.2 million, saying the benefits for ratepayers would be marginal, Pacific Business News reports.
- HELCO, the subsidiary of Hawaiian Electric on the Big Island, originally proposed buying the plant in 2015, saying it would save customers $42 million over the remaining 15-year contract term. The utility has held a power purchase agreement with the owners of the Hamakua Energy Partners fuel plant since 2001.
- But the PUC said in its order that HELCO has since forecasted a decline in usage of the plant, and customers "are anticipated to pay more during the initial years following the purchase, with the realization of benefits only many years later."
Hawaii Electric Co. has had a pretty rough year trying to get major applications approved by regulators, who are skeptical of the utility's plans to modernize the grid and, in this case, purchase a fuel-powered plant.
While the utility argued purchasing the plant is more cost-effective than continuing the long term power purchase agreement, Hawaii regulators are more skeptical, saying ratepayers wouldn't reap the benefits until years later.
The state already faces the highest electrical bills in the nation, leading much of its customer base turning to rooftop solar arrays in order to slash costs. It's also unclear how purchasing the plant would fit into Hawaii's ambitious plans to run on 100% renewable energy by 2045.
HELCO's parent company said in its last iteration of its Power Supply Improvement Plan it would hit the state's renewables goals five years early, using a mixture of grid-scale solar, wind energy and demand response. To do so, the plan calls for phasing out oil generation and avoid importing liquefied gas supplies.
But in a blow to the utility, regulators nixed the utility's grid upgrade plan designed to help meet those goals laid out in the PSIP also filed earlier this year, saying it was too expensive for ratepayers.
“The commission further questions the justification for such a large investment where the project asserts only an indirect link to address the primary issue currently facing Hawaii’s renewable energy integration,” the PUC wrote. “The application does not specifically address how the companies intend to integrate customer-sited assets in the near term and long term.”
While HECO has until June to file a new plan, it's unclear how its subsidiary HELCO plans to move forward with the buyout of the power plant. The larger power supply plan is also in flux, with some stakeholders saying this third iteration does not take full advantage of the potential of distributed energy resources.
- Pacific Business News Hawaii regulators reject utility purchase of Big Island power plant
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