- The Hawaiian Electric Companies (HECO) and Hawaii Gas have terminated their non-binding memorandum of understanding through which Hawaii Gas would have regasification terminal for bulk imports of liquefied natural gas (LNG) that HECO would have used and helped fund.
- HECO, the state’s dominant electricity provider, has a 15-year, $235 million agreement with FortisBC Holdings of Canada for delivery of up to 800,000 tons of LNG per year, contingent on completion of its merger with NextEra Energy. Imports would begin in 2019, but HECO would opt for onsite regasification instead of helping build the facility with Hawaii Gas.
- Hawaii Gas is in the process of completing its own $200 million agreement with an as-yet unnamed international supplier to import LNG for Hawaii, a deal it estimates could save the state up to $2 billion over the 15 year term of the contract that would begin in 2019, according to Pacific Business News.
HECO hopes to use LNG as a cleaner and more affordable replacement for the fuel oil that currently dominates its electricity generation as the state transitions toward 100% renewable energy by 2045. Regulators have yet to approve the plan, and LNG issue is one of the main sticking points in an ongoing regulatory review of HECO's new Power Supply Improvement Plan.
Hawaii Gov. David Ige (D) opposes the importation of LNG for electricity generation, calling it a "distraction" from efforts to hit the 100% mandate. At a renewable energy conference in August, Ige told Hawaii stakeholders they should focus on cleaner solutions instead of importing another fossil fuel.
HECO, however, says that LNG could be integrated into the exisiting power supply system with minimal infrastructure upgrades and that it would phase the fuel out by 2045, though the exact resources it would substitue remain unclear.
A desire to keep costs down and use existing facilities may have been a motivator behind the decision to terminate the Hawaii Gas agreement, with HECO CEO Alan Oshima saying the utility "did not want to spend significant [funding] on infrastructure because that would raise our customers’ rates.”
While regulators have yet to weigh in on HECO's LNG import plan, another decision could determine whether the utility could act on it at all. If NextEra's plan to buy Hawaiian Electric is rejected by state regulators, HECO may not have the financial resources, according to the PSIP. A decision on the merger is expected in early June.
The Hawaii Gas LNG import plan has already approved by state regulators. Macquarie Infrastructure Co., the parent company of Hawaii Gas, has reported Hawaii Gas got 55 bids from LNG shippers for its import offer.