HILO — A company that lost a bid to build the next geothermal power plant on Hawaii Island filed a complaint with the state Public Utilities Commission Feb. 9 — the day before Hawaii Electric Light Co. announced talks with Ormat Nevada Inc. had ceased.
Huena Power Inc., whose attorneys include former U.S. Rep. Colleen Hanabusa, alleges HELCO misled bidders through its request for proposals and used the process for a “market test.”
Noting that negotiations for the 25-megawatt project between Ormat and HELCO were at an “impasse,” the company requested that the commission tell the utility instead to accept its bid and enter negotiations.
Hanabusa and a representative of the company, formed by Hawaii-based Innovations Development Group, couldn’t be reached for comment. The company’s investors includes the Office of Hawaiian Affairs, which contributed $600,000 for its geothermal proposal.
HELCO President Jay Ignacio said Friday the power company was working on its response. While the RFP process received some criticism from its independent observer, he said the utility was sincere about its interest in generating more geothermal power to offset its use of oil.
Boston Pacific, the company overseeing the process, said HELCO had not properly demonstrated the need for the project and was putting the “cart before the horse.”
“It was intended to replace existing generation,” Ignacio said. “It probably was misunderstood. We did the RFP to get lower cost energy that could manage our power system just like fossil fuels.”
In its complaint, Huena said that the delay in approving a new geothermal contract shows HELCO issued the RFP without a “good faith intent to purchase any geothermal energy.”
HELCO started the RFP process, initially requesting 50 megawatts of geothermal power, in 2011, hoping to get projects on both sides of the island. All of the bids were for projects in East Hawaii. Five companies submitted final and best offers for the contract.
After asking interested developers to resubmit bids, HELCO selected Ormat, which also operates Puna Geothermal Venture, the state’s only geothermal power plant, in February 2015.
According to HELCO’s report to the PUC, submitted Wednesday, Ormat ended negotiations in December.
Ignacio said it took time for HELCO to draft the 29-page document filed Wednesday, and he called the timing of the complaint and HELCO’s announcement a coincidence.
He said the utility is focused on finishing its power supply improvement plan next and doesn’t plan to enter negotiations with another company.
“We can’t actually go back to the other bidders and start negotiating with them,” Ignacio said. “It’s a very strict and formal process.”
According to HELCO’s Wednesday filing with the PUC, negotiations with Ormat to provide an additional 25 megawatts of power at 12 cents per kilowatt-hour occurred between March and October.
Much of the section discussing negotiations is redacted, but the document notes that Ormat asked HELCO to accept “flexible ancillary capabilities” with a revised price target.
“In the end, it was their (Ormat’s) decision” to end negotiations, Ignacio said.
Mike Kaleikini, senior director of Hawaiian Affairs for Ormat Technologies, said sticking to the RFP requirements was a “big challenge for us.”
“We used out-of-the-box proposals that would have made it economic viable for us,” he said. “Because of the strictness of the RFP, we just couldn’t deviate.”
Kaleikini said Ormat was proposing a new power plant in the vicinity of the 38-megawatt PGV, located on Kilauea’s East Rift Zone near Pahoa.
Email Tom Callis at tcallis@hawaiitribune-herald.com.