HILO — The Hawaii Public Utilities Commission has denied Hawaii Electric Light Co.’s request to buy the Hamakua Energy Partners power plant.
“After reviewing the record, the commission finds that customer benefits are not sufficiently demonstrated to justify the purchase,” the commission concluded.
“Of course, we’re disappointed,” Jay Ignacio, HELCO president, said in an interview. “We’re still evaluating the decision.”
HELCO announced in 2015 it would buy the plant for $84.5 million. The commission, which has oversight, put the number at $88.1 million — including taxes and upgrades.
Hamakua Energy’s website says it has two General Electric engines producing up to a third of Big Island peak power demand. They’re combustion turbines fueled by low-sulfur diesel and “extremely” low-sulfur oil known as naphtha. They’re the same type of engines used to fly DC-10 and 747 airliners.
At the time of its announcement, HELCO said the power plant purchase could be expected to “result in lower costs for customers and will support continued integration of renewable energy from variable sources such as solar and wind.”
But the utilities commission’s decision last week said the price of the Hamakua energy plant was too high. Commissioners said the price “is reasonable if the benefits exceed the costs,” but “given the small margin of estimated customer benefits, the purchase price is dangerously close to a ‘breakeven’ point, which does not support approval.”
Ignacio declined to say if he believes the commission is wrong about the price. But he said HELCO has the right to file a motion for reconsideration.
No decision has been made on that yet, Ignacio said.
“We’re going to go through the decision, and the order, and decide,” he said.
The utilities commission notes HELCO demonstrated “marginally positive” consumer cost savings. However, “these customer benefits are small, and in the early years after purchase customers are expected to pay more under HELCO ownership.”
HELCO has a current power-purchase agreement with Hamakua Energy, but says in its request that the plant will likely keep producing after the agreement expires in 2030.
The commissioners wrote that HELCO’s “assumption that the Hamakua Energy Partners facility will still be operating at 65 percent capacity is an unsupported and overly optimistic assumption.”
Ignacio indicated the commission’s decision won’t affect HELCO’s ability to continue transitioning to renewable energy.
Hamakua Energy is limited to a single daily startup because of air emissions.
“One issue we wanted to pursue is to have the capability to start and stop the plant more than once a day,” Ignacio said.
Currently, the plant stays online even outside peak demand. That’s costly. A key aspect of an effective power supply is to ramp up production for peak demand but cut production when demand drops.
Even though HELCO hasn’t made a decision yet about whether to keep trying to buy the plant and appeal, Ignacio said “if they remained independent, we still have the contract in place.”
The Hawaii Legislature fulfilled Gov. David Ige’s wish in 2015 to pass a law requiring that 100 percent of energy come from renewable sources by 2045. Hawaii is the first state to go that far.
A Hamakua Energy plant manager declined to comment for this article because plant owners traditionally haven’t commented.
The current Hamakua Energy owner is private equity firm ArcLight Capital Partners, LLC, headquartered in Boston. It was after hours there at press time.
Email Jeff Hansel at jhansel@hawaiitribune-herald.com.