Hawaii Supreme Court rejects PPA between HELCO, biomass plant

By Erin Voegele | May 15, 2019

The Hawaii Supreme Court issued a ruling May 10 rejecting a power purchase agreement (PPA) between Hawaii Electric Light Co. and Hu Honua, developer of a 21.5 MW biomass power plant under construction on the big island of Hawaii that now operates under the name Honua Ola Bioenergy.

The biomass project has been under development for more than a decade. According to information published by the state of Hawaii, Honua Ola plans to retrofit the former Hilo Coast Processing Co. coal-fired power plant site to produce up to 21.5 MW of energy using locally grown eucalyptus as fuel.

According to the state, the Hawaii Public Unities Commission in mid-2017 approved an amended PPA filed by HELCO, which asked for PUC approval based on projected project benefits, including jobs and reduced levelized pricing of $0.221 per kilowatt hour (kWh) for 30 years. The original PPA was $0.253 per KWh for 20 years. HELCO expects the project could increase the island’s renewable energy portfolio by approximately 10 percent.

The PPA was challenged in court by Life of the Land, a non-profit environmental organization. The group argued the PUC failed to consider the state’s goal to reduce greenhouse gases (GHGs) as required under state law.

“The PUC must explicitly consider the effect of the state’s reliance on fossil fuels on, inter alia, GHG emission,” said the court in its decision. “We have characterized this as a ‘requirement to reduce reliance on fossil fuels and to consider [GHG] emissions [, which] applies to the fulfillment of all the [PUC’s] duties.”

“That the facility involved in the amended PPA is a biofuel facility does not absolve the PUC of this duty,” the court said. “Thus in approving the amended PPA, the PUC was required to expressly consider the reduction of GHG emission.”

The court concluded its ruling by noting state law “requires the PUC to expressly consider the reduction of GHG emissions in its decision-making. The PUC failed to do so in determining whether the costs associated with the amended PPA were reasonable, and in approving the amended PPA. The PUC also failed to afford LOL an opportunity to be heard at a meaningful time and in meaningful manner regarding the amended PPA’s impact on LOL’s property interest in a clean and healthful environment, as defined by HRS Chapter 296. The PUC’s 2017 D&O is therefore vacated and this case is remanded to the PUC for proceedings consistent with this opinion.”

In February 2019, HELCO filed a letter with the PUC indicating the biomass project was expected to be ready for interconnection acceptance testing in March or April of this year. The letter also said that the PPA was not yet effective as the Supreme Court had not yet issued its opinion regarding the LOL lawsuit. “Therefore, Hu Honua has inquired whether Hawai’I Electric Light would be amenable to waiving the final approval requirement so that the project may be placed into service so that Hawai’I Electric Light can begin making payments to Hu Honua under the terms of the PPA,” HELCO said in the letter. “However, Hawai’i Electric Light is not amenable to Hu Honua’s proposal.”

Representatives of Honua Ola Bioenergy did not immediately respond to a request for comment from Biomass Magazine. 

A full copy of the court’s ruling can be downloaded from the Hawaii Supreme Court website.