The heated disputes over who will be first to install the next large power-generating unit on the Big Island involves several players. Here’s a brief description of the major ones:
HELCO: The Hawai`i Electric Light Co., Inc., is the Big Island’s electric utility. It is a subsidiary of HEI, Inc., which owns the utilities on O`ahu, Maui, and Hawai`i island.
As the licensed regulated utility, HELCO is responsible for providing power on the Big Island. Under federal law, HELCO must agree to purchase power from companies that can produce it as cheaply as (or cheaper than) the utilities themselves. In the past, the sugar mills provided power to HELCO from burning bagasse. (One mill, Hilo Coast Processing Co. at Pepe`ekeo, continues to generate electricity using oil and coal.) Puna Geothermal Venture is another major independent power producer (IPP), now providing 30 megawatts of capacity to the HELCO grid.
The rates at which HELCO purchases power from the IPPs must be approved by the Public Utilities Commission. HELCO submits to the PUC the agreements it has negotiated in a formal docket, which may take months for the PUC to consider and vote upon.
In addition to awaiting Supreme Court action on the validity of its permit to expand the Keahole plant, HELCO has yet to obtain final approval of the clean-air permits it needs for the expansion. The permit issued by the state Department of Health was appealed to the Environmental Protection Agency appeals board; the outcome of that appeal is expected in mid-May.
EDC/Encogen: Enserch Development Corporation is a Texas corporation. It has entered into a partnership with Jones Capital of Charlotte, North Carolina, to form Encogen Hawai`i, L.P., which is proposing to build a power plant on the site of the Ha`ina mill that used to be part of the Hamakua Sugar Co. operations. After several years of negotiations with HELCO, Enserch now has a signed power-purchase agreement, which awaits formal approval by the PUC.
Encogen proposes to build a 60 megawatt dual-train combustion cycle power generation unit. According to project manager Jody Allione, the first phase can be completed eight to 10 months after the PUC issues its final decision and order on the power-purchase agreement. The second phase can be on-line eight to 10 months after the first one.
Encogen’s air permit has been issued by the Department of Health and awaits final approval from the Environmental Protection Agency. (The 45-day review period for the EPA expires May 18, according to a spokesman for the DOH.)
Encogen proposes to be a co-generation facility — that is, it will not only produce power, but will support other industry with its waste heat or water. Allione says Encogen has tentatively agreed to support at least two affiliated projects: an aquaculture farm will use warm water from the power plant in its fish tanks, while a macadamia-nut drying facility will use waste heat.
Allione is not concerned over HELCO’s haste to install additional power-generating capacity at its Keahole site. The PUC has made no ruling that HELCO can include in its rate base just one additional 60 MW unit, she told Environment Hawai`i. In any event, once the PUC approves the HELCO-Encogen power-purchase agreement, Encogen has a firm contract with HELCO to produce power, regardless of the outcome of any rate-case decision HELCO may have pending with the PUC.
KCP: Kawaihae Cogeneration Partners is a partnership made up of several companies owned or controlled by Albert Hee, on the one hand, and, on the other, California-based subsidiaries of the Japanese giant, Mitsubishi.
KCP is proposing to build a 60-megawatt facility at Kawaihae, on property owned by the Department of Hawaiian Home Lands. In addition to producing power, Hee has said the plant will generate desalinated water, in support of DHHL’s development plans for the Kawaihae area.
KCP has been attempting to arrive at a power-purchase agreement with HELCO for several years. In addition, KCP has been involved in legal action against HELCO over use of the Keahole site. It requested intervenor status before the PUC as the PUC considers the Encogen-HELCO power-purchase agreement, and has filed an appeal with the First Circuit Court over the PUC’s denial of its request.
KCP has its own legal problems. A lawsuit brought by DHHL beneficiaries seeking to force KCP to prepare an environmental impact statement went all the way to the Supreme Court. The case was remanded to the Third Circuit Court for consideration of the extent to which KCP has complied with the state environmental disclosure law, HRS Chapter 343.
PUC: The state Public Utilities Commission is charged with regulating electric utilities to ensure that they have sufficient capacity to meet anticipated demand, and to ensure that rates are as low as possible while providing share holders with a reasonable rate of return on their investment.
In addition to the pending rate hikes and power-purchase agreements before the PUC, it is also considering a docket that would allow for deregulation of electric utilities. If the PUC approves that idea, HELCO and the other electric utilities in the state would effectively become carriers of energy, but not vendors.
Consumer Advocate: The state Division of Consumer Advocacy, which is attached to the Department of Commerce and Consumer Affairs, reviews the complex dockets considered by the PUC with an eye to protecting the interests of rate-payers. It advises the PUC, but has no regulatory authority.
— Patricia Tummons
Volume 8, Number 11 May 1998
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