Lowering the Balance of Power? HELCO Wants to Renegotiate its Power Purchase Agreements with Renewable Energy Providers

HILO — Hawaii Electric Light Co. wants to renegotiate its power purchase agreements with renewable energy providers.

Earlier this week, the County Council approved by a 9-0 vote a resolution urging HELCO to renegotiate its contracts based on the price of energy production rather than “avoided cost,” which ties the cost of producing renewable energy to the price of oil on the market.

“We are in agreement with the resolution,” said HELCO President Jay Ignacio on Friday. He testified in favor of the renegotiated contracts when the resolution came before a County Council committee.

Councilman J Yoshimoto said the idea for the resolution came out of a discussion about general energy issues with HELCO officials earlier in the year.

Last December, the Public Utilities Commission approved an amended purchase power agreement between HELCO and PGV to purchase an additional 8 megawatts of power that would expand production to 38 megawatts and provide monthly savings of between $1.60 and $1.90 per customer through 2025.

Those savings struck a lot of people as not enough, given Hawaii Island’s reliance on imported fuel for energy.

“The savings that resulted out of the recent negotiations that HELCO had with PGV were minimal,” Yoshimoto said. That’s why he wrote the resolution to “ask both parties to go back to the negotiating table. That’s the bottom line.”

Ignacio was hopeful PGV was looking to renegotiate at least one of its contracts.

“They (PGV) have approached us and asked to renegotiate the part of the contract governing the first 25 megawatts, and they recognize the problem,” Ignacio said. “We have sent invitations to all the other power producers inviting them to come back and negotiate the energy contracts.”

As stated in the resolution, HELCO will provide the County Council an update on the status of its efforts at its meeting Oct. 17 at the West Hawaii Civic Center. This update will include whether PGV “was amenable to lowering the price rates for payers and the amount of the new negotiated price, if one has been agreed upon.”

Yoshimoto said he was hopeful the negotiations result in savings.

Ignacio, interviewed separately, agreed.

“I do hope so,” the HELCO president said. “From the electric utility’s perspective, we want to get lower cost contracts so we can pass the savings on to consumers.”

“The only assurance that we have is that they negotiate in good faith,” Yoshimoto said.

Hawaii County residents pay some of the highest costs per kilowatt in the nation.

While the Legislature has passed a law mandating that future energy contracts be decoupled from the price of oil, that doesn’t help the existing long-term contracts, some of which are for 20 or 30 years, that rely on the avoided-cost model.

HELCO also has purchase power agreements with two wind farm firms, Apollo Energy Corp./Tawhiri Power LLC and enXco/Hawi Renewable Development; and hydroelectric plant Wailuku Holding Co.

Source - Hawaii Tribune Herald