Honua Ola Bioenergy to Weigh Legal Options Following PUC’s Denial of Motion for Reconsideration to Approve Power Purchase Agreement with Hawaiian Electric

June 24, 2022 — Honua Ola Bioenergy (Hu Honua Bioenergy, LLC in legal documents) will weigh its legal options, including the filing of an appeal with the Hawai‘i Supreme Court, following the Public Utilities Commission’s (PUC) denial today of its motion for reconsideration, which was filed in response to the PUC’s denial of Honua Ola’s power purchase agreement with Hawaiian Electric on May 23.

Spurred forward by two prior approvals by the PUC of Honua Ola’s power purchase agreement with Hawaiian Electric in 2013 and 2017, Honua Ola is now 99% constructed and currently has a staff of 30 full-time employees.

Warren Lee, president of Honua Ola Bioenergy, stated, “We are disappointed in the PUC’s decision, but we are not giving up because Honua Ola is in the right on this issue and we owe it to our employees who have stuck with us, and to the Big Island residents who support Honua Ola’s commitment to provide clean, renewable energy. We look forward to continuing to show that Honua Ola has done everything asked of us to reduce greenhouse gas emissions and become Hawai‘i’s first carbon negative power plant.”

Lee added, “This isn’t just a setback for our company, but for all Hawai‘i Island families and businesses who are currently paying nearly twice the rate Honua Ola would offer.”

PUC Chair James Griffin, who is leaving his position next week on June 30, and Commissioner Jennifer Potter signed the order denying Honua Ola and Hawaiian Electric’s motions for reconsideration to approve the power purchase agreement. Commissioner Leodoloff Asuncion chose to abstain from signing the order. Commissioner Asuncion previously filed a 20-page dissent in opposition to the 2-1 majority decision issued on May 23 denying the power purchase agreement, noting at the time that Honua Ola had met its burden for approval based on the requirements established in the remand from the Hawai‘i Supreme Court to the PUC.

BACKGROUND

• The PUC has approved power purchase agreements between Honua Ola and Hawaiian Electric twice previously in 2013 and 2017. The PUC’s approval in 2013 allowed Honua Ola to proceed with construction at an initial cost of $175 million. The PUC’s approval in 2017 directed Honua Ola to build the plant to completion and begin producing energy as soon as possible, resulting in a total investment of approximately $520 million to date. The 2017 approval order was signed by current PUC Chair, James Griffin, who is leaving his position, effective June 30, 2022.
• The PUC’s 2017 order was challenged in the Hawai‘i Supreme Court by Life of the Land (LOL) because the PUC failed to explicitly consider GHG emissions in its written decision. Importantly, Honua Ola and Hawaiian Electric had provided the PUC with evidence showing a reduction in emissions prior to the 2017 order, but the PUC failed to describe this evidence in its 2017 decision.
• Because of the PUC’s error, the Hawai‘i Supreme Court remanded the matter back to the PUC in April 2019 and directed the Commission to hold an evidentiary hearing on GHG emissions.
• The PUC refused to follow the Hawai‘i Supreme Court’s instructions and did not hold an evidentiary hearing. Instead, led by Chair James Griffin, the PUC issued a decision on July 9, 2020, denying a competitive bidding waiver between Honua Ola and Hawaiian Electric, effectively killing the project. The PUC made this decision even though it had twice previously approved a competitive bidding waiver between Honua Ola and Hawaiian Electric in 2008 and 2017.
• On September 16, 2020, Honua Ola filed an appeal with the Hawai‘i Supreme Court requesting that the PUC’s 2020 decision be vacated, and an evidentiary hearing conducted on GHG emissions.
• On May 24, 2021, the Hawai‘i Supreme Court unanimously ruled in favor of Honua Ola, holding that the competitive bidding waiver was still in effect and that Honua Ola and the PUC were in the same position as they were following the Supreme Court’s opinion issued in 2019. The Supreme Court again directed the PUC to hold an evidentiary hearing addressing GHG emissions, just as it had instructed in 2019.
• The Hawai‘i Supreme Court’s opinion sent a clear message to the PUC that the scope would be limited to consider GHG emissions and to ensure that LOL would be allowed to participate in an evidentiary hearing. The hearing took place over a five-day period from March 1 to March 7. However, the PUC required that the parties address additional issues outside the scope of the Supreme Court’s instructions, including the pricing impacts of the project.
• As a condition of approval, Honua Ola committed in writing to the PUC that its facility will be carbon negative, the first renewable energy project in Hawai‘i to make that promise, and backed that up with several financial and operational commitments, including its offer “to adopt any reasonable modifications and/or additional conditions ordered by the Commission that will enable the Commission to hold Hu Honua accountable and enforce any conditions of approval” as was detailed in the filing of its post-hearing brief to the PUC on March 29.
• Honua Ola is 99% complete and could be ready later this year to begin producing clean renewable bioenergy for 14,000 homes and businesses. Fast-growing, non-native eucalyptus planted decades ago as a crop to replace sugar cane would be Honua Ola’s primary feedstock. Invasive species, including albizia, strawberry guava and gorse could also be used to produce renewable energy while eliminating them from the environment.
• Honua Ola will support the State of Hawai‘i’s clean energy goals, revitalize East Hawai‘i Island’s agricultural sector, and create permanent, long-term jobs for the next 30 years to help support the island’s economy.