Honolulu residents’ monthly electric bills will increase following a power plant improvement project approved by the Public Utilities Commission Monday.
The PUC approved on Monday a proposal by Hawaiian Electric to replace oil-burning equipment at its Waiau Power Plant in Pearl City with units that can run on renewable fuels. In order for HECO to recoup the estimated $847 million cost of the project, the average O‘ahu customer’s electricity bill will increase by about $3.62 per month.
According to the PUC’s decision, HECO plans to replace six turbines at the Waiau plant with six new ones capable of running on biofuels or ultra-low-sulfur diesel, along with associated ancillary infrastructure replacements. By doing so, HECO proposed that the project will generate 253 megawatts of renewable energy, while also helping to shore up the island’s power grid against large-scale blackouts.
HECO’s proposal, which the PUC selected as part of a competitive bid process, is to bring the project online in three phases, with two turbines installed and activated in 2029, two more in 2031 and the last two by July 31, 2033. Following the project’s completion, HECO has committed to own and operate the plant for at least 30 years.
HECO’s proposal at one point requested approval for a $1.15 billion project, up by 36% from its original $847 million ask. HECO claimed that cost increase stemmed from years-long delays for deliveries of major equipment, corresponding price increases, and increased tariffs on metals and other regulatory compliance standards.
Earlier this month, the Hawai‘i State Energy Office proposed delaying any decision regarding HECO’s proposal until September in order for the company to better explain how its price increase could be competitive.
In particular, the Energy Office mentioned the recently announced partnership between the state and the Japanese company JERA, which Chief Energy Officer Mark Glick noted claims to be able to bring its own proposed 500-megawatt project online more quickly and cheaply than HECO.
However, several other energy producers — including Par Hawai‘i and Longroad Energy — warned that granting extra time to evaluate HECO’s proposal would undermine the competitive bidding process.
The PUC denied HECO’s requested cost increase in part because the state Division of Consumer Advocacy estimated that recouping such a high cost would result in customers’ electric bills increasing by about $5 or more, which exceeded the terms of the state’s initial request for project proposals.
The PUC has also required HECO to meet certain standards as the state moves toward 100% renewable energy by 2045. For instance, the new turbine units must be running on at least 51% renewable fuel by 2032 or when the first four turbines are brought online, whichever happens first. Then, by 2040, the new units must be running at 75% renewable fuel.
Should HECO fail to reach any of these milestones, the company must pay $253,000 to the state for every day a goal is not met. Furthermore, if the project does not come fully online by the scheduled completion deadline in 2033, HECO must pay $379,000 each day it is behind schedule.
