PUC Requires HECO to Reopen Renewable Energy Bids

Public Utilities Commission News Release

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HONOLULU – In a July 14, 2011 Decision and Order, the Public Utilities Commission (PUC) required Hawaiian Electric Company (HECO) to restart within 90 days the bidding process for renewable energy generation that would have come from a 200 MW Molokai wind project. The decision also allows the Castle & Cooke portion of the Big Wind project on Lanai to proceed.

Hermina Morita, Chair of the PUC stated, “Part of the PUC’s role in clean energy development in Hawaii is to ensure an open and fair process. Castle & Cooke and HECO have complied with previous PUC orders by submitting a timely term sheet. However, their proposed assignment of 200 MW to Molokai Ranch goes beyond the scope of the PUC’s waiver from the original competitive bid process.”

In the order, the PUC acknowledges that there is value in considering a multi-island solution to help the State meet its Renewable Portfolio Standard, as required by law. A diversity of projects should reduce the risks associated with a single generation facility or single resource. To that end, the PUC stated that it is in the public interest to allow greater geographical and resource diversity into the bidding process. The renewable energy projects submitted in this future request for proposal may be sited on any island that can be reasonably reach [sic] Oahu via an inter-island cable or sited on the island of Oahu itself.

This recent PUC decision results from HECO and First Winds’ inability to submit a term sheet to the PUC by a March 18, 2011 deadline, and from a May 23, 2011 letter request from HECO seeking confirmation that Castle & Cooke attempt to assign 200 MW to Pattern Energy on Molokai was acceptable. After careful review of the term sheet, the assignment and previous PUC orders, the PUC determined that Castle & Cooke cannot assign part of its development rights to Pattern Energy to develop 200 MW of wind power on Molokai, because the PUC waiver order neither allowed for such an assignment nor contemplated Castle & Cooke ever building a wind project on Molokai.

Morita said, “With our high energy costs and uncertain economic environment it is important to execute the bidding process in a timely manner.” To make up for the lost generation from the inability to execute a term sheet for the Molokai project, the PUC has ordered HECO to submit a new request for proposal for renewable generation to the PUC within 90 days. The proposals shall be for 200 MW or more of renewable energy to be delivered to or on the island of Oahu.

The PUC order is not a final approval of the Castle & Cooke wind project. Castle & Cooke and HECO must still seek approval from the PUC for their negotiated power purchase agreement and, if applicable, the community benefit agreements. The project must also complete the required environmental review and seek land-use and other various permitting approvals for the project to move forward.

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