The Public Utilities Commission has denied Hawaiian Electric’s request to seek competitive bids for 500 MW of fuel-flexible power on Oʻahu. The commission said the utility must first demonstrate that such generation would benefit Oʻahu ratepayers.
HECO made its appeal to the PUC after the Japanese company JERA announced plans to form a new public utility to spearhead the construction of a 500 MW natural gas plant on Oʻahu.
JERA intends to formally file for a Certificate of Public Convenience and Necessity to create a new utility by early 2027. During that process, the PUC will determine whether having a second electric utility that provides power to Oʻahu would benefit the public.
If the PUC recognizes JERA as its own utility, it can build power plants without going through HECO’s competitive bidding process, which requires energy developers to compete against one another to win a HECO contract for a new project. Those contracts are also subject to PUC approval.
HECO contends that JERA’s project should be evaluated against bids from other developers as part of the competitive bidding process to ensure customers are getting the best deal.
“JERA is a deal pre-packaged by a for-profit, foreign-owned entity, presented as the only choice. It is not,” HECO stated in a letter to the PUC on July 17.
“By moving ahead with the arrangement that has been structured by JERA, Hawai‘i locks itself into a multibillion-dollar single-source contract that we will be committing this and future generations to pay,” the letter continued.
But in order for HECO to bring JERA’s project back into the fold of the competitive bidding process, the PUC had to first sign off on HECO soliciting bids for new fuel-based firm power projects.
The PUC said on Aug. 5 it was not in the public’s interest to grant HECO’s request for additional fuel procurement. In a response to HECO’s letter, the commission said HECO had not demonstrated that such power was necessary for Oʻahu’s grid.
“Without a demonstration of need, such a request can have far-reaching consequences, not only for Oʻahu customers, but for the State of Hawaiʻi,” the PUC stated.
However, the commission said it may reconsider its decision if HECO could prove that Oʻahu needs more firm power beyond the projects it currently has in its pipeline.
HECO Vice President Jim Kelly sent a written comment to HPR on behalf of the utility that stated, “We appreciate the PUC considering our request and we think this is a prudent path forward.”
The PUC’s response comes amid heated debate on what resources should make up Oʻahu’s energy grid.
Gov. Josh Green and the Hawaiʻi State Energy Office maintain that JERA’s natural gas project can lower energy costs for ratepayers, but Hawaiʻi Natural Energy Institute Director Rick Rocheleau said those savings would likely be marginal.
A study published in late June by UHERO fellow and economist Michael Roberts found that no new thermal generation is needed on Oʻahu’s grid, but Roberts later retracted that study due to errors.
