HECO Wins $639M, 50-Year Contract As Army Privatizes Its Electric System

Oct 3, 2019

Hawaiian Electric Co. Inc. has been awarded a contract to own and  operate the electrical system for the U.S. Army's Oahu installations, a deal valued at $638.5 million over 50 years, the company said in a release Thursday.

HECO currently provides electricity to the Army, which distributes the power through its facilities and then bills its users. Under the new arrangement, pending regulatory approvals, HECO would own the system and respond to trouble calls, said HECO spokeswoman Shannon Tangonan.

The contract was awarded on a competitive basis by the U.S. Defense Logistics Agency and is part of the Army's service-wide effort to move responsibility for its utilities to private companies.

"The Army needs secure, reliable energy to do our mission and that's what this effort is all about," Col. Tom Barrett, U.S. Army Garrison Hawaii commander, said in the statement. "Privatizing the Army's electrical system on Oʻahu supports energy resilience, and energy resilience is critical to Army readiness."

The agreement covers the Army's 12 installations on the island, among them Schofield Barracks, Wheeler Army Airfield, Tripler Army Medical Center, Fort Shafter and Army housing areas.

The state Public Utilities Commission will need to approve the contract. HECO plans to file an application within the next 30 days. If the PUC consents to the arrangement by next year, the transition would take a year, with completion expected by the end of 2021.