Big Island renewable energy plant wins appeal

The Hawaii Supreme Court, giving new life to Hu Honua Bioenergy LLC’s nearly completed biomass plant on Hawaii island, ruled unanimously Monday in favor of the company’s appeal and sent back the case to the state Public Utilities Commission with clear instructions on how to proceed.

This was the second time that the high court has sent the case to the PUC, which previously reversed an earlier decision by denying Hawaii Electric Light Co.’s request for a waiver from competitive bidding.

Both Hu Honua and opposing environmental group Life of the Land, whose appeal landed the case before the Supreme Court the first time, said they were pleased with the court’s opinion.

Hu Honua, which does business as Honua Ola Bioenergy, has been seeking the PUC’s approval to begin operating a $474 million biomass plant in Pepeekeo on the Hama­kua Coast that is 99% complete and will burn trees to produce energy. That energy would be purchased by Hawaii Electric Light Co., now known simply as Hawaiian Electric, under an agreement between the two companies.

In its decision, the court said the waiver from competitive bidding was still in effect and said the parties are fixed in the same position following the court’s 2019 opinion when it sent back the case to the PUC and instructed the PUC to hold an evidentiary hearing on greenhouse gas emissions in connection with Hu Honua’s amended power purchase agreement.

The opinion, written by Supreme Court Associate Justice Todd W. Eddins, also was signed by Supreme Court Chief Justice Mark E. Recktenwald and Associate Justices Paula A. Nakayama, Sabrina S. McKenna and Michael D. Wilson.

Wilson, in a concurring opinion, said the majority’s decision “gives discretion to the PUC to determine again whether a waiver of competitive bidding should be granted to Hawaii Electric Light Co.”

“We are grateful for the Hawaii Supreme Court’s unanimous decision today in favor of Honua Ola Bioenergy,” Honua Ola Bioenergy President Warren Lee said in a statement. “We look forward to the opportunity to present data on how Honua Ola will produce much-needed firm, clean, renewable energy, while also reducing greenhouse gas emissions at the PUC’s evidentiary hearing. We are also thankful for the Court’s clarification that the 2017 waiver from competitive bidding remains valid and in force.”

A legal challenge in 2017 by Life of the Land brought the case for the first time before the Supreme Court. The court ordered the PUC in 2019 to reconsider the power purchase agreement and hold an evidentiary hearing because the agency failed to “explicitly consider” the state’s goal of reducing greenhouse gases, which is required under state law.

The PUC at the time interpreted the Supreme Court’s order as nullifying the waiver and proceeded to reexamine the case. On July 9 the PUC issued an order reversing its previous decision by denying Hawaii Electric Light Co.’s request to waive competitive bidding. The PUC said long-term impacts of a 30-year contract would make the energy more expensive than other renewable­-energy sources and that the public interest would be best served by requiring the project to be evaluated alongside other renewable­-energy proposals. Since the PUC rejected the waiver, it declined to hold an evidentiary hearing.

Hu Honua filed a motion with the PUC for reconsideration, but the agency upheld its order and said the arguments by the company didn’t meet the legal requirements for reconsideration. Hu Honua argued that the PUC misinterpreted the instructions from the Supreme Court and shouldn’t have nullified its previous decision to grant the waiver and should have held an evidentiary hearing.

The Supreme Court’s ruling on Monday supported Hu Honua’s claim that the PUC misinterpreted the high court’s instructions and that the PUC’s “blinkered approach is unreasonable given that the scope of remand is determined ‘not by formula’ but by inference by the opinion as a whole.”

The high court said the PUC’s interpretation of the Supreme Court’s 2019 opinion “rests on a single phrase in the opinion’s last sentence,” which read that the PUC’s 2017 decision and order is therefore vacated. The Supreme Court’s opinion on Monday said the PUC didn’t follow the court’s instructions that “the PUC shall give explicit consideration to the reduction of (greenhouse gas) emissions in determining whether to approve the Amended PPA.”

Life of the Land Executive Director Henry Curtis said the high court’s latest opinion still could result in the wood-burning plant being rejected.

“We are happy with the Hawaii Supreme Court decision,” he said. “The decision clearly says the Public Utilities Commission may deny the waiver but not use the remand order. It is clear that Hu Honua is very overpriced and cannot survive a further PUC proceeding.”

PUC Chairman Jay Griffin, who heads the three-member commission, said in a statement, “We’re still reviewing the Court’s decision and will develop next steps consistent with the ruling.”

Hawaiian Electric took a wait-and-see approach.

“We’ll await direction from the commission on how they plan to proceed,” it said in a statement.

Lee, the Honua Ola president, said the company “will soon be ready to produce firm, clean, renewable energy 24 hours a day, seven days a week for Hawai‘i Island residents and communities.”

“Furthermore,” he said, “Honua Ola will greatly reduce the Hawai‘i Island’s future dependence on fossil fuels, while facilitating HELCO’s ability to add other intermittent renewable resources, like wind energy and solar power, onto its grid. We look forward to being able to provide these services to the community as soon as possible.”

But Curtis, of Life of the Land, said Hu Honua is heading down an ill-fated path.

“They still don’t have their water permit for their injunction wells,” he said. “In the Lahaina case, the U.S. Supreme Court ruled that facilities that discharge water into the ocean are regulated under the Clean Water Act even if the pipe does not reach the ocean. Hu Honua wants to put the equivalent of water covering a football field 100 yards long, 53 yards wide and 60 feet deep every day just a few dozen yards from the ocean. In order for Hu Honua to continue, they need approvals from both the PUC and the Department of Health. Life of the Land is confident they will receive neither.”

Hu Honua refuted Life of the Land’s arguments and said in a statement that the Supreme Court’s opinion “is clear that the 2017 waiver is still valid and in force.”

“The PUC’s reasons for approving the waiver in 2017 still hold true today,” Hu Honua said. “We are hopeful that the PUC will not disregard the Hawaii Supreme Court’s guidance a second time.”

Hu Honua also said that its renewable energy at “approximately 20 cents/kwh is not overpriced.”

“In fact, it’s a bargain when compared to the most recent true firm resource approved by the PUC in May 2021 (Kapolei Energy Storage project on Oahu, designed to replace the AES coal plant), which is anticipated to dispatch energy at 30-40 cents/kwh,” Hu Honua said.

Hu Honua also said the water permit was not an issue on appeal before the Hawaii Supreme Court.

“Therefore, (it’s) not an issue before the PUC on remand. Hu Honua will be in compliance with all Clean Water Act and DOH requirements,” Hu Honua said.