Updated 

PUC rejects Aina Koa Pono, again


The Public Utilities Commission has again rejected a contract between Hawaii Electric Light Co. and Aina Koa Pono for a biodiesel refinery outside Pahala, saying it’s too expensive for ratepayers and there’s no proof it won’t harm the environment.

The 104-page PUC order, issued Monday, apparently puts to rest the proposed $450 million refinery, at least for electricity. But the Aina Koa Pono facility, to be built off Camp Meyer Road, 1.5 miles from Pahala, could still move forward as a source of biofuel to power vehicles or private power generators. The company has leased 12,000 acres of land from the Edmund C. Olson Trust II and the Mallick Trust.

The PUC said allowing HELCO and Aina Koa Pono to enter a 20-year contract tied to the cost of fossil fuels could end up causing the biofuel to displace cheaper, fixed-rate fuels in order to meet the contracted volume of fuel HELCO must buy from Aina Koa Pona.

That would cause ratepayers to pay more, not even counting the additional monthly surcharge that would be tacked on to finance the project under the contract.

“Adding such a constraint over a prolonged period of time appears to benefit AKP by seeking to ensure that the entire, annual minimum volume of AKP-produced biofuel is purchased and consumed, to the ratepayers’ detriment by leaving ratepayers with little choice but to pay for the contracted volume of biofuel when a cheaper fuel source or renewable energy resource may be or may become available, or to essentially leave HELCO’s grid and generate their own electricity,” the PUC order states.

This is the second time the PUC has rejected the contract. In response to the first rejection in 2011, the parties came back with a cheaper, renegotiated contract. That apparently didn’t mollify the PUC.

HELCO President Jay Ignacio could not be reached for comment Thursday. But in a statement issued by the utility, he reaffirmed HELCO’s commitment to alternative energy sources, and said the PUC made it clear in its order it supports renewable energy as well.

“We respect the commission’s decision and our companies will continue to focus on alternatives to meet Hawaii’s clean energy goals and lower the cost of electricity for our customers,” Ignacio said.

Big Island residents attending public hearings over the past two years have largely opposed the facility, worrying about loss of farmland and the facility’s impact on the environment and traffic. Those in favor have primarily focused on the promise of jobs in remote post-plantation-era Ka‘u, especially for youth.

Aina Koa Pono officials say the project will bring in $400 million of outside investment and create 400 construction jobs, followed by 150 permanent plant/farm jobs.

The project aims to microwave 900 tons of biomass daily to more than 600 degrees, producing 24 million gallons of biodiesel and 8 million gallons of biogasoline per year. The leftover biochar can be used as a soil additive, according to Aina Koa Pono officials.

Hawaii County Mayor Billy Kenoi has repeatedly said he’s not in favor of any more alternative energy sources for the island unless they result in a lowering of utility bills, not a raising of them.

“We objected to Aina Koa Pono from the very beginning,” Kenoi said Thursday. “We’ve always been advocates for renewable energy, but it can’t be at the expense of ratepayers, Big Island residents and local businesses.”

Kenoi praised his energy coordinator, Will Rolston, for staying on top of the issue. The county had intervened in the PUC case on behalf of ratepayers.

Rolston has questioned whether the refinery, relying on what he says is unproven technology, will even result in a net increase in energy, after plants are grown and harvested, then microwaved and the resulting fuel is hauled 80 miles from the refinery to the HELCO plant at Keahole.

Kenton Eldridge, co-founder and chairman of the board of Aina Koa Pono , could not be reached for comment by press time Thursday. He did, however, defend his project in an interview last summer.

“We have technology that works,” Eldridge said at the time.

State law sets a 2030 deadline for HECO to obtain 40 percent of its power from renewable sources or face penalties. Currently, Hawaii Island leads the state, with 46.7 percent from renewable sources, followed by Maui, with 20.8 percent. Oahu’s 7.6 percent brings the state HECO aggregate to 13.9 percent.