County: Aina Koa Po-NO


HILO — Hawaii Island electricity customers may not have to pay a surcharge on their bills for the proposed $450 million Aina Koa Pono biodiesel refinery outside Pahala, but the county will continue to oppose the plant on other grounds, Energy Coordinator Will Rolston said Thursday.

Hawaiian Electric Co., the parent company of the Big Island’s Hawaii Electric Light Co., has agreed not to fight a state consumer advocate’s recommendation that Oahu bear the entire burden of the cost differential between the cheaper fossil fuel and the new biodiesel that is planned to be hauled to HELCO’s Keahole plant and burned for electricity.

The cost differential is expected to tip in the ratepayers’ favor later in the 20-year contract as fossil fuel prices increase.

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.

The original plan submitted late last year had HECO customers bearing 80 percent of the cost and HELCO customers bearing 20 percent. That would have meant an extra 84 cents per month for a HELCO residential bill of 500 kilowatt-hours or $1 per month for a residential bill of 600 kilowatt-hours. The surcharge would not begin until Aina Koa Pono begins deliveries of biofuel.

Cecily Barnes, HECO’s manager of biofuels, said the company’s preference was to have both islands chip in for the cost. But she said HECO will not fight the recommendation in its rebuttal documents that are due today. That means, if the Public Utilities Commission approves the plan, Oahu customers would pay an extra $1.25 monthly on a 600-kilowatt-hour bill, compared to $1.08 when Hawaii Island was in the mix.

But the rate hike is only part of the problem, Rolston said. He questions 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.

“We’re sitting here and we’re trying to figure out how it could work,” Rolston said. “The math doesn’t add up.”

Kenton Eldridge, co-founder and chairman of the board of Aina Koa Pono, declined to discuss the PUC process when contacted Thursday. He did, however, defend his project.

“We have technology that works,” Eldridge said.

Public hearings on the project have concluded, but the public can still submit testimony by sending it to hawaii.puc@hawaii.gov and including the case number 2012-0185 in the header.

Parties in the case have until Aug. 2 to wrap up their transmittals. It’s not known when the PUC will issue its ruling.

Jeff Ono, executive director of the Division of Consumer Advocacy, said Thursday he favors the fuel supply contract currently under PUC review. He does, however, want to see Oahu bear the brunt of the cost because that island is contributing the least to the state’s renewable energy portfolio, the percentage of energy obtained by renewable energy sources such as biofuels, geothermal, solar, wind and hydropower.

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, according to data provided by Barnes.

“If HECO is going to rely on an aggregate basis, then Oahu ratepayers have to bear some of that cost,” Ono said.

If all goes as planned, the processing plant will be built off Camp Meyer Road, 1.5 miles from Pahala. The company has leased 12,000 acres of land from the Edmund C. Olson Trust II and the Mallick Trust.

Public hearings last year resulted in a mixed view from the Pahala community.

The project has encountered opposition from Ka‘u residents worried about its environmental impact and loss of farmland, while labor unions and others say the region really needs jobs in the post-sugar era.

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.

Aina Koa Pono is not required to do an environmental assessment, but the company will conduct a study of environmental and cultural impacts of the operation. The study will help the company determine whether the fuel trucks will pass south, through Naalehu and through South Kona, or go north and over Saddle Road. The traffic impacts are not yet known.