The parent company of Hawaiian Electric Co., Hawaiian Electric Industries Inc., has sold the 60-megawatt Hamakua Energy Plant to a subsidiary of Harbert Management Corp.
Financial details of the transaction were not disclosed, but HEI said the sale isn’t expected to have a material impact on company finances.
The Honokaa power plant was owned by Pacific Current LLC, a subsidiary of HEI. In previous news releases, HECO has referred to Hamakua Energy as the electric company’s “largest independent power producer.”
Harbert, based in Birmingham, Ala., is an investment management firm with longstanding holdings of power-generating facilities, including an ownership stake in the 208-megawatt Kalaeloa Partners LP co-generation plant on Oahu since 1997.
“We believe Harbert’s depth of experience in owning and operating power plants and being a good partner with utilities, including in our state, will serve the Hamakua Energy Plant and Hawaiian Electric well in their missions to supply power for the people of Hawaii Island and support the island’s transition to an increasingly renewable energy future,” said HEI CEO Scott Seu in a statement. “This sale is a further step toward simplifying HEI’s strategy and regulatory position as we focus on our core utility business.”
According to a March 3 blog entry by Henry Curtis, an environmental activist and executive director of Life of the Land, HEI — which had banking, shipping and real estate interests — has been selling off its assets and now owns only HECO, the electric utility for Oahu, Maui and Hawaii Island.
In an earnings announcement last month, HECO reported a net loss of $1.4 billion for 2024, partly due to being tagged with a $1.9 billion share in payouts to victims of the August 2023 Maui wildfires that killed 102 people. The power company reported a net income of $199 million in 2023.
After its credit rating plummeted to junk-bond status, HECO asked legislators this session for a $1 billion fund as a hedge against future wildfire liability, to be paid for by a small fee on its customers.
One measure, House Bill 982, which has passed over to the Senate, would limit amounts customers could collect in lawsuits or administrative settlements. A companion measure, Senate Bill 1201, didn’t receive a hearing from the Ways and Means committee and missed the first crossover.
The utility claims it can’t pay another catastrophic wildfire settlement without the requested fund.
HECO — which said in a Securities and Exchange Commission filing that it can’t afford to pay a dividend to HEI — compensated Shelee Kimura, HECO’s president and CEO, with $1.25 million in salary and bonuses in 2024. Four HECO vice presidents collected from nearly $600,000 to more than $900,000 in salary and bonuses.
The Hamakua Energy Plant, which provides about a third of the Big Island’s 180-megawatt peak electricity demand, went offline in late February 2024. A Hamakua Energy spokesperson attributed the plant’s failure to “mechanical issues with our generators.”
The outage occurred at the same time HECO’s Keahole generator — which, according to Hawaiian Electric’s website, contributes 77 megawatts to the grid — was on the mainland being overhauled. On March 25, 2024, the utility asked customers to reduce their power consumption through at least mid-April, a time period that included Hilo’s signature event, the weeklong Merrie Monarch Festival.
Low generation capacity forced HECO to initiate forced outages known as rolling blackouts on the Big Island on Jan. 8, Feb. 13 and March 14, 2024.
Three state lawmakers wrote the PUC on March 15, 2024, calling for an investigation of HECO, noting that 21,000 customers were affected by the rolling blackouts on the Big Island the previous night and another 13,000 on Oahu who lost power a week earlier.
“The lack of reliability due to insufficient energy generation, HECO’s aging equipment, unreliable oil-fired power generation, and immediate and long-term solutions should be investigated,” the letter by Sens. Glenn Wakai, Jarrett Keohokalole and Lynn De Coite, all Democrats, stated.
The Merrie Monarch Festival and its signature hula competition were not impacted by outages, and HECO announced a public end to the Big Island’s power shortage on April 25.
In early September 2024, former owners Pacific Current announced that Hamakua Energy — which used biodiesel to generate between a quarter and a third of its Honokaa plant’s electrical power — was converting its facility to use 100% renewable fuels.
The state has set a goal of 100% renewable energy by 2045.
Hawaiian Electric Industries (HEI) was registered on July 1, 1981, to make investments that were too risky to be part of the regulated Hawaiian Electric Company (HECO).
Each legislative bill addresses one component of the utilities financial picture. What isn`t provided to Legislators are the various financial options, costs, risks, and benefits. This makes it difficult to determine whether securitization makes sense, and if so, what percentage should be paid by ratepayers.
Email John Burnett at jburnett@hawaiitribune-herald.com.
