PUC Final Decision and Order #31759  December 23, 2013 (excerpts)

The Contract Price for the AKP-Produced Biofuel is Excessive and Not Cost-Effective

The contract price for the AKP-produced biofuel is excessive and not cost-effective at present and for the foreseeable future, and thus, is unreasonable and inconsistent with the public interest.

The commission, in Docket No. 2011-0005, previously expressed its concerns that HELCO's commitment to purchase an annual minimum quantity of AKP-produced biofuel likely will require HELCO to operate its Keahole combined cycle generation units outside of economic dispatch (i.e., uneconomic dispatch mode) in order to ensure that such contracted volumes of biofuel are consumed, and thus, has the potential to displace or curtail more economical, existing renewable energy resources or restrict the addition of other new low-cost, fixed price renewable energy projects. The commission's concerns remain and have not been alleviated by the Companies in this proceeding (Docket No. 2012-0185). Such a commitment, moreover, appears to benefit AKP, to the ratepayers' detriment.

Ratepayers Are Not Required to Ensure the Development of Biofuel Projects That Do Not Provide Them with Quantifiable Benefits

The commission rejects as unpersuasive the Companies' contention that the commission's approval of the contract (including the contracted biofuel price) is necessary to enable the development of a large-scale, local biofuels production facility.  As previously noted in the Introductory Section of this Decision and Order, the commission's rejection of the Biodiesel Supply Contract does not prevent AKP from pursuing a scaled-down version of its proposed bio-refinery project for the purpose of supplying biofuel to the transportation and other non-utility generation sectors. Here, the commission concludes that ratepayers should not be required to "ensure the economic returns [that are] necessary to attract project financing" for the construction and development of AKP's bio-refinery on the island of Hawaii to produce and supply biofuel for the generation of electricity.

The Microwave Catalytic Depolymerization Technology Appears Unproven on a Large, Commercial Scale Basis

The commission's approval of the contract is a prerequisite for AKP to obtain the funds to finance the Project, which includes the use of the Micro Dee technology on a large, commercial-scale basis. Hence, if the commission ultimately approves the contract and the Companies' corresponding requests, HELCO and HECO ratepayers risk being "stuck" with a long-term, twenty-year contract that is designed to provide AKP with a known amount of revenue and a steady revenue stream during the contractual time period when the price of the AKP-produced biofuel is likely to be higher than the price of the diesel fuel that it is replacing.

Moreover, the contract, if approved by the commission, will result in a fifty-month (i.e., four years and two months) period between the contract's Effective Date and AKP's Commercial Operation Date.  During this approximate four-year and two-month "placeholder" period, other renewable energy resource options, at potentially lower costs, may not be vetted or otherwise considered by HELCO while a determination is made as to whether AKP, utilizing the Micro Dee technology on a large, commercial scale basis, is able to deliver the contracted volume of biofuel to HELCO in accordance with the contract specifications....

Benefits to Ratepayers of Lower Cost Energy

Because HELCO's renewable energy generation output is in excess of the statutory forty percent (40%) level, for any new generation project (renewable or fossil) or any significant change in the type of fuel supply proposed in the future, HELCO must demonstrate that the project provides cost reduction benefits to ratepayers, directly or indirectly, by improving and maximizing the integration of additional lower cost renewable energy. AKP's Biodiesel Supply Contract fails to meet this objective....

Significant community and ratepayer opposition exists with respect to the HELCO-AKP contract, including opposition from the local county government....

This docket is closed, unless ordered otherwise by the commission.

LINK: AKP Docket File

Biofuel Scheme Wanted $1.08 per Ratepayer per Month for 20 Years

Star-Adv Dec 29, 2013: Last week the commission filed its decision rejecting, for the second time, a proposed biodiesel supply contract between the producer, Aina Koa Pono-Ka'u LLC, and two sibling utilities, Hawaiian Electric Co. and Hawaiian Electric Light Co. A similar deal got the thumbs-down from the PUC two years ago.

Both utilities were parties because the cost of producing the annual load of 16 million gallons of liquid biofuel would have been borne in part by ratepayers on Hawaii island, where HELCO is the power company, and Oahu.

The price to be paid by the utilities was withheld as proprietary information, but the surcharge that would be added to each customer's monthly bill was estimated at 90 cents for Hawaii island accounts and $1.08 on a typical Oahu residential bill.

That may not sound like a huge tab, but over the course of the 20-year contract, that adds up to a substantial tab.

read ... Green power is goal but at sensible cost

2011: $170/barrel? PUC Rejects AKP Biofuel Contract

2012: AKP Demands $1/month from Oahu, Big Isle Ratepayers

2012: AKP Biofuel Scam Finds Only 20 Supporters in Survey of 300