Public Utilities Commission approves new H‐POWER agreement between Hawaiian Electric Company and City & County of Honolulu

News Release from HECO January 28, 2013

(Honolulu) ‐ The Hawaii Public Utilities Commission (PUC) has approved the amended and restated power purchase agreement between Hawaiian Electric Company and the City & County of Honolulu for the utility to buy electricity generated by the expanded H‐POWER plant in Campbell Industrial Park.

The original power purchase agreement was reached in 1986 and the 46‐megawatt H‐POWER plant has been generating electricity since 1990 with a two boiler, waste‐to‐energy plant.  Starting construction in 2009, H‐POWER added a third boiler, combustion train and associated air pollution control equipment, turbine generator, cooling equipment and electrical interconnection equipment that will increase total capacity to 73 megawatts.

H‐POWER provides firm renewable power, aiding Hawaii’s drive to reduce dependence on imported oil for energy. The expansion allows the City’s Department of Environmental Services to divert at least 800,000 tons of municipal solid waste annually from Oahu’s landfill and it will help Hawaiian Electric meet the state’s renewable energy goals. The new contract modifies and extends terms of the original contract and includes the expanded capacity for the next 20 years.

“H‐POWER is a vital component in our integrated solid waste management plan and ensures Honolulu’s sustainability,” said Mayor Kirk Caldwell. “I was involved with this project when I served as managing director, making sure that money for the third boiler was in the budget, and I’ve followed its progress since the beginning of construction. This is great news, and we look forward to working with Hawaiian Electric.”

“We are pleased the PUC has affirmed that this new contract is fair, reasonable and in the best interest of our customers,” said Scott Seu, Hawaiian Electric vice president for energy resources. “With limited ways to dispose of waste on the island and our need to get off imported oil for generation, waste‐to‐energy is an ideal solution. We have worked well with the City & County and Covanta, the company that operates the H‐POWER, and we look forward to our continuing partnership.”

Hawaiian Electric will pay H‐POWER six cents to 16 cents per kilowatt‐hour (kWh), depending on time of day and amount of power provided, plus 5 cents per kWh capacity payment for electricity during peak hours from 7 a.m. to 9 p.m. The price is linked to an external price index. H‐POWER is paid the non‐escalating capacity fee because it provides firm power when it is needed. Hawaiian Electric takes no mark up or profit on electricity purchased from suppliers like H‐POWER.

Covanta Honolulu operates the Honolulu Program of Waste Energy Recovery (H‐POWER) plant for the City. H‐POWER combusts garbage at 1,800 degrees Fahrenheit and turns it into inert ash. The boiler produces steam that drives a turbine generator. The facility has been able to process up to 2,160 tons of municipal solid waste (MSW) per day and the expansion will add up to 900 tons per day with a total of more than 800,000 tons of MSW per year.

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Comparison: Highest RETAIL electric rate on Mainland -- Connecticut at 19.5 cents per kwh

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HECO announced that it has begun buying electricity from the city's expanded HPOWER waste-to-energy plant. The added capacity will reduce the amount of garbage dumped into landfills. HECO will pay a price for the energy comparable to what it is paying for energy generated by large-scale wind and solar projects, the utility said.

The PUC recently approved a power purchase agreement under which HECO will pay the city an average of 22.4 cents a kilowatt-hour through the life of the 20-year contract.

At the low end of recent power purchase agreements, HECO is paying 21.8 cents a kilowatt-hour for solar energy from the Kalaeloa Two project in West Oahu.

The utility is paying 22.9 cents a kilowatt-hour for power produced by the new Kawailoa wind project on the North Shore. It is paying 23.6 cents a kilowatt-hour for utility-scale solar energy it buys from developers under its feed-in tariff program.