HONOLULU, Jan 06, 2011 (BUSINESS WIRE) --Hawaiian Electric Company, subsidiary of Hawaiian Electric Industries,
Inc. (HEI) (NYSE:HE), today signed a contract for a local company, Aina
Koa Pono, to provide sustainable, locally grown and processed biofuel
for electric generation in Hawaii. With planned operations in the Ka'u
region of the Hawaii Island, the project will initially supply biofuel
to Keahole Power Plant on that land.
"This is the first contract awarded as a result of our call in April
2010 for locally grown and processed biofuels to be used in our power
plants on Hawaii Island, Oahu and in Maui County," said Robbie Alm,
Hawaiian Electric executive vice president.
"The team at Aina Koa Pono submitted an excellent proposal and was
prepared to negotiate with the best interests of the State and Hawaii
Island at heart."
Alm said the contract is an important step in reaching Hawaii's clean
energy goal of 70 percent of electricity and transportation energy from
clean sources by 2030. The project complements Hawaiian Electric's plans
for adding significant amounts of renewable energy from other sources,
including solar, wind, garbage-to-energy, biomass, geothermal, ocean and
others. Under the AKP contract, the utility will:
Buy a significant quantity of local biofuels for generating units to
increase energy independence, spend energy dollars locally and reduce
vulnerability to volatile oil prices.
Signal to landowners and agricultural interests that Hawaiian Electric
companies are committed to using local fuels and are signing contracts
that create a workable business model for agricultural energy crops to
emerge in Hawaii.
Because liquid fuels are transportable, create a renewable fuel supply
for firm power that can be used anywhere in Hawaii.
"This contract moves us forward on Governor Abercrombie's 'New Day'
plans for energy independence, on compliance with the aggressive
Renewable Portfolio Standards now in state law and on our promises in
the Hawaii Clean Energy Initiative agreement," Alm said.
Subject to approval by the Public Utilities Commission, with input from
the Consumer Advocate, the contract would initiate an innovative plan to
provide economic support to Hawaii Island customers while encouraging
more renewable energy statewide. It asks for the PUC to spread among
customers of Hawaii Electric Light Company, Maui Electric Company and
Hawaiian Electric Company the difference between the price of locally
grown and produced biofuel and the fossil fuel it replaces.
Based on December 2010 fuel costs, this would add less than 1/3 of a
cent per kilowatt-hour, or $1.55 to $1.86 per month, to a typical
residential customer bill (typical residential use varies between 500
and 600 kilowatthours a month) for Hawaii Island, Maui County and Oahu
"This contract provides for potential future delivery of AKP biofuels to
other islands, making it reasonable that all customers join in paying
the initial incremental cost as this facility gets up and running.
Fossil fuel oil prices are expected to continue their erratic climb, so
in time the cost of AKP biofuel is expected to be less than the cost of
the oil it displaces," Alm said.
"Hawaii Island already has the highest level of renewable energy in the
state, getting more than 30% of its energy from renewable sources.
Renewable energy requirements are calculated on a consolidated basis for
the Hawaiian Electric companies' service territories, so Maui and Oahu
have benefited from Hawaii Island's leadership," Alm said.
Other terms of the AKP contract include:
It is effective from and contingent upon PUC approval.
AKP will provide 14 million gallons per year in 2014, increasing to 16
million gallons per year in 2015 for a total of 20 years.
Restricted to feedstock grown on Hawaii Island with conditional
allowances for feedstocks from elsewhere in Hawaii.
Price is fixed over term of contract with annual escalation. (Price
and terms are confidential due to ongoing negotiations with other
Biofuel will meet Hawaii Electric Light Company specifications and be
used primarily at Keahole Power Plant in West Hawaii with flexibility
for delivery to other generation stations on Hawaii Island, and Oahu
and in Maui County.
Biofuel will comply with sustainable sourcing standards developed by
the Hawaiian Electric Companies in partnership with the Natural
Resources Defense Council.
The first delivery of 190,000 gallons will be for testing and air
Hawaiian Electric companies may purchase biodiesel from any other
supplier providing the AKP minimum annual purchase commitments are met.
Negotiations are also continuing with other companies for other
additional local biofuel supplies.
SOURCE: Hawaiian Electric Industries, Inc.
Hawaiian Electric Company
Peter Rosegg, 808-543-7780
For institutional investor inquiries
Hawaiian Electric Industries, Inc.
Shelee Kimura, 808-543-7384