Earlier this week, I published an article reviewing the latest piece of bad news to hit SunEdison (SUNE); Hawaiian Electric's (HE) decision to terminate three utility scale power plants totaling 112MW on Oahu. In a long explanation filed with the Hawaii Public Utilities Commission (HPUC), HECO argued that they had worked hard with SUNE, making every effort to avoid the termination notices. On its own, it seemed that the utility was being forthright, but additional information that has emerged over the last couple days indicates otherwise.
In a statement released on February 18, HPUC Chair Randell Iwase chastised HECO for their recent moves, which he noted seem to be working against Hawaii's goals of lowering electric rates for customers and using 100% renewable energy by 2045. It turns out that HECO has done all of the following recently:
In addition, a recent Honolulu Star Advertiser article highlighted the fact that HECO recently announced that they want to replace some older oil fired steam generator units, and increase the amount of electricity supplied by Oahu's only coal powered plant from 180MW to 189MW. In short, the utility seems to want to continue using fossil fuels which need to be shipped to the island at great cost, versus working through the delays with the new renewable power sources that are in the process of being completed.
These actions would be more understandable in places like West Virginia, which doesn't get a lot of sun and has fossil fuels under every rock. But in a state where electricity from the grid costs over $.30/kWh, these new projects that HECO wants to terminate will substantially decrease the cost to consumers once completed. A few months of delays are a small price to pay, versus another 2-3 year new bidding process.
The letter from Chair Iwase is good news for renewable developers, and SUNE in particular, as it indicates that the HPUC is looking out for Hawaii consumers and understand that project terminations are not in their best interests. I expect HECO to be required to undo their termination request and work with SUNE to allow the company to complete the sale of the projects to DE Shaw, so that work can once again begin on them.
This article was written by
Disclosure: I am/we are long SUNE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.