Hawaii Electric Light Co. is seeking approval of an amended power purchase agreement with Puna Geothermal Venture, according to documents filed Tuesday with the state Public Utilities Commission.
“Among other benefits, the amended and restated PPA is expected to result in significant cost savings for Hawaii Electric Light’s customers,” according to the filing.
“We’re thankful to our regulators for the opportunity to revisit the agreement and find solutions that ultimately lower customer bills,” Sharon Suzuki, president, Maui County and Hawaii Island Utilities, said in a Hawaiian Electric news release. “The pricing of renewables has dropped significantly in recent years. The owners of PGV recognize that, so we appreciate their willingness to sit down and work with us on an amended contract that benefits customers and accelerates our transition to 100% renewable energy.”
HELCO asked that the PUC approve the PPA early this year, stating in the filing it would provide “significant benefits,” including lower bills for customers, a reduction in the use of fossil fuels, and a “reduction in customers’ exposure to fossil fuel price volatility,” among others.
Under the new agreement, the rate paid by the utility to PGV will be fixed and no longer linked to the price of oil.
By eliminating the volatility of oil prices from the rate paid to PGV, the new fixed-price contract will ensure that bills are more stable, the news release stated. This new pricing arrangement follows guidance provided by the PUC.
Mike Kaleikini, PGV’s senior director, Hawaii affairs, told the Tribune-Herald in May that PGV was interested in de-linking the cost of power from oil to provide more certainty about its revenue, and that the parties entered those talks before the 2018 eruption of Kilauea volcano began.
The state’s only geothermal power plant was isolated by lava during the eruption. Lava destroyed a substation and covered a few geothermal wells, as well as cut off road access to the plant. It was otherwise spared significant damage in the eruption that began May 3, 2018, in lower Puna.
PGV officials said recently they hoped the plant would be operational by the end of 2019 and could sell electricity early in 2020.
Under the existing power purchase agreement, PGV provides HELCO with up to 38 megawatts of energy and capacity, the filing states.
As part of the amended agreement, PGV has agreed to modify its current facility to provide an additional eight megawatts of energy and firm capacity, which will further reduce bills and the use of fossil fuels to generate electricity.
Once the upgrade is complete, residential bills are expected to drop about $7.50 a month starting in 2022 and close to $13 a month in 2023, according to the news release.
“We have enjoyed a long and successful relationship with Hawaiian Electric and Hawaii Electric Light and are grateful for its support of geothermal power,” Isaac Angel, chief executive of Ormat Technologies Inc., the owner of PGV, said in the release. “We are proud to partner with Hawaiian Electric and enable Hawaii’s commitment to clean energy and reducing greenhouse gas emissions. As Hawaii continues to pursue the goal of achieving 100 percent of its electricity generation from renewable sources, PGV is an increasingly critical source of renewable energy and capacity, unaffected by volatile fossil fuel pricing, in this region.”
The existing agreement expires in 2027 and will remain in place until it is succeeded by the amended agreement when PGV’s upgrade is complete in 2022.
The amended and restated PPA would expire Dec. 31, 2052.
A phone call to Kaleikini was not immediately returned Thursday.
Email Stephanie Salmons at email@example.com.