Anaergia asks PUC to compel MECO to negotiate contract

September 15, 2015
By EILEEN CHAO - Staff Writer ( , The Maui News

Two renewable energy projects proposed by California-based Anaergia Services are on hold until Maui Electric Co. agrees to buy the energy that would come from the projects.

Anaergia filed a complaint with the state Public Utilities Commission on Sept. 4, alleging that the utility and its parent company, Hawaiian Electric Industries, "unreasonably and wrongfully refused to accept (Anaergia's) bona fide offer to sell and deliver renewable energy produced in conjunction with agricultural activities."

It is asking the commission, among other things, to compel the utility to negotiate a biogas fuel supply contract with Anaergia.

Mayor Alan Arakawa signed a contract on Jan. 8, 2014, to allow Anaergia to build a "state-of-the-art" waste conversion facility at the Central Maui Landfill in Puunene. He touted the project's ability to boost the county's landfill diversion rate to more than 85 percent, almost double the current rate.

It is slated to come on line by 2018, but Arun Sharma, president of Americas at Anaergia, said that the startup date may have to be adjusted based on the PUC decision-making timeline.

That project and the accompanying biofuel project in West Maui have not been able to move forward without a signed power purchase agreement with MECO.

The electric company told regulators in a letter submitted in February that it is "not prepared to proceed at this time" with a contract to purchase power from Anaergia's proposed biofuel project, and said it was still considering another option - to purchase biogas in lieu of power.

So far, the utility has not committed to purchasing either biogas or power from Anaergia.

"Despite (Anaergia's) diligent efforts over the past several years to attempt to negotiate with HECO and MECO in good faith . . . it has become apparent that (they) have no intention of accepting the renewable energy offered by (Anaergia) that would benefit the people and the county unless it is required to do so," Anaergia says in its complaint.

The company says, as a result, it has and "continues to be financially harmed and damaged."

MECO spokeswoman Shayna Decker said that the utility hasn't been able to commit to a contract because the pricing of Anaergia's renewable fuels is too high. "We worked very hard with Anaergia to negotiate a contract that was in the best interests of our customers. However, in the end, the pricing they offered was too high and would have resulted in increased costs to our customers," Decker said in an email.

Sharma argues that the pricing of the company's renewable fuels is "very competitive."

"We strongly believe the project is in the public interest," Sharma said in an email. "It is aligned with the state's objective of 100 percent renewable energy, adds to energy security . . . adds green space and hundreds of jobs to a community that can benefit tremendously."

He added that the company's proposed $50 million Maui Energy Park (formerly known as the Mahinahina Energy Park) in West Maui would "save millions of dollars for the county" in fines and penalties for environmental violations stemming from the Lahaina wastewater treatment plant. Four community groups sued the county in 2012 over the plant's use of injection wells, saying that discharge from the wells is seeping into coastal waters and damaging reefs and the ocean environment.

A federal judge has ruled twice in the past year that the county's use of injection wells is a violation of the Clean Water Act, leaving the county open to tens of thousands of dollars a day in civil penalties, according to an Earthjustice attorney who represents the group.

Anaergia proposed to use about 2.5 million gallons per day of treated water from the wastewater treatment plant to irrigate about 1,800 acres of sorghum, a biocrop that would be processed into renewable fuel at the Central Maui facility.

Sharma said that the Maui Resource Recovery Facility in Puunene "provides an opportunity for Maui to become a leader in environmental sustainability by achieving the highest landfill diversion in the world."

The company had expected the facility to be up and running by 2017, but company officials said earlier this year that the anticipated completion date has been moved back slightly as negotiations with potential buyers for its products continue. Anaergia had expected to sign power and fuel supply contracts this year.

Arakawa signed a 20-year contract with Anaergia in January 2014 to build and operate the Puunene facility. Anaergia, which operates more than 1,600 renewable energy projects worldwide, agreed to finance, design, construct, own and operate its facility at the landfill, though the county will need to pay a tipping fee through the duration of the contract.

Still, county officials expect to save "millions of dollars" over the next two decades while diverting more waste from the landfill and producing renewable fuels.

The facility will turn waste into three end products: recyclables to be shipped and processed off-island, as some of the waste currently is; liquefied natural gas from the organic waste; and refuse-derived fuel blocks from the inorganic waste.

Hawaiian Electric Industries and its subsidiaries currently are undergoing the public review process for a proposed $4.3 billion merger with Florida-based NextEra Energy. The PUC will begin holding evidentiary hearings about the merger on Nov. 30 at the Neil Blaisdell Center in Honolulu. The commission expects to make a decision by June.

* Eileen Chao can be reached at © Copyright 2015 The Maui News. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.