Anaergia loses bid for lower rates on programs from PUC|
September 29, 2016
By LEE IMADA - Managing Editor (firstname.lastname@example.org) , The Maui News
Anaergia Services lost its bid to obtain preferential rates for its biogas and trash conversion programs on Maui when the state Public Utilities Commission issued a ruling Monday in favor of Hawaiian Electric and Maui Electric Cos.
The decision and order by the PUC did offer future avenues for the energy company, which has contracted with Maui County to build a waste conversion facility at the Central Maui Landfill. The PUC clarified the process and what constitutes a "bona fide request" for preferential rates; defined renewable energy as "renewable electricity" and not just fuel, such as biogas; and clarified the meaning of "agricultural activities" that produce renewable energy that are eligible for preferential rates.
Under law, the state's policy is to promote the long-term viability of agriculture by allowing for preferential rates for the purchase of renewable energy produced in conjunction with agricultural activities. The PUC said that the requirement "is satisfied by any amount of agricultural activity" and "is not limited to existing, local, bona fide farmers."
It also made clear that the PUC - and not the utilities - decides whether a request is "bona fide."
"A public utility does not possess the authority to deny a request to forward a proposal . . . solely on the basis that the utility believes the request to be in bad faith or is otherwise not considered to be 'bona fide,' '' the PUC said.
However, the PUC said that MECO did not violate state law by declining to forward Anaergia's proposals to the commission.
"None of Anaergia's proposals constituted a 'bona fide' request for preferential rates for the purchase of renewable energy produced in conjunction with agricultural activities," the PUC said.
MECO maintained that the fuels produced by Anaergia were too costly and would increase power rates for consumers in not signing power purchase agreements with the company.
In September 2015, Anaergia filed a complaint with the commission saying that MECO and its parent company Hawaiian Electric Cos. violated state law when they refused to forward requests for preferential rates to the commission.
In 2014, the California-based energy company signed a 20-year contract with Mayor Alan Arakawa's administration to build a state-of-the-art waste conversion facility at the Central Maui Landfill, and it has proposed building a $50 million Maui Energy Park in West Maui to grow sorghum, a biocrop that would be processed into renewable fuel at the Central Maui facility.
Jeff Walsh, Anaergia's director of business development for the Pacific region, said Wednesday that while portions of the decision were not favorable to his company, the landfill and sorghum projects remain on the books and in the company's plans.
"At the end the day, it is still full steam ahead," Walsh said.
He explained that Anaergia was not "sitting around with bated breath" waiting for a PUC decision. Anaergia reportedly was working with Alexander & Baldwin on energy crop trials on Hawaiian Commercial & Sugar Co. land. The sugar plantation will be shutting down at the end of the year.
"We are developing parallel plans," Walsh said. "We have to have all avenues open."
In fact, Anaergia is negotiating another contract with the county after winning a bid with its partners to provide renewable power to the Kahului wastewater treatment plant by processing all the sludge from the island's three sewage treatment plants. If the contact is signed by the end of the year, as expected, the plant could be operational in 2018, he said.
The adverse decision does not prevent Anaergia from sitting down with MECO and talking about producing fuel for its Maalaea Power Plant, Walsh said. Even though the PUC watered down MECO's gatekeeping abilities, Walsh said any power purchase agreement for a utility-based product has to be "a collaboration."
"It's a mixed plate," Walsh explained about Anaergia's plans. "As a developer, you really want to have all avenues open, with the utility being one of them."
Anaergia was hoping to provide biofuels to MECO and was "a bit surprised" by and doesn't necessarily agree with the PUC's ruling that renewable energy meant providing firm power and not just the fuel, he said. Still, he indicated that the company might be open to building power generation units for its biofuels.
"If the production is electrons, so be it," he said.
The plans to develop the trash conversion facility at the Central Maui Landfill remained in place "independent of this decision," Walsh said. The work will remain on schedule according to the contract and portions of the facility could be up as early as 2019, he said.
MECO said that it was "pleased with the Public Utilities Commission's ruling that confirms Maui Electric followed the law in its dealings with Anaergia," said Shayna Decker, the utility's spokeswoman, on Wednesday. "We'll continue to act in the best interest of our customers, and we remain committed to working with renewable energy developers on clean and affordable solutions that benefit all customers as we move forward to meet our state's goal of 100 percent renewable energy."
Doug McLeod, former Maui energy commissioner and currently an official with energy consultant DKK Energy Services LLC, said Wednesday that the PUC ruling "was a win on all counts for MECO," but "it also gives a roadmap that anyone, including Anaergia, could try to use for a project connected with agriculture that is producing electricity as the final product."
* Lee Imada can be reached at email@example.com.
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