Renewable Energy De-Linked From Fossil on Electricity Bills

Windmills at Kaheawa, above Maalaea. Courtesy of First Wind.

By Sonia Isotov

On Tuesday, the Hawaii PUC approved an amended power purchase contract between Kaheawa Wind Power, LLC and Maui Electric Company (MECO) which de-links the costs incurred for the renewable energy project with the price of fossil fuels.

The key ruling by the state Public Utilities Commission (PUC) will save Maui electricity consumers about $300,000 a year and will help protect them from soaring oil prices in the future, Lt. Governor Brian Schatz said today.

“The outcome gives the ratepayers on Maui long term-price certainty, protecting them from the rising cost of oil,” said Lt. Governor Schatz, in a written statement.

“Kaheawa Wind Farm produces approximately 10% of Maui’s entire annual electricity requirements, and the price of this wind power is now substantially below the current cost of generating power using oil. With the new contract, as the price of oil goes up over time, the ratepayer savings will increase.”

The Kaheawa Wind Power, owned by UPC Hawaii Wind Partners LLC, operates the 30 megawatt (MW) wind farm at Kaheawa Pastures in Ukumehame, Maui.

Construction continues for the Kaheawa Wind II project continues as the company adds 14 new turbines to the hills above Maalaea. Photo by Wendy Osher.

In the original contract approved by the PUC in March 2005, the total energy costs paid by MECO were based on a composite price: 70% came from a fixed payment rate and 30% was based on MECO’s filed avoided energy cost data, which is tied to the cost of oil.

The amended contract delinks the price of wind energy from the price of oil in accordance with HRS Chapter 269 and HRS 269-27.2(c), which was enacted after the original MECO wind contract was negotiated.

Under the new legislation, payments for renewable energy projects are no longer tied to the price of fossil fuels.

According to the PUC, the amended contract will eventually save Maui’s 67,700 residential and business customers about $330,000 a year, or roughly $5 per customer. It also gives them long-term price certainty, protecting them from volatile oil prices.