When the Public Utilities Commission (PUC) adopted a Framework for Competitive Bidding several years ago, the plan was a simple one: if our monopoly utility (used to buying oil — or diesel or coal — making electricity and sending us a bill) wanted to buy any amount of renewable energy over 5 MW from third parties, it would have to be competitively bid to insure fair pricing and a transparent process for us ratepayers.

Recent events prove just how badly this simple plan to insure competition can be abused.

A while back HECO and developer Castle & Cooke (C&C) asked the PUC to decide whether a 20 MW solar PV project proposed by C&C on land it owned in Mililani would be exempt from the Framework. They called it an Energy Park, and even though it was over the 5 MW limit, they insisted that four independent developers (one would be C&C and one Boston-based First Wind LLC) might be able to bring it in cheaper if they shared interconnection costs for parcels of 5 MW each. C&C called itself the “master developer” and sent along a memo telling everyone it wanted the project up and running by 2011. Time was of the essence.

solar panels with sunset

Large solar farms have been considered by energy developers as a way to provide less expensive electricity on Oahu.

ProVision Solar

Then-PUC Chair Carlito Caliboso, appointed by Linda Lingle in 2003, decided the Energy Park definitely resembled a 20 MW project and couldn’t be exempt from the Framework for Competitive Bidding but, after pointing out that any economic benefits from this arrangement were entirely speculative, he nonetheless decided to give the project a waiver from competition (even though they hadn’t asked for one). Joined by then-PUC Commissioner John E. Cole, Caliboso told HECO it had four months to work out pricing and other terms with the four independent developers for the waiver to survive.

Then-PUC Commissioner Leslie H. Kondo (now Executive Director of the Ethics Commission) shot off a blistering dissent. He pointed out that C&C and the three other developers were private entities, developing their projects for a private purpose and not entitled to a waiver. (Kondo would write a second scathing dissent less than a month later when Caliboso granted HECO and C&C/First Wind a second waiver for Big Wind; he said it was “R.I.P” for competitive bidding for renewable energy in Hawaii.) Commissioner Kondo also suspected it would be pretty much impossible for HECO to negotiate pricing and other terms with four solar developers in just four months. Turns out he was right.

The four Energy Park developers met the initial deadline, but then things started to unravel and accusations started to fly. HECO complained to C&C that some or all of the four developers were colluding with one another to avoid conditions of HECO’s standard agreements. C&C fired back that it was unaware of any improprieties and warned that delay on any of the four 5 MW projects would jeopardize the whole Energy Park.

Twice over the next two years, unfortunately, HECO had to inform the PUC that it had given time extensions to the four developers: the cost assumptions just weren’t working out, and they just couldn’t agree on sharing.

Early last year HECO was back at the PUC, this time for approval of a final agreement. There was just one hitch: it was with only one developer, First Wind (now SunEdison), and it was for the full 20 MW of solar power. According to HECO’s application, the delays caused by the developers’ bickering accompanied a plummet in solar pricing and a decision that now only one developer could economically pull this off. C&C said it would entertain the best bid, First Wind won, and negotiations began with HECO for what was now a single 20 MW project.

Funny thing though, none of the parties — not HECO, SunEdison, C&C or First Wind — thought to ask the PUC if it was okay to accept a waiver from competitive bidding by insisting this was NOT a 20 MW project and then turn it back into one, or ask if the initial waiver was still good, or maybe did they need a new one?  HECO waited almost a year to ask the PUC for a new or modified waiver — after the fact. Meanwhile, master developer C&C had already sold the Mililani land and project rights to First Wind and walked away.

On June 2, 2015, the PUC (now chaired by Randall Iwase) denied HECO’s request for a new waiver (for 20 MW), and declined to modify the first waiver (for four 5 MW parcels) and shut it all down. The Commission said it was troubled that C&C had expressly represented that it would only be one of four independent developers, yet ended up as the last man standing before selling out.

Unnerved, SunEdison filed a terribly late motion to intervene, denying it had engaged in any bait and switch scheme (now in private practice, Carlito Caliboso’s law firm represents SunEdison’s interests in this matter), and three days later, HECO asked the PUC to reconsider/suspend its own Order, saying the PUC really didn’t know what it was doing.

New accusations are now whipping back and forth between HECO and the lone surviving Energy Park developer. SunEdison has accused HECO of engaging in repeated delays and suggested that the utility hoped the project might fail so it could expand its rate base (what it charges us) by continuing to rely on utility-owned resources. HECO fired back a statement denying SunEdison’s allegations of conflicts of interest, lack of integrity, and failure to act in good faith.

No one knows what the PUC will do with all these accusations of improper dealing, but it’s pretty clear that waivers from competition don’t necessarily work to the benefit of us ratepayers after all. It’s also pretty clear that Oahu might be enjoying 20 MW more solar power today — if only everyone hadn’t been in such a hurry to avoid competition and had played by the rules.

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