Hawaiian Electric officials announced Wednesday that they’ve negotiated a huge deal to import liquefied natural gas from Canada that could mean slightly lower utility bills for customers on Oahu, Maui and Big Island.
But they say the contract with Fortis is contingent on the state Public Utilities Commission approving the $4.3 billion buyout of Hawaiian Electric Industries by Florida-based NextEra Energy. The PUC would also have to sign off on the proposed contract, regardless of whether the merger goes through.
Hawaiian Electric Industries owns Hawaiian Electric, Maui Electric and Hawaii Electric Light, which collectively provide power to 457,800 residential customers on Oahu, Maui County and the Big Island.
Gov. David Ige’s administration opposes the NextEra merger and any plans to import LNG for electricity use.
The governor came out against LNG last August, saying it’s an imported fossil fuel that doesn’t need to be a part of Hawaii’s state mandate of providing 100 percent of its electricity needs from renewable energy sources by 2045. He said the money spent transitioning Hawaii to use LNG, even as a “bridge fuel,” as supporters call it, is money that could be better spent on going renewable.
“We know Governor Ige has expressed opposition to importing LNG,” Ron Cox, Hawaiian Electric’s vice president for power supply, said in a release. “However, we have just reached contract terms with a supplier after a long negotiation and now have much more than a theoretical plan for the governor, Public Utilities Commission, energy stakeholders and the public to consider. We believe we have a responsibility to put forward an option that has significant economic and environmental benefits for the people of Hawaii, and that addresses some of the Governor’s concerns.”
Hawaiian Electric sees LNG as a “cleaner, low-cost fuel to replace oil in the transition” to Hawaii achieving its 100 percent renewable goal.
“As we make this transition, LNG is a cleaner-burning alternative that potentially can provide billions of dollars in savings and stabilize electric bills for our customers compared to continuing to rely on imported oil with its volatile prices,” Cox said. “LNG is a superior fuel for the firm generation needed to keep electric service reliable as we increase our use of variable renewables like solar and wind.”
Hawaiian Electric estimates the LNG contract and greater efficiencies from modernized generation could save electricity customers from $850 million to $3.7 billion through 2045, depending on future oil prices, according to the release.
That could mean savings of up to $32 a month for Oahu residents, on the higher end. For the Big Island, savings could be as much as $8 per month, and on Maui savings could be as high as $1.25 a month.
The company says the benefits would also be environmental. It estimates that annual oil imports for electricity generation would be reduced by over 8 million barrels, or 80 percent, as soon as 2021, the release says.
To make it happen, Hawaiian Electric needs the PUC to approve the companies’ plans to overhaul four power plants, estimated to cost $341 million. Hawaiian Electric would also need LNG shipping containers, estimated to cost $117 million. (The projected savings take these costs into account.)
“This proposal, negotiated with the added expertise and experience of NextEra Energy as an advisor, will support achieving our 100 percent renewable energy goals,” Cox said. “It will allow us to integrate increasing amounts of renewable energy at much lower cost while providing more reliable service for our customers. Further, our plan keeps new LNG infrastructure, both on- and off-shore, to a minimum flexibility to reduce LNG imports as renewable energy increases.”
The plan calls for Fortis to liquefy the gas piped from northeastern British Columbia at its Tilbury facility in Delta, near Vancouver, and then transport it to Hawaii in mid-sized LNG carrier ships.
As with all fuel purchases and purchased power, the actual cost of the natural gas would be passed directly to customers on bills, without mark-up or profit to the Hawaiian Electric Companies, the release says.
The PUC in March finished more than a year of public hearings and a quasi-judicial process of reviewing Hawaiian Electric’s proposal to merge with NextEra Energy. A final decision is expected this summer.
Learn more about Hawaiian Electric’s proposal here.