The justices said state regulators were right to question environmental problems and consumer costs.

In a searing rebuke to Hu Honua, the Hawaii Supreme Court has denied the company’s appeal of a Public Utilities Commission decision, saying the state was correct to reject the biomass project’s bid to operate on the Big Island.

Big Island locator map

The court handed down a unanimous 5-0 ruling on Monday saying it found no error in the commission’s conclusion that allowing Hu Honua to fire up would not be in public’s best interest.

Hu Honua’s major shortcomings are the 8 million metric tons of air pollution it would emit over 30 years by burning eucalyptus and other trees, as well as the higher cost of energy consumers would be forced to pay, adding some $10.97 to their monthly bills.

The commission “has a duty to act in the public interest,” and that’s what it did last May by voting 2-1 to reject Hu Honua’s long sought-after quest for a power purchase agreement to sell energy to Hawaiian Electric, the court found.

The Hu Honua Renewable Biomass Plant located at Pepeekeo on Hawaii island is stalled after the state Public Utilities Commission declined to grant a power purchase agreement. (Cory Lum/Civil Beat/2022)

Hu Honua issued a statement late Monday afternoon saying it’s disappointed by Monday’s ruling and considers it a setback for Hawaii’s renewable energy transition.

Company president Warren Lee said in the statement that the $520 million plant is fully constructed and by denying it an opportunity to operate will increase “the likelihood of grid stability and more blackouts.”

Hu Honua’s lawyers had argued that the PUC erred in its May 23 decision by exceeding the scope of a previous remand from the high court. They said the sole issue the PUC should have considered was greenhouse gas emissions, not other factors like costs to consumers.

They argued the PUC violated Hu Honua’s due process rights by finding facts outside the docket, applying a wrong evidentiary standard and by subjecting the company to a carbon neutrality standard.

The Hu Honua legal team led by Honolulu attorney Bruce Voss argued that the PUC misunderstood its mandate and held Hu Honua to an unfair standard.

The justices disagreed.

“Based on the straightforward language of the remand order, the PUC was not only at liberty to consider pricing, it was required to consider the reasonability of the project’s pricing in light of its GHG emissions,” the court wrote.

Voss declined to discuss details of the case.

Hu Honua’s insistence that the PUC should not consider the price consumers would have to pay for its electricity “difficult to understand.”

Where Hu Honua’s lawyers got that idea “remains a mystery.”

“Our roadmap was a simple one, and we gave it twice,” according to the ruling.

But even setting that aside, the bottom line is that the PUC has a duty to act in the public interest, the justices said. The Hawaii constitution says the PUC must balance technical, economic, environmental and cultural considerations in its decision making.

Protecting ratepayers by considering price impacts is central to the PUC’s public interest obligations, the justices said.

Justice Michael Wilson issued a separate concurring opinion, noting the climate emergency Hawaii declared in 2021 and the PUC’s role in helping to confront it.

“It has the daunting task of saving Hawaii from the existential threat of climate change by reducing carbon emissions from Hawaii’s energy system. In so doing, the PUC protects the constitutional right of Hawaii’s people to a life-sustaining climate system,” Wilson wrote.

Eucalyptus trees would have been chipped and burned as the fuel source for the biomass plant. (Cory Lum/Civil Beat/2022)

Monday’s ruling was a resounding legal victory for Hu Honua’s opponents.

Henry Curtis, executive director of Life of the Land, saw the ruling as a birthday gift: he turned 70 on Sunday.

Curtis has fought the proposed tree-burning plant for more than a decade, saying all along that it made no sense from an environmental or consumer protection point of view.

Life of the Land sued in 2017 after the PUC issued Hu Honua a power purchase agreement, saying the commission didn’t adequately consider the massive amount of air pollution it would emit.

The case went to the Supreme Court which ordered the PUC to take greenhouse gas emissions into account.

Attorney Chase Livingston, who represented Life of the Land in the latest appeal, praised Curtis for keeping the matter burning before state regulators and the courts.

“Had it not been for the tireless efforts of Life of the Land and its executive director, Henry Curtis, these important issues would not have received the careful scrutiny from the PUC and the Supreme Court that is reflected in today’s opinion,” Livingston said in an email.

Marco Mangelsdorf, a solar energy entrepreneur on the Big Island, was elated by Monday’s ruling.

“Today’s decision would seem to deliver an unmistakable kill shot to the notion of over-priced power contracts that rely on burning something in Hawaii,” Mangelsdorf said by email. “The court absolutely did the right thing for Big Island ratepayers and all Hawaii residents.”

Hawaiian Electric Co., the utility that would purchase electricity from Hu Honua and add it to the island’s grid, had a muted response.

“We’re reviewing the decision,” said Jim Kelly, vice president of government and community relations.

Kelly wouldn’t speculate on whether his company is bracing for a lawsuit from Hu Honua.  

Hu Honua filed a federal lawsuit against Hawaiian Electric after the utility terminated an original power purchase agreement with the biomass company in 2016 over missed deadlines.

Hu Honua sought over $1 billion in damages. In an amended complaint in 2018, Hu Honua claimed that the utility could be on the hook for some $1.6 billion plus attorney’s fees for alleged anti-trust violations, breach of contract and other claims.

The two sides reached a confidential settlement and Hu Honua agreed to put its federal lawsuit on hold while Hawaiian Electric sought a power purchase agreement with Hu Honua from the PUC, according to a filing with the PUC.

Now that the court has upheld the PUC’s rejection of the energy contract, Curtis said he would not be surprised to see that federal litigation resume in some form.

In its statement on Monday, Hu Honua did not refer to the federal lawsuit. The company said is it “currently evaluating its options going forward.”

Read the court’s ruling and Justice Wilson’s concurring opinion here:

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