HECO Palm Oil Plan Hits Snag -- No Oil?

Apparently HECO is coming up dry when it comes to their mainland supplier of so-called “green fuel”–Imperium–for their new $164-million dollar biodiesel power plant on Leeward Oahu.

Keep in mind that when they say “green fuel” and “biodiesel,” what they are actually talking about is palm oil. Yes, that stuff that is the most significant cause of rainforest loss in Malaysia and Indonesia, and associated with human rights violations and worker exploitation. THAT green fuel.

From Pacific Business News:

Hawaiian Electric Co. is seven months away from starting up Oahu’s first new power plant in nearly 20 years, but its “green” fuel supplier may not deliver.

The plant is on schedule to be fired up in August at Campbell Industrial Park. HECO had expected its first shipment of biodiesel to run the plant on Jan. 1.

But getting that clean-burning fuel — a requirement regulators had imposed in approving the project — is proving to be more difficult than expected.

Despite the original January delivery date, the state Public Utilities Commission has yet to approve HECO’s contract with Seattle-based Imperium Renewables to provide between five million and 12 million gallons of biodiesel annually through 2011.

Financial troubles that have hobbled Imperium over the past year are raising red flags at the PUC, which has asked HECO for a contingency plan should the deal fall through.

Meanwhile, a challenge by a local environmental advocacy group that questioned the supply contract is further prolonging the process.

But HECO is still moving forward with construction of the $164 million plant, where workers this week completed pouring the cement foundation. The huge 110-megawatt generator for the plant, which will act as a backup power source during peak hours or in the event of a power outage, has already been delivered to the site.

PUC Chairman Carlito Caliboso told PBN the commission is giving HECO until Jan. 30 to amend its biodiesel supply contract with Imperium, which originally planned to build a biodiesel production plant down the street from HECO’s new power station.

Now, Imperium will have to ship biodiesel from its plant in Grays Harbor, Wash., HECO spokesman Peter Rosegg said.

Although HECO stresses its confidence in Imperium to make good on the contract, Rosegg said the utility has alternative suppliers in mind.

“We know there are other potential suppliers,” he said. “For example, we recently received bid proposals for biodiesel for Maui Electric Co. to use in performing operational tests.”

Imperium spokesman John Williams declined to comment.

The utility obviously wants the plant to go online as scheduled since it has invested millions up front and cannot pass those costs on to customers until it is operational.

In a worst-case scenario, the new plant’s generators are “fuel flexible,” meaning they can run on traditional diesel, Rosegg said.

But the PUC said HECO would need to resubmit paperwork in order to run it on anything but clean-burning biofuel, and essentially start the approval process from scratch.

“The plant had been approved under the condition that it be 100 percent biofuel,” Caliboso said. “I know that physically it can be run on regular oil, but that was not part of the approval. HECO would need to ask for permission to run it on anything else.”

The supply contract challenge by environmental group Life of the Land, a frequent HECO critic that has opposed the plans for the Campbell plant from the beginning, was granted a hearing in October.

At that Oct. 6 hearing, Caliboso, PUC commissioner Leslie Kondo and its chief legal counsel, Stacey Djou, repeatedly questioned HECO executives about a contingency plan from Imperium.

“The fact that there is a missing contingency plan, technically Imperium is in default,” Djou said. “Without that, how do we know this contract is just, reasonable, and in the public interest?”

Caliboso said if HECO’s amendments to the supply contract are “significant,” the review process will take even longer.

“We haven’t seen the amendments, but at this stage in the proceeding, if there are significant contract amendments made, it likely will require further hearing on the case,” Caliboso said.