The judges said state regulators had a right to question environmental issues and consumer costs.
In a sharp rebuke to Hu Honua, the Hawaii Supreme Court has dismissed the company’s appeal against a decision by the Public Utilities Commission, saying the state was correct in rejecting the biomass project’s bid to operate on the Big Island.
The court ruled unanimously 5-0 on Monday, saying it found no error in the commission’s conclusion that it was not in the public’s best interest to fire Hu Honua.
The main disadvantages of Hu Honua are the 8 million tons of air pollution it would emit over 30 years from burning eucalyptus and other trees, as well as the higher energy user costs that consumers would have to pay, reducing their monthly bills by about 10, $97 increased.
The commission “has a duty to act in the public interest,” and it did so last May by defeating Hu Honua’s long-awaited PPA request to sell power to Hawaiian Electric by a score of 2-1, the court found.
Hu Honua issued a statement late Monday afternoon saying she was disappointed with Monday’s decision and viewed it as a setback for Hawaii’s transition to renewable energy.
Company President Warren Lee said in the statement that the $520 million facility is fully constructed and denying it will increase “the likelihood of grid stability and further power outages.”
Hu Honua’s lawyers had argued that the PUC erred in its May 23 decision by exceeding the scope of a previous Supreme Court pre-trial detention. They said the only issue the PUC should have considered was greenhouse gas emissions, not other factors like cost to consumers.
They argued that the PUC violated Hu Honua’s due process rights by finding facts off the list, applying a false standard of proof and subjecting the company to a carbon neutrality standard.
Hu Honua’s legal team, led by Honolulu Attorney Bruce Voss, argued that the PUC misunderstood its mandate and applied unfair standards to Hu Honua.
The judges disagreed.
“Based on the plain language of the warrant, the PUC was not only free to review the pricing, it also had to review the reasonableness of the project’s pricing in light of its greenhouse gas emissions,” the court wrote.
Voss declined to discuss details of the case.
Hu Honua’s insistence that the PUC should not take into account the price consumers have to pay for their electricity is “difficult to understand”.
Where Hu Honua’s lawyers got this idea from “remains a mystery”.
“Our roadmap was simple and we gave it twice,” the decision reads.
But even putting that aside, the bottom line is that the PUC has an obligation to act in the public interest, the judges said. The Hawaiian Constitution states that the PUC must balance technical, economic, environmental, and cultural considerations in its decision-making.
Protecting ratepayers by addressing price implications is central to the PUC’s public interest obligations, the judges said.
Judge Michael Wilson issued a separate affirmative opinion, noting the climate emergency declared by Hawaii in 2021 and the PUC’s role in addressing it.
“It has the daunting task of saving Hawaii from the existential threat of climate change by reducing CO2 emissions from Hawaii’s energy system. In doing so, the PUC protects the constitutional right of the people of Hawaii to a life-sustaining climate system,” Wilson wrote.
Monday’s ruling was a resounding legal victory for Hu Honua’s opponents.
Henry Curtis, managing director of Life of the Land, saw the verdict as a birthday present: he turned 70 on Sunday.
Curtis has opposed the proposed tree incinerator for more than a decade, all the while saying it doesn’t make sense from an environmental or consumer perspective.
Life of the Land sued Honua in 2017 after the PUC issued a power purchase agreement to Hu Honua, saying the commission failed to adequately account for the massive amount of air pollution it would emit.
The case went to the Supreme Court, which asked the PUC to take greenhouse gas emissions into account.
Attorney Chase Livingston, who represented Life of the Land in the most recent appeal, commended Curtis for keeping the matter going before state regulators and the courts.
“Without the tireless efforts of Life of the Land and its Executive Director, Henry Curtis, these important issues would not have received the thorough scrutiny by 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 delighted with Monday’s decision.
“Today’s decision seems to deliver an unequivocal death shot to the notion of overpriced electric contracts based on something being burned in Hawaii,” Mangelsdorf said via email. “The court did absolutely the right thing for Big Island taxpayers and all residents of Hawaii.”
Hawaiian Electric Co., the utility that would buy electricity from Hu Honua and feed it into the island’s grid, reacted cautiously.
“We are reviewing the decision,” said Jim Kelly, vice president of government and community relations.
Kelly didn’t want to speculate on whether his company is preparing for a lawsuit from Hu Honua.
Hu Honua filed a federal lawsuit against Hawaiian Electric after the utility canceled an original power purchase agreement with the biomass company in 2016 due to missed deadlines.
Hu Honua sought over $1 billion in damages. In an amended 2018 lawsuit, Hu Honua claimed the utility could be on the hook for around $1.6 billion plus attorneys’ fees over alleged antitrust violations, breaches of contract and other claims.
The two sides reached a confidential settlement and Hu Honua agreed to stay his federal lawsuit while Hawaiian Electric sought a power purchase agreement with Hu Honua of the PUC, according to a filing with the PUC.
Now that the court has upheld the PUC’s denial of the energy contract, Curtis said he wouldn’t be surprised if that federal litigation resumes in some form.
In his statement Monday, Hu Honua made no reference to the federal lawsuit. The company said it is currently evaluating its options going forward.
Read the court ruling and Judge Wilson’s concurring opinion here: