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PUC ruling throws open bidding for Molokai wind

The attempt by Hawaiian Electric Co. to assign the troubled Molokai portion of the Lanai-Molokai Big Wind project to Castle & Cooke has been rejected by the Public Utilities Commission.

On Thursday, the commission ordered HECO to hold a bidding process within 90 days for the proposal to generate 200 megawatts of wind electricity on Molokai for delivery to Oahu. At the same time, it advanced the HECO-Castle & Cooke half of Big Wind that would be generated on Lanai, though many more steps lie ahead before the project can break ground.

The process that became Big Wind started out more modestly when HECO asked for 100 megawatts to be generated on Oahu. The PUC later allowed HECO to sidestep the usual competitive bidding process and to negotiate directly with Castle & Cooke for 200 megawatts on Lanai and with First Wind, the developer of the Kaheawa wind farm above Maalaea, for a like amount on Molokai.

Castle & Cooke, which owns most of Lanai, had no difficulty, but First Wind was unable to come to an agreement with Molokai Ranch. After First Wind was frozen out, Molokai Ranch announced it was working with Pattern Energy, and HECO announced that Castle & Cooke would take over at least three- quarters of the Molokai share.

Last week, the PUC allowed Life of the Land and Maui County to intervene on the narrow issue of who will pay for the technical studies, although both parties indicated that they hoped to widen the question.

Thursday’s order does appear to widen the question, since the request-for-proposal process would allow would-be bidders to submit proposals that diverge from Castle & Cooke’s or Pattern’s ideas.

Hermina Morita, the PUC chairwoman, said: “Part of the PUC’s role in clean energy development in Hawaii is to ensure an open and fair process.

. . . However, (HECO and Castle & Cooke’s) proposed assignment of 200 megawatts to Molokai Ranch goes beyond the scope of the PUC’s waiver from the original competitive bid process.”

HECO is under pressure because it must meet state renewable energy minimums, and in an announcement, it said the PUC “acknowledges there is value” in a multi-island solution.

This proposition has generated opposition on Lanai and Molokai, where organized groups have objected to surrendering their landscape to feed power to Honolulu, and it has raised questions from the county, which is not opposed to a multi-island network but says it wants to be sure the community benefits on the small islands will balance the impacts.

The new order says proposals can aim at sites on any island within reasonable reach of Oahu, or on Oahu.

The review said that the original HECO agreement never contemplated giving Castle & Cooke an assignment right or even imagined that the Lanai landowner would be a developer on Molokai, where it has no land.

The open-ended new request for proposals merely asks for 200 megawatts of renewable energy – not necessarily wind – to be delivered to Oahu. That would suit Maui energy coordinator Doug McLeod, who said he believes that since Big Wind started blowing in 2009, solar has moved to a position that is very close in cost.

The new order does not give final approval to the 200 megawatts of Lanai wind, since neither a power purchase agreement with HECO nor a community benefits package has been approved.

Land use approvals also will be required.