Lawyers for the company that had its three solar farm contracts terminated by Hawaiian Electric Co. said state regulators should investigate whether NextEra Energy Inc., the firm looking to buy HECO’s corporate parent, influenced the utility’s decision.
In a 117-page filing Tuesday with the state Public Utilities Commission, legal counsel representing SunEdison Inc. said HECO did not have the right to terminate the contract and that the decision raises questions about whether HECO is favoring utility-owned generation as well as NextEra Energy involvement.
HECO filed a formal letter two weeks ago to end its contract with SunEdison for three utility-scale solar facilities on Oahu totaling 112 megawatts. The solar farms were set to go online by the end of the year and would have sold solar power to HECO for approximately 14 cents a kilowatt-hour for the duration of their 22-year life span.
PUC Chairman Randy Iwase chastised the electrical utility last week because the state would miss out on such a large amount of low-cost renewable energy — a blow to the state’s 100 percent renewable goal.
HECO said it ended the contracts because of SunEdison’s financial difficulties. The Maryland Heights, Mo.-based solar and wind power provider has lost 92 percent of its market value in the past year.
SunEdison was selling the three Oahu solar farms and other projects to pay off $336 million of debt. The company said it reached a sale agreement in December with D.E. Shaw group, Madison Dearborn Capital Partners IV LP and Northwestern University.
In the filing, the proposed buyer of SunEdison’s three utility-scale solar projects, D.E. Shaw, said it can have the 112 megawatts of solar online before the end of the year.
The three solar-energy facilities include 50-megawatt Kawailoa Solar, to be built in Haleiwa; 15-megawatt Lanikuhana Solar, to be built southwest of Mililani; and 47-megawatt Waiawa PV, being built in Waipio.
“I want to reiterate the D.E. Shaw group’s strong support for these projects and ask the PUC to encourage HECO to rescind its recent termination,” said Bryan Martin, managing director at D.E. Shaw & Co., in the Tuesday letter. “We firmly believe these projects can be built in 2016 if HECO changes course promptly.”
D.E. SHAW WAS one of the original owners of the three facilities before SunEdison purchased the facilities last year.
“In light of SunEdison’s financial issues over recent months … we signed an agreement to acquire the projects,” Martin said. “While it it is true that SunEdison’s financial difficulties made these projects more complicated, we do not believe that SunEdison’s financial woes made these projects impossible to finance or construct under new ownership.”
One reason HECO canceled the projects was that SunEdison had missed deadlines. D.E. Shaw said it’s common for companies to request extensions on interim milestones but that SunEdison remained committed to completing the project on time.
“WE HAVE NEVER seen a utility cancel a power purchase agreement because a project missed interim milestones,” Martin said.
Yamamoto Caliboso, a law firm representing the solar projects, said the PUC should investigate whether NextEra may have directed HECO to terminate the contracts. Former PUC Commissioner Carlito P. Caliboso is a partner at the firm.
“Finally, as the Commission is well aware, HECO has also disclosed and confirmed in the merger proceedings that HECO must obtain consent from NextEra Energy Inc. for major decisions such as terminating a power purchase agreement,” Yamamoto Caliboso said.
“This would potentially explain HECO’s motivation to terminate the … low cost PPAs (power purchase agreements) at this late stage when the Projects are so close to being completed, which from the perspective of its customers’ interests seems inexplicable.”
SunEdison said it has invested $42 million in the three solar projects. One of the projects, Waiawa PV, already was under construction, with workers installing 11,000 metal structural posts on 150 acres, laying nearly 68,000 feet of underground wiring and mounting 1,240 solar panels.
