The Public Utilities Commission has rejected a proposal to build a biofuels facility in Kau on the Big Island. 

The developer, Aina Koa Pono, hoped to use plant feedstocks to produce drop-in biofuel for the electric utilities on the Big Island, Maui and Oahu. But the PUC said that the fuel would be too expensive, in a decision issued on Monday.

“The contract price for the AKP-produced biofuel is excessive and not cost-effective at present and for the foreseeable future, and thus, is unreasonable and inconsistent with the public interest,” commissioners wrote. 

In addition to the contract price, which would raise electricity rates, the project would increase Hawaii Electric Light Co.’s costs for dispatching its Keahole generating units, according to the PUC.

This is the second time that the PUC has rejected the project. In 2011, regulators ruled that the fuel was too expensive. Aina Koa Pono renegotiated the price of the fuel, shaving off $125 million of the projected cost to ratepayers, and HELCO resubmitted the contract to the PUC last year.

But the final price still proved too high for the PUC. 

UPDATE: In a statement issued Thursday, HELCO President Jay Ignacio said that despite the PUC’s rejection of the contract, the ruling indicates that the PUC still supports biofuels as part of Hawaii’s renewable energy portfolio.

“The Aina Koa Pono contract is one of many the Hawaiian Electric Companies have negotiated with renewable energy projects to help reduce Hawaii’s  dependency on imported fossil fuels; create economic opportunities in Hawaii by supporting local agriculture and energy independence; and stabilize and lower electricity costs for our customers,” Ignacio wrote. “The Public Utilities Commission has approved other biofuel and biomass contracts and this decision makes it clear they still support this renewable energy strategy.”

Photo: Aina Koa Pono’s proposed biofuel plant. (Courtesy, Aina Koa Pono)

— Sophie Cocke