Hilo’s Energy Landscape Transforms with Hamakua Plant Sale

News Summary

Hilo’s energy scene faces a significant shift as Hawaiian Electric Industries Inc. sells the Hamakua Energy Plant to Harbert Management Corp. The sale, finalized on March 10, 2025, follows a tumultuous year for HEI’s subsidiary, which experienced substantial operational losses. The change aims to enhance sustainability and optimize power production as Harbert steps in, promising improvements amidst challenges in Hawaii’s energy transition. The future of local energy dynamics now rests on how well Harbert navigates this new frontier.

Hilo’s Power Mix Just Got a Shaky Makeover!

Hilo residents have felt the wind of change recently with the sale of the Hamakua Energy Plant — an essential player in the local energy landscape. Hawaiian Electric Industries Inc. (HEI) has sold its 60-megawatt facility, a prominent power generation hub, to Harbert Management Corp., based out of Alabama. The deal was finalized on March 10, 2025, but the financial details of this sale remain undisclosed.

What Led to the Sale?

HEI’s CEO, Scott Seu, hinted at some significant shifts within the company. The sale of Hamakua Energy is part of a broader strategy to streamline operations and focus on their core utility business. The decision comes following a challenging year for the subsidiary, Pacific Current, which faced an astounding $55 million operating loss in 2024 – a shocking jump from just a $3 million loss the year before.

A Plant with a Tumultuous Recent History

The Hamakua Energy Plant, which had been offline since February 2024, wasn’t just a backdrop for Hilo’s energy supply; it was the second-largest power production site on the island! However, the facility ran into serious trouble. Factors behind the hefty losses included a $35.2 million impairment loss on some of its assets and a popular headache — a $4.9 million repair bill due to operational hiccups linked to contaminated fuel affecting its turbines. Ouch!

HEI has been the proud owner of the Hamakua Energy Plant since 2017, acquiring it from a private equity firm along with a commitment to supply power through a contract that was supposed to last until 2030. But now, with Harbert stepping in, what does the future look like for this energy icon?

Who is Harbert Management Corp.?

Harbert is no stranger to the energy industry; in fact, they’ve been around the block with other power generation facilities, including a stake in the 208-megawatt Kalaeloa Partners LP on Oahu since 1997. Their experience could be a game-changer for Hilo, as they plan to contribute positively to Hawaii’s shift to renewable energy, aiming to bolster local power production while optimizing sustainable practices.

Moving On with a Dash of Funding Magic

Taking a close look behind the financial curtain, HEI recently made headlines for selling 54 million shares of its stock for a whopping $558 million and 90.1% of its stake in American Savings Bank in a $405 million deal last New Year’s Eve. This rush of capital was primarily meant to address obligations stemming from involving $4 billion tort litigation linked to the recent Maui wildfire. Behind the scenes, HEI is clearly navigating challenging waters – focusing on restructuring while balancing hefty expenses.

Looking Ahead

As for the folks in Hilo? Many are questioning how this energy shake-up will impact their daily lives and power usage. While the sale is not expected to significantly alter HEI’s financial trajectory, the transition introduces new dynamics. The hope remains that Harbert will carry the baton in a way that not only smooths out operational kinks but also jumps on the green energy agenda.

In summary, the sale of the Hamakua Energy Plant is a pivotal moment for both HEI and Hawaii Island’s energy scene. As the island moves closer to achieving cleaner energy solutions, the transition under new management might pave the way for a more sustainable future. Buckle up, Hilo, it’s going to be an interesting journey!