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Developers of a wind farm set to break ground later this year in Kahuku are boasting of its low-priced energy, but Oahu residents will still be paying six times the national average for the wind energy produced from the 10 turbines.

Hawaiian Electric Co. has agreed to pay Champlin/GEI Wind Holdings, based in Santa Barbara, Calif., an average of 15 cents per kilowatt hour for the wind energy produced at the Na Pua Makani wind farm under a 20-year contract.

By contrast, the average national price of wind energy fell to a record low of 2.5 cents per kwh in 2013, according to the latest U.S. Department of Energy .��This is down from a 15-year peak of about 7 cents per kwh in 2009.

Even in Western states, where wind pricing has been the highest, the selling price in 2013 was averaging 6 cents per kwh.

Mike Cutbirth, CEO of Champlin, said that the wind farm’s pricing was higher than mainland prices because of higher shipping and construction costs.

“I think it’s a competitive price,” he said, noting that it’s lower than other renewable energy projects that have recently secured contracts with HECO.

“We had sought to have the Legislature pass the financial disclosure law to require independent power producers to show actual costs and profit margins. That never passed.” — Jeff Ono, Consumer Advocate

But the pricing raises questions about whether HECO is negotiating the best prices for its customers and whether state regulators have the necessary information to assess wind prices.

Last week, the Hawaii Public Utilities Commission approved the wind farm while simultaneously exempting it from the competitive bidding process designed to ensure that consumers are getting the best prices.

Meanwhile, Jeff Ono, Hawaii’s Consumer Advocate, whose job it is to look out for the interests of consumers and is a party to PUC proceedings, said he still lacks adequate financial information from developers to assess renewable energy prices.

In the past, the commission��unsuccessfully advocated for legislation that would give it access to confidential business information to help it make decisions about whether to approve a renewable energy project.

“We had sought to have the Legislature pass the financial disclosure law to require independent power producers to show actual costs and profit margins,” said Ono. “That never passed.”

While the PUC and Consumer Advocate regulate Hawaiian Electric Co. and have access to the company’s financials, they don’t wield the same regulatory authority over energy companies that are negotiating contracts with the utility.

“It’s a problem,” said Ono.

Pricing for Other Wind Farms

The pricing for the Na Pua Makani wind farm is significantly lower than the pricing of recently constructed wind projects. The average pricing for the Kahuku and Kawailoa wind farms on Oahu and��the Auwahi and Kaheawa II wind farms on Maui is 20 cents to 23 cents per kwh, according to PUC filings. ��

Wind energy developers have said in the past that land, shipping and development costs have driven up prices. HECO has also dumped excess wind energy, driving up wind energy prices.

Remarkably, one of Hawaii’s first successful wind farms, First Wind’s Kaheawa I, which went online in 2006, had pricing that started��at 8 cents per kwh. However, 30 percent of the price was linked to HECO’s “avoided energy” costs — or the cost it would take to produce that same amount of energy from��fossil fuels. So when oil prices go up, so does the wind farm’s energy pricing, and vice versa.

When Hawaii implemented the 2008 Hawaii Clean Energy Initiative, which set aggressive renewable energy targets, state policymakers stressed the need to wean the state off of expensive oil, which out of the local economy annually.

The combination of Hawaii’s high electricity rates, the falling prices of renewable energy and Hawaii’s ample sources of wind, solar and geothermal, have made the state an ideal market for clean energy projects.

But energy developers, instead of competing against one another, or average market prices, have instead been competing against the cost of oil in Hawaii, impeding the state’s goal of lowering consumer electricity rates, energy developers have told Civil Beat.

In��seeking PUC approval of the Na Pua Makani wind farm contract, HECO touted its favorable pricing compared to the��cost of producing energy from oil. The wind farm pricing is 34 percent lower than the October 2013 cost of energy produced from fossil fuels, HECO noted in PUC filings.��

Only Slightly Cheaper Than Current Oil Costs

Sen. Gil Riviere, who represents the North Shore community, noted that in its final decision the PUC didn’t compare the wind farm pricing to today’s oil costs. As of December, it cost HECO 15.8 cents per kwh to produce energy from oil, making the Na Pua Makani pricing only slightly more favorable.

Developers of the Na Pua Makani wind farm are also in the process of seeking a lucrative federal tax incentive, which would cover 30 percent of the project’s capital investment costs — or the developer can elect to receive a payment of 2.3 cents per kilowatt hour of generated electricity for 10 years.

While past��renewable energy��contracts have included two different prices, depending on whether a developer secures the federal tax credit, the Na Pua Makani wind farm’s price will remain the same regardless of whether Champlin secures the federal tax credit, said Cutbirth.

PUC Chair Mina Morita declined to respond to Civil Beat’s questions about the wind farm’s pricing.

“The commission has no comment on these matters,” Thomas��Gorak, the PUC’s chief counsel, told Civil Beat by email.