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Hawaii Regulators Questioning SunEdison Solar Electricity Contract Cancellations

Whether or not a company happens to be creating a clean solar electricity footprint, it better step tenderly if it sports an ailing financial report card and delays showing its numbers.

State utility Hawaiian Electric made a decision to terminate the PPA with SunEdison over three proposed solar farms to be located in Hawaii’s third largest island, Oahu. Rationale? The troubled renewables firm failed to meet several financing deadlines, spurring Hawaiian Electric to rescind the contract in February.

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Now the Hawaiian Public Utilities Commission (HPUC) is said to be  stepping into the regulatory arena. According to PV-Tech, the HPUC will be investigating Hawaiian Electric’s decision to cancel project contracts with SunEdison.

This was evidently reflected in Hawaiian Electric’s decision to terminate the PPA between the two countries over three proposed solar farms to be located in Hawaii’s third largest island, Oahu. The utility pulled out of the contracts in February, citing SunEdison’s mounting financial woes as the primary reason. After the troubled renewables firm failed to meet several financing deadlines, Hawaiian Electric sent February notices to undo the contract.

SunEdison may have experienced a head-turning year in 2015; touting itself as the world’s only renewable energy company to offer solar, wind, and storage, while expanding over six continents. But matters have taken a bad turn since then:

  • SunEdison has seen its share price plunge in the last year on growing concerns about the firm’s ability to generate cash and pay down debt. (Current share price is $0.59)
  • Accompanying this fall in market value, the company twice postponed releasing its 10-K filing for 2015 financial performance. On March 16th, it provided this statement:

“The scope of work required to finalize the Company’s financial statements included in the 2015 Annual Report on Form 10-K has expanded due to the identification by management of material weaknesses in its internal controls over financial reporting, primarily resulting from deficient information technology controls in connection with newly implemented systems. Because of these material weaknesses, additional procedures are necessary for management to complete the Company’s annual financial statements and related disclosures, and for the Company’s independent registered accounting firm, KPMG LLP, to finalize its audits of the Company’s annual financial statements and the effectiveness of internal controls over financial reporting as of December 31, 2015.  In addition, the investigation by the Audit Committee, previously disclosed by the Company on Form 12b-25 filed with the Securities and Exchange Commission on February 29, 2016, concerning the accuracy of the Company’s anticipated financial position previously disclosed to the Company’s board of directors, has not yet been finalized.

“To date, the additional procedures performed as a result of the material weaknesses identified and the investigation by the Audit Committee have not resulted in the identification of any material misstatements or restatements of the Company’s audited or unaudited consolidated financial statements or disclosures for any period previously reported by the Company.”

The HPUC report criticized Hawaiian Electric’s lack of motivation to advance the projects, calling into question whether terminating the contracts would be in the interest of its customers.

In the meantime, SunEdison’s survival and financial viability appears at stake. On April 4th, Fox Business has speculated on a potential bankruptcy filing:

“Solar-energy company SunEdison plans to file for bankruptcy protection in coming weeks, a dramatic about-face for a company whose market value stood at nearly $10 billion in July. 

“The company is preparing a chapter 11 filing and is in talks with two creditor groups to obtain a loan to fund its operations during the process, according to people familiar with the matter. Creditors are likely to take control of the company and its portfolio of power projects, the people said.”

We will update readers with news about this situation.

Image via Shutterstock




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