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Hawaiian Electric wins $638.5M contract to operate 12 Army installations

Hawaiian Electric Co. Inc. won a 50-year contract to own, operate and maintain the electric distribution system at the U.S. Army's 12 installations on O'ahu, according to an Oct. 3 Form 8-K filing.

The installations include those in Schofield Barracks, Wheeler Army Airfield, Tripler Army Medical Center, Fort Shafter and Army housing areas.

Valued at $638.5 million, the contract was awarded to the Hawaiian Electric Industries Inc. subsidiary following a competitive process that started in 2016. The contract is pursuant to the Army's program to privatize its electric system on O'ahu.

If approved by the state Public Utilities Commission in 2020, the contract will allow a one-year transition period and Hawaiian Electric will take ownership, operation and maintenance of the system in late 2021 for a 50-year term.

Hawaiian Electric will implement initial capital upgrade in the first six years of the contracts and will replace aging infrastructure over the 50-year period. The Army will pay Hawaiian Electric a monthly utility services charge for improvements and maintenance of the system, in addition to its regular monthly electricity bill.

Hawaiian Electric will purchase the distribution system for $16.3 million and will pay the Army through a monthly credit against the monthly utility services charge.