SEC Form 8K filed by HECO September 4, 2014
On August 27, 2014, Chevron Products Company, a division of Chevron U.S.A. Inc. (Chevron), and Hawaiian Electric Company, Inc. (Hawaiian Electric) entered into a first amendment (Amendment) to the Low Sulfur Fuel Oil Supply (LSFO) Contract, which terminates on December 31, 2016 and may automatically renew for annual terms thereafter unless earlier terminated by either party. The Amendment reduces the price of fuel above certain volumes, allows for increases in the volume of fuel, and modifies the specification of certain petroleum products supplied under the contract. In addition, Chevron agreed to supply a blend of LSFO and ultra-low sulfur diesel as soon as January 2016 (for supply through the end of the contract term, December 31, 2016) to help Hawaiian Electric meet more stringent federal Environmental Protection Agency air emission requirements known as Mercury and Air Toxics Standards.
The Amendment is subject to approval of the Public Utilities Commission of the State of Hawaii, and can be terminated if approval is not received by April 15, 2015.
On August 27, 2014, Chevron and Hawaiian Electric, Maui Electric Company, Limited and Hawaii Electric Light Company, Inc. entered into a third amendment to the Inter-Island Industrial Fuel Oil and Diesel Fuel Supply Contract, which amendment extended the term of the contract through December 31, 2016 and may automatically renew for annual term thereafter unless earlier terminated by either party.
Item 1.02 Termination of a Material Definitive Agreement
On August 28, 2014, Hawaiian Electric provided notice to Hawaiian Independent Energy LLC (HIE) that it will not renew the LSFO contract that was assigned to HIE from Tesoro Hawaii Corporation. The term of the contract is through December 31, 2014, and renews automatically unless terminated by either party.
Par Petroleum Corporation Responds to HECO Announcement
News Release from Par Petroleum September 5, 2014
HOUSTON — Par Petroleum Corporation (NYSE MKT: PARR) announced today that one of Hawaii Independent Energy (“HIE”)’s supply contracts with Hawaiian Electric Company, Inc. (“HECO”) would not be renewed when it expires in December.
“HECO’s decision to discontinue its fuel supply agreement with HIE is unfortunate. However, we intend to remain competitive in this market, and we are aggressively pursuing other outlets for our products,” said William Monteleone, Par Petroleum Corporation’s Chief Executive Officer. “We recently announced a one-year contract to supply the military with aviation turbine fuel commencing October 1, 2014 with estimated revenue of more than $160 million. Additionally, the pending acquisition of Mid-Pac, which we believe will close by year-end, will add an estimated 4,000 barrels per day of gasoline.”
“We believe these actions demonstrate our continued commitment to competing for business in Hawaii and we look forward to a long and successful relationship,” concluded Mr. Monteleone.
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PARR Form 8K Filed September 5, 2014:
On September 5, 2014, the Company issued a press release responding to the recent announcement by HECO that it would not renew one of its contracts with Hawaii Independent Energy ("HIE"), Par's wholly owned subsidiary, when the contract expires on December 31, 2014.
Although the HECO contract is significant to HIE, the contract represented less than 8% of the Company's refining segment revenue for the first six months of 2014. The HECO contract contains confidentiality provisions which restrict the disclosures that the Company can make. However, the HECO contract was entered into in the ordinary course of business and represents only a portion of HIE's low sulfur fuel oil sales. The Company continues to discuss the situation with HECO.
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