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| The economics of `Aina Koa Pono's plan to grow biomass and refine biofuel in Ka`u are topics of a recent entry by Richard Ha on his blog hahaha.hamakuasprings.com. |
Ha discusses the economics of project. He says, “HECO is spending hundreds of thousands of dollars on public relations to convince us that it is trying to lower people’s rates – when, in secret, it appears to be doing exactly the opposite.”
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| Richard Ha |
Ha questions the conclusion that the average Hawai`i ratepayer’s electricity bill would increase by only about $1 per month. According to Ha, HECO is seeking approval to pay `Aina Koa Pono $200 per barrel of biofuel and would pass on any extra cost, beyond what oil actually costs at the time, to its ratepayers on the Big Island and O`ahu.
“HECO has kept that $200 per barrel price secret – they are still keeping it secret – but the Big Island Community Coalition folks figured out the price and how the ‘$1 per month rate increase’ was determined,” Ha says. “Using the Energy Information Agency’s Annual Energy Outlook (AEO-2012), one can see that HECO is using the highest price scenario, which projects an oil price close to $180/barrel in 2015. In the AKP discussion, it was said that the price of oil would exceed the actual price projected at the end of the period.
“We can see that the line hits $200 per barrel in 2035. Since they assume that oil will be $180 in 2015, they can therefore say that the difference (between the actual and projected price) would be very small, Hence, an increase of only perhaps $1 per month for the average ratepayer. However, it follows that if the actual price of oil is much lower than $180 per barrel, ratepayers will be paying the difference between that amount and $200. What if the actual cost of oil in 2015 is $120/barrel? That would cause rates to go up much more than $1 per month –especially for high-power users.”
“HECO has kept that $200 per barrel price secret – they are still keeping it secret – but the Big Island Community Coalition folks figured out the price and how the ‘$1 per month rate increase’ was determined,” Ha says. “Using the Energy Information Agency’s Annual Energy Outlook (AEO-2012), one can see that HECO is using the highest price scenario, which projects an oil price close to $180/barrel in 2015. In the AKP discussion, it was said that the price of oil would exceed the actual price projected at the end of the period.
“We can see that the line hits $200 per barrel in 2035. Since they assume that oil will be $180 in 2015, they can therefore say that the difference (between the actual and projected price) would be very small, Hence, an increase of only perhaps $1 per month for the average ratepayer. However, it follows that if the actual price of oil is much lower than $180 per barrel, ratepayers will be paying the difference between that amount and $200. What if the actual cost of oil in 2015 is $120/barrel? That would cause rates to go up much more than $1 per month –especially for high-power users.”
Ha also says that `Aina Koa Pono’s proposed process is “extremely energy-intensive and expensive. It would make electricity to make microwaves to vaporize the cellulose to get the liquid and then take the pyrolysis oil, refine it to make it burnable, and then haul it down to Keahole in tanker trucks to make steam. Why should the ratepayer pay for all that?”
Ha contends that making cellulosic biofuels “are not yet a cost-effective technology.” He reports that in 2010, cellulosic biofuel companies on the mainland needed to buy their feedstock for $45 per ton. But because farmers were earning $100 per ton for hay, the biofuel firms received a $45 per ton subsidy. “I asked how much AKP expected to pay for feedstock, and the AECOM Technology Corporation consultant said between $55 and $65/ton,” Ha said. “The problem there is that Hawai`i farmers have been earning $200/ton for hay for 10 years now.”
Ha said, “It’s also important to consider that locking ourselves into a 20-year contract now would preclude lower cost alternatives. Geothermal, for example, is the equivalent of oil at $57 per barrel. Ocean thermal has the possibility of being significantly lower in price than $200 per barrel oil. LNG is on the radar, and so is biomass gasification. Who knows what else would come up in 20 years?”
Ha contends that making cellulosic biofuels “are not yet a cost-effective technology.” He reports that in 2010, cellulosic biofuel companies on the mainland needed to buy their feedstock for $45 per ton. But because farmers were earning $100 per ton for hay, the biofuel firms received a $45 per ton subsidy. “I asked how much AKP expected to pay for feedstock, and the AECOM Technology Corporation consultant said between $55 and $65/ton,” Ha said. “The problem there is that Hawai`i farmers have been earning $200/ton for hay for 10 years now.”
Ha said, “It’s also important to consider that locking ourselves into a 20-year contract now would preclude lower cost alternatives. Geothermal, for example, is the equivalent of oil at $57 per barrel. Ocean thermal has the possibility of being significantly lower in price than $200 per barrel oil. LNG is on the radar, and so is biomass gasification. Who knows what else would come up in 20 years?”
Ha points to remarks by Council of Revenue members Paul Brewbaker and Carl Bonham, “who have said, very emphatically and for awhile now, that low energy cost is critical. We should listen to them,” he says.
Ha says that, when the International Monetary Fund team modeled different oil supply scenarios and did a presentation at the Association for the Study of Peak Oil conference recently, they could not model a constant $200 per barrel of oil. “Those would be uncharted waters; and ones, by the way, that would devastate Hawai`i’s tourist industry. Why should we start paying $200 per barrel for oil in 2015 if we don’t have to?” Ha asks.
“The amount of risk involved in the AKP biofuels proposal is just far too great,” Ha says. In the investment world, reward is generally commensurate with risk. Except for protection from $200 per barrel oil in later years, the AKP project would provide little reward for all the risk we ratepayers would assume.”
Ha concludes, “This is a very, very bad deal for consumers. Big Island electricity rates have been 25 percent higher than O`ahu’s for as long as anyone can remember. This probably adds to the reason why the Big Island has the lowest median family income in the state, as well as the social ills that go with it. We need lower rates, not higher rates!”
See more at hahaha.hamakuasprings.com.
HAWAI`I VOLCANOES NATIONAL PARK waives entrance fees tomorrow in honor of the Martin Luther King, Jr. holiday. In conjunction with the park’s Fee Free Day, Kilauea Military Camp invites all park visitors to experience how KMC supports America’s troops by utilizing any of its facilities and services. For more information about KMC, call 967-8371.
ON TUESDAY, After Dark in the Park offers a below-the-scenes look at Kilauea Volcano’s plumbing system. USGS Hawaiian Volcano Observatory scientist Michael Poland presents a picture of what Kilauea’s subsurface might look like based on observations from eruptions, earthquake patterns, ground deformation, chemical changes and geologic studies. The program at Kilauea Visitor Center Auditorium in Hawai`i Volcanoes National Park begins at 7 p.m. $2 donations support park programs, and park entrance fees apply.
IN SPORTS, KA`U’S BASKETBALL TEAMS are busy this week. Boys travel to Pahoa tomorrow and St. Joseph’s Wednesday before their meeting with Waiakea at home on Friday.
Girls play at Waiakea on Tuesday and home on Thursday, when they meet Hilo.
Ha says that, when the International Monetary Fund team modeled different oil supply scenarios and did a presentation at the Association for the Study of Peak Oil conference recently, they could not model a constant $200 per barrel of oil. “Those would be uncharted waters; and ones, by the way, that would devastate Hawai`i’s tourist industry. Why should we start paying $200 per barrel for oil in 2015 if we don’t have to?” Ha asks.
“The amount of risk involved in the AKP biofuels proposal is just far too great,” Ha says. In the investment world, reward is generally commensurate with risk. Except for protection from $200 per barrel oil in later years, the AKP project would provide little reward for all the risk we ratepayers would assume.”
Ha concludes, “This is a very, very bad deal for consumers. Big Island electricity rates have been 25 percent higher than O`ahu’s for as long as anyone can remember. This probably adds to the reason why the Big Island has the lowest median family income in the state, as well as the social ills that go with it. We need lower rates, not higher rates!”
See more at hahaha.hamakuasprings.com.
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| Rep. Richard Onishi |
IN THE 2013 STATE LEGISLATURE, Ka`u’s Rep. Richard Onishi is co-sponsoring a bill that proposes an amendment to Article XI of the state Constitution to include game animals on state lands as resources to be managed and conserved by the state. The section to be added states, “The state shall manage and control for the perpetuity of future generations, game animals, including sheep, deer, pigs, and wild cattle presently located throughout all state lands. The management of game animals shall be subject to guidelines established by the Legislature, including cooperative resource management strategies which shall ensure the public’s sustained use and enjoyment of game animals as a protected state resource.”
HAWAI`I VOLCANOES NATIONAL PARK waives entrance fees tomorrow in honor of the Martin Luther King, Jr. holiday. In conjunction with the park’s Fee Free Day, Kilauea Military Camp invites all park visitors to experience how KMC supports America’s troops by utilizing any of its facilities and services. For more information about KMC, call 967-8371.
ON TUESDAY, After Dark in the Park offers a below-the-scenes look at Kilauea Volcano’s plumbing system. USGS Hawaiian Volcano Observatory scientist Michael Poland presents a picture of what Kilauea’s subsurface might look like based on observations from eruptions, earthquake patterns, ground deformation, chemical changes and geologic studies. The program at Kilauea Visitor Center Auditorium in Hawai`i Volcanoes National Park begins at 7 p.m. $2 donations support park programs, and park entrance fees apply.
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| From 1984, this photo from USGS/HVO shows one of 44 high lava fountains that built the Pu`u O`o cone. |
HAWAIIAN VOLCANO OBSERVATORY brings a program to Pahala Plantation House Wednesday evening, when geologist Tim Orr presents photos and videos reviewing highlights and recent developments of Kilauea Volcano’s ongoing 30-year-long east rift zone eruption. The program, part of Volcano Awareness Month, begins at 6:30 p.m. Depending on turnout, more HVO programs could be scheduled in the future. Call 928-9811 for more information.
IN SPORTS, KA`U’S BASKETBALL TEAMS are busy this week. Boys travel to Pahoa tomorrow and St. Joseph’s Wednesday before their meeting with Waiakea at home on Friday.
Girls play at Waiakea on Tuesday and home on Thursday, when they meet Hilo.
Girls soccer has BIIF Division II games this week, with Round 1 on Tuesday, semi-finals on Thursday and finals on Saturday at Kealakehe.
BIIF Division II games for boys soccer take place next week.
SUPPORT OUR SPONSORS AT PAHALAPLANTATIONCOTTAGES.COM AND KAUCOFFEEMILL.COM. KA`U COFFEE MILL IS OPEN SEVEN DAYS A WEEK.