Ka`u Calendar Saturday, Dec. 24, 2016

Christmas in the Country continues until Jan. 2 at Volcano Art Center Gallery, Photo from Volcano Art Center.

INTERVENTION IN HELCO'S RATE HIKE is the request filed Friday by Life of the Land and Puna Pono Alliance. The 80-page Joint Motion to Intervene in HELCO’s application for a 6.5 percent rate increase is before the Public Utilities Commission.
      Life of the Land has been admitted into 41 PUC proceedings since 1971. It has also filed a motion to intervene on the side of the complainants in the PUC docket concerning the controversial Ocean View solar farms in Ka’u.
   Life of the Land and Puna Pono Alliance focused their intervention on a variety of rate recovery issues, including climate change, safety, customer`s disconnecting from the grid, cutting out fat from the utility`s operating structure, the potential acquisition of a fossil fuel power plant, and changing from a cost-of-service rate model to a Performance Based Ratemaking using Performance Incentive Metrics.

    “With the exception of the NextEra-HECO merger proceeding, rate cases are without rival, in terms of complexity and numeric intensity,” wrote Life of the Land's Vice President and energy guru, Henry Curtis. 

     Curtis wrote: “Today, we exist on a razor's edge between the past and the future. Technological advances, and on-the-ground conditions, are rapidly evolving. What worked yesterday is significantly different today.
    “The greatest changes are occurring on the grid-edge, or in the realm of what lies beyond the traditional utility-customer metered grid-interface. Hawai`i Rooftop solar, Net Energy Metering, Demand Response, the Internet of All Significant Things, voice-activated Bluetooth home electronic consumer appliances, smart home energy systems, residential energy storage systems including plug-and-play systems that can be installed in any room, and driverless electric vehicles are among the science-fiction things of yesteryear which are the realities of today."

   “Fundamental questions arise. Is the utility seeking ratepayer funds to prop up and perpetuate a past which no longer exists, or is the utility creating a distributed platform which can serve as a building block for the future?"
     Curtis contends that the three main issues in a rate case are: What costs should be passed onto ratepayers? Which costs should not be passed on? What is the appropriate rate of return on equity for the utility?”
     After costs, Curtis said, he is very concerned about safety while producing power on the Big Island – a huge issue for the Puna residents living near the geothermal plant. During the public hearing about the rate case, PUC commissioners were told that there have been 17 declared civil defense emergencies when toxic emissions from the power plant poisoned residents.

     Curtis writes “The HELCO-Puna Geothermal Ventures Power Purchase Contract clearly states that there are three different safety sub-issues: safety for the HELCO grid, safety at the PGV plant, and safety for HELCO customers. The contract binds PGV safety, with HELCO purchase, of geothermal energy.
      “Currently HELCO customers face on-going toxic trespass due to intentional and unintentional emissions by the actions taken at the PGV plant. HELCO has failed to deal with this safety issue," states Curtis.
     "The Commission has the kuleana to deal with safety issues. The Mission Statement of the Hawai`i Public Utilities Commission deals in part with safety.”
     Curtis quotes from the PUC’s mission statement: “The Commission’s mission is to provide effective, proactive, and informed oversight of all regulated entities to ensure that they operate at a high level of performance so as to serve the public fairly, efficiently, safely, and reliably, while addressing the goals and future needs of the State in the most economically, operationally, and environmentally sound manner, and affording the opportunity for regulated entities to achieve and maintain commercial viability.”

Henry Curtis
Photo by Big Island Video News

    Curtis explains: “Tropical Storm Iselle leveled Albizia trees, forcing residents to stay home. The Puna Geothermal Plant did not shut down; the plant was kept operational due to demands by HELCO. Unanticipated toxic emissions blanketed the neighborhood. Trapped residents suffered. Civil Defense told people to leave the area, but they were trapped by fallen trees blocking roads. Ratepayers should not pay utility costs incurred while being trapped in their homes.
    “Customer exit or bypass is a hot button issue. The edge of the grid is becoming less firm. Demand Response and Rooftop Solar enable residents to provide power, as well as frequency and voltage regulation, to the grid. Should customers be allowed to leave the grid?
    “Should the utility give incentives to the ten largest customers? According to HELCO, the 10 largest customers account for 16.4 percent of electric sales by the utility. Furthermore, the ten entities have “demonstrated the ability to self-generate as a number of them have either installed or plan to install PV, wind or hydroelectric systems.
      “Life of the Land and Puna Pono Alliance have a position that customer exit is not the boogeyman, and it may be the optimal solution of the future.
     “The issue of whether the loss of a single customer harms all other customers has never been addressed. Conversely, does unlimited growth benefit everyone, since the utility will gain new customers? Or is it a one-sided equation, where if the utility gains one customer and losses another customer, it is a net loss for everyone, because gains don`t count, but losses do count?
      “If the State goals are to increase the use of renewable energy and decrease greenhouse gases, while maintaining reasonable rates, how does grid connection matter?

Life of the Land and Puna Pono state that residents have been blanketed by toxic
emissions from the geothermal plant. Photo from Puna Pono Alliance

     “Life of the Land and Puna Pono Alliance firmly believe that grid parity has been achieved on the Neighbor Islands. HELCO proposes to raise rates in the near term, and then add additional expenses with implementing the Smart Grid and for adding redundant layers of cybersecurity. On the other hand, battery prices will fall while their reliability will increase. Thus, there will be increasing cost justification for leaving the grid.
      “Life of the Land and Puna Pono Alliance believe that those exiting the system should not be penalized. A true unbundled price comparison should be made between the different options for the future.
      “The Hawai`i Legislature passed SB 120 SD1 in 2013. The governor signed the bill as Act 37. The bill encourages the Commission to replace the traditional cost-of-service rate model with one based on Performance Incentive Metrics. The use of the carrot-and-stick approach will be examined in this rate case. Life of the Land and Puna Pono Alliance support the idea that PIMs should be addressed holistically as part of a broad incentives and penalties analysis. This is the approach suggested by Blue Planet Foundation and Hawai`i Solar Energy Association in the Commission`s decoupling proceeding.
      “The Public Utilities Commission informed HELCO that it had to do a better job cutting costs. If the utility has cut fat from its system, it has done a poor job explaining it. This docket will examine ways of reducing utility costs. Unbundling rates is key, so everyone can understand what the cost of different services are, and so customers can pay only for those services that they want to get from the utility.
      “HELCO asserted that greenhouse gas emissions can be discussed in future rate cases. Other utilities are not waiting for future rate cases. Life of the Land and Puna Pono Alliance believe that the issue of global warming, climate change and greenhouse gas emissions should be part of every utility docket. But ultimately, that is a policy decision to be made by the Commission.

Marco Mangelsdorf

     “The issue of climate change is not going away. It will be up to the States to take the necessary regulatory actions. The rise in ocean temperatures will result in a greater number of increasingly intense, tropical storms and hurricanes. As has been recently demonstrated, the Big Island is the most likely place to be hit.
     “Life of the Land and Puna Pono Alliance support the idea that separate and independent companies should own generation and energy delivery systems. HELCO should not be allowed to purchase a fossil fuel plant in Honoka`a.”
     Tuesday is the last day to file a Motion to Intervene or to Participate.

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A NEW NON-PROFIT UTILITY FOR THE BIG ISLAND recently received approval from the Internal Revenue Service, which gave Hawai`i Island Energy Cooperative  its 501(c)(12) status. It joins more than 900 member-owned, community based utilities in the USA, which serve an estimated 42 million energy consumers.
     Marco Mangelsdorf, HIEC director and spokesperson, stated. “Receiving this official approval is fantastic news. This sets the stage for HIEC to be an operating non-profit utility serving the Big Island. This is particularly important as both Hawai`i Electric Light Co and Hawaiian Electric Co. roll out new electric rate increases. Cost control and efficiency are core to a cooperative, not shareholder profits.”

     The new status for a new player in the energy field comes after the PUC failed to approve the Next Era takeover of Hawaiian Electric Industries and its subsidiaries HECO, HELCO and Maui Electric Co. These subsidiaries are about to unveil their latest Power Supply Improvement Plans and rate increases are pending.
     “The consideration of the cooperative ownership structure is timely, relevant and presents an opportunity to make critically important decisions about how Hawai`i Island will meet our state’s clean energy objectives in the most cost effective way possible” adds Mangelsdorf.
    “We first sought to get a seat at the table in early 2015 as the docket on the HEI-NextEra was opened,” noted HIEC president Richard Ha. “Those of us who founded HIEC were convinced that the tumblers had fallen into place for us to do all that we could to try and replicate the success that Kaua`i Island Utility Cooperative has been achieving on the Garden Island. We got our seat and are excited about the future.” 

        Energy guru and commentator Henry Curtis wrote a blog item entitled, Should HELCO be Sold to a Non-Profit? Curtis states that being recognized as a non-profit utility by the IRS will enable the new entity to pursue one of three courses.
       A top-down approach would involve buying HELCO from its parent company Hawaiian Electric Company, through a deal with the shareholders of Hawaiian Electric Industries, and the approval of the Public Utilities Commission. HIEC would borrow a billion dollars and spent a year or two in regulatory arenas.
     A bottom-up approach would involve establishing a micro-grid within HELCO`s geographic footprint, perhaps in conjunction with Parker Ranch, and gradually increasing its size, until it rivalled or displaced HELCO.
     A third approach would involve threatening one of the above, forcing HELCO to lower its rates, and to become more responsive to its customers.

Richard Ha has been a longtime advocate of an alternative
to HELCO. Photo from Richard Ha

     Curtis also explains how HEI may see the sale as a poor proposition: “Some have speculated that HEI would resist selling HELCO to HIEC. If such action resulted in lower rates, then MECO and HECO would be next. If the sale resulted in worse conditions for Big Island residents, then HEI would be blamed for agreeing to the sale. To overcome this resistance, the price tag to HEI shareholders would have to be substantial.”

     Curtis asks what, if anything, would change when he writes “One issue that would have to be resolved is whether the transfer of assets would simply involve replacing the owners and restructuring taxes, or if the sale would actually change policies, such as the role of geothermal and the possible use of LNG.”      Discussing the history of such acquisitions, Curtis writes:

     “There have been several successful and unsuccessful efforts to acquire electric utilities in Hawai`i beyond NextEra`s recent failure to acquire the Hawaiian Electric Companies.
     The top-down successes included Hawaiian Electric Co. purchase of Maui Electric Co. in 1968 and Hawai`i Electric Light Company in 1970, Kaua`i Island Utility Cooperative  purchase of Citizens Utility Corp.'s Kaua`i Electric Division in 2002, and Larry Ellison`s purchase of Lana`i utilities.
    “An alternative top-down approach was the creation of Hawaiian Electric Industries holding company by HECO in 1981-83. “Top down failures to date included the first proposal by KIUC to acquire Citizens Kaua`i Electric Division in 2000, the proposal by Ku`oko`a to acquire the HECO Companies and Puna Geothermal Ventures , and the failed proposal by Princeton Energy Group to create Ikehu Moloka`i.
    “Hawai`i Island Energy Cooperative is currently proposing to acquire HELCO, and Parker Ranch is currently proposing to develop a Waimea Microgrid.
     “Bottom up efforts have included the establishment Camp Smith's Inner and Outer Microgrid in Aiea, the creation of a small-scale microgrid at the VERGE Energy conference held in Honolulu last June, and Hickam Air Force Base`s proposed microgrid.
    “There have been proposals for several other microgrids at the Natural Energy Laboratory of Hawaii Authority  on the Big Island, a Maui Community College microgrid, and the effort by Larry Ellison’s Lanai Resorts LLC to hire Byron Washom to develop a Lana`i microgrid.”
     “Some utilities have considered acquiring other utilities. At one point HECO considered acquiring the Kaua`i utility before KIUC succeeded. The Gas Company considered acquiring the HECO Companies,”added Curtis.

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CHRISTMAS IN THE COUNTRY is ongoing through the holidays at Volcano Art Center in Hawaiʻi Volcanoes National Park. Free; park entrance fees apply.

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