Thursday, January 29, 2015

HECO and NextEra dodged questions at the Legislature

By Henry Curtis

Four Hawai`i Legislative Committees held a hearing on the proposed HECO-NextEra merger.  

HECO President and CEO Alan Oshima and NextEra Energy Transmission  (NEET) President Eric Gleason gave presentations and then answered questions from various Senators and Representatives.




Alan Oshima gave a 15 minute opening speech, noting, “We are introducing NextEra to as many stakeholders as we can, throughout all islands so that they will have the opportunity to ask NextEra the hard questions, on a one-to-one basis.”

Oshima asserted that one of the last things that the Board was very concerned about, was having some of us go back to see NextEra’s operations in Florida, to see for ourselves.”


One of the Power Point slides was titled, “What are the Benefits for Hawai`i?" One category was "Commitment to Hawai`i and Local Communities" for which three items were listed. "Hawaiian Electric name to continue and HQ to remain in Honolulu. Committed to establish a local Hawaiian Electric advisory board. Will maintain overall current level of corporate giving."




Senator Rosalyn H. Baker inquired about the power structure should the merger go through. Would NextEra rely on local management?  What would be the natural of the Hawaii Advisory Board?  Should the Legislature or the PUC memorialize the commitment?

Hawaii doesn’t want to be the tail wagging the dog.”

Eric Gleason stated, “Operationally how would the governance work? It’s very early. We announced this transaction less than two months ago. We haven’t started integration planning yet. There’s a lot of details that still need to be worked out. At this point I can tell you what the intention is, and the intention is, to do something that is consistent with, the reporting relationship that I described and the advisory board that I described.”

Representative Justin H. Woodson suggested that NextEra might not be willing to share their five or ten year comprehensive business plan but perhaps they would provide legislators with a five-year pro forma?

Eric Gleason asserted the proper venue was the PUC. “Everything we have will come out through the PUC process. So for example, as part of our diligence on the acquisition, there’s a financial model that will be reviewed in part of the PUC process. It will be confidential I think. But in terms of the underlying business plan, the long-term plan, the detailed plan, that’s really the plans that Hawaiian Electric filed in August.”

Representative Angus L.K. McKelvey asked about job retention and outsourcing.  “On your on-island presence, the daily interaction of customers, billing centers, being able to pay your bill locally, trouble shooting hot line, customer service. Is all of that going to remain local or is there going to be a plan to outsource this?

Alan Oshima said that “Eric and I just talked about some of this even on our way over. It’s really too soon for NextEra to know. They really, really want to get to know our company, how we operate, know the values of our State etc. before making firm plans. Believe me, these questions are coming up, in our company, and I’m not able to answer it. So I’ve been finding, five minutes of time in between meetings with Eric to say look, we’ve got to sit down and talk about this.”

Senator Suzanne Chun Oakland stated that HECO had certain goals they had to achieve by 2030. If the NextEra deal goes through, how much faster will HECO achieve those goals?

Alan Oshima responded, “Yeah, I’m not a betting person. You know that. But I’m pretty confident that with their expertise, and financial power and purchasing power we can get there sooner. I’m not sure how much sooner.”

Senator Chun-Oakland honed down on rooftop solar.  “For those that do want to install PV systems, how much sooner would it occur if NextEra was involved?

Alan Oshima asserted “I’m not sure about the sooner. …I don’t think we would have moved forward with NextEra if they didn’t adopt our plans. We are so committed and aligned in this State for a renewable future.”

Senator Chun-Oakland tried to get Oshima to give an answer. “I still haven’t heard though how that will accelerate things.”

Alan Oshima responded, “I’ll give you a little glimpse at what my day is like, in terms of technology and how many people are asking for appointments. And our Company meeting with many, many people pitching improvements, technology. It’s constant now. We’re in a time of exponential change. The change is what’s going to drive a lot of what we’re going to see in the future.”

Representative Romy M. Cachola asked, “What’s the percentage of rooftop PV are you willing to allow?” After a nonsensical reply Cachola repeated his question and added if “there’s a limit to the number of PV, rooftop PV that you’re going to allow?

Alan Oshima said “It’s not what we’ll allow, it’s what we think the market will bear.”

Senator Sam Slom asked about the proposed inter-island cable.

Eric Gleason asserted, “In terms of the cable, in our minds at least the jury’s out to whether a cable between Oahu and Maui Island is in the public interest. We’ve said based on the analysis we’ve done, suggests that it is. They’ve done some analysis that suggests that it isn’t. We don’t have the benefit of all that analysis. It’s not our top priority quite frankly. We got a lot of things to focus on in this merger. But I think in due course, the Commission has a proceeding underway.”

Representative Chris Lee pointed out that many utility decisions and the utility business model depend upon whether a cable is or is not built.

“You said the jury’s out on the cable, in your estimation. And I think this is important, we talked about it before, because whether or not you connect the interisland grids and create one grid determines what projects on the Neighbor Islands will go forward. 

You’re talking about billions of dollars in investment give or take, between the cable plus those projects, etc. And that determines really how you weigh utility scale and other Neighbor Island grid projects against things like static generation with LNG and other stuff on Oahu. 

My question is, you’re investing multiple billions of dollars into this deal. How can you not have this question answered, already, as to which way you’re going to go? Which way you’re going to invest? Because you’re business model depends on it.”

Eric Gleason presented an alternative view. “Our view is, no matter what direction Hawaii goes, the utility’s going to remain important, and capital is going to be important and all of the questions are open and it is a very complicated optimization, which include facts that change over time. So it would be irrational I think of us to come in thinking we had the answer.”




Senator Baker focused on the proposed long-term benefits and the immediate need to lower rates. Her exchange with Alan Oshima was interesting.

“You talked about by 2030 these things were going to happen. This is 2015 so I’m assuming that it’s going to take us 15 years to get to those goals. Does that mean that customers are going to have to wait 15 years to see reductions in their energy rates?”

“Yeah I want to be, there’s a lot”

“Yes it’s going to take 15 years to get those reductions or yes you’re going to answer my question?”

“Yes to get 20%. I don’t know what you’ll. It’s a complicated question. But 20% by 2030 is for bills.”

“Will help Hawaiian Electric get there but we’re not going to see any reduction in our energy bills unless the price of oil continues to go down. Anytime soon. Is that correct?”

“No, unless we switch to LNG and can flatten that cost of oil.”

“Let’s talk about LNG for a second. We don’t currently have the infrastructure to take LNG. We have to bring it in to the State, so it’s imported. And it’s low right now but it could go up. …There is a cost[terminals, barges] to bringing LNG in. So can you say with any assurance to the ratepayers that if we bring in LNG and all of the attended costs that have to go with it to get it here and get it to a place you could use it whether it’s on Oahu, Maui or Big Island. How is that going to lower the costs and when might that happen?”

“We wouldn’t do it if it didn’t lower costs.”

Representative Cachola asked about LNG. “What’s the percentage of that use of that fuel you’re going to use?

Alan Oshima responded, “We’re still negotiating that. Right now, we’re coming close to a decision. …The conversion won’t happen tomorrow, it will happen years from now. It’s a gradual decrease of fossil fuel. What LNG would do is replace the more expensive and dirtier fossil fuels by cleaner cheaper fossil fuel.”

Senator Mike Gabbard asked “What share of the total electrical demand in the three service areas for LNG?

Eric Gleason and Alan Oshima needed input from someone in the front row who was not identified.

We would start with something less than 80% and tail down over time until we reach 65% renewables, then the LNG will be 30% of the energy mix in 2030. …Our plans call for it, to go down to zero as we move forward.”

Kathryn Mykleseth, a reported for the Honolulu Star-Advertiser, wrote a story on December 29, 2014 in which NextEra Energy CEO Jim Robo spoke against rooftop solar tax credits. “I think the solar investment tax credit should be phased out over time. …I am not a big fan of incentives that distort the market.” The article discussed wind tax credits. “As of the end of September, NextEra Energy received $132 million credit from the Production Tax Credit in 2014, according to a company filing with the U.S. Security and Exchange Commission.”

Senator Gabbard asked Eric Gleason about the disparity between NextEra’s view on solar and wind tax credits.

Gleason responded that Robo was talking in general and not about Hawaii in particular, adding that “incentives over time should be phased out, and we say that about wind production tax credits just like we do solar investment tax credits …it’s not for us to set policy, but that is our view.”

The federal wind Production Tax Credit passed the U.S. House of Representatives in December due in part to heavy lobbying by NextEra. 

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Wednesday, January 28, 2015

Why isn’t Randy Iwase the Interim PUC Chair?

By Henry Curtis
 Some commenters have asked why Randy Iwase is acting as Chair of the Public Utilities Commission although he has not been confirmed by the Senate.
 On January 12, 2015 Hermina “Mina” Morita resigned as PUC Chair.
 On January 16, 2015 Governor David Ige appointed Randall “Randy” Iwase to be PUC Chair. Randy Iwase must be confirmed by the Senate.
 On January 21, 2015, the third Wednesday in January, the Legislature opened the 2015 Legislative session.
 When the senate is not in session and a vacancy occurs in any office, appointment to which requires the confirmation of the senate, the governor may fill the office by granting a commission which shall expire, unless such appointment is confirmed, at the end of the next session of the senate.  The person so appointed shall not be eligible for another interim appointment to such office if the appointment failed to be confirmed by the senate.”
 Thus executive appointees made before January 21 serve in their roles, while appointees made on or after January 21 are “Interim” pending Senate approval.
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Randy Iwase takes on the HECO-NextEra Merger Proposal, Liquefied Natural Gas (LNG) and the Inter-Island Cable

By Henry Curtis
Four Hawai`i Legislative Committees will take up the proposed HECO-NextEra merger.  The informational briefing will occur today at 1 p.m. in the State Capitol Conference Room 325. Presentations will be limited to spokespeople for Hawaiian Electric Industries and NextEra Energy Inc.
The hearing will be broadcast statewide by `Olelo on Channel 53. The hearing can be viewed by computer through Livestream.
Pacific Business News published two on Governor Ige’s selection of Randy Iwase to Chair the Public Utilities Commission.
PUC nominee Iwase gives his take on Hawaii's biggest energy issues. Randy Iwase stated that the three biggest issues facing the PUC is the merger proposal, liquefied natural gas (LNG) and reorganizing the PUC.
Iwase talked about the proposed merger.
"We will be quite open to allowing a variety of people and points of views to come in and intervene, whatever that may be," Iwase said. "As long as they understand the law, we're going to allow public comments to come in in writing. We want to hear all points of views, so once all of that comes in and all the questions are answered, we will make a decision."
The story behind RandyIwase's nomination to head the Hawaii PUC. Randy Iwase said the PUC is like the referee in a football game. 
"You are there for all four quarters, but if there's a way for the crowd to get you out because they don't like your call, they will kick you out, so I'm just going to go along. I've got my whistle, flag and we'll see how long they keep me in the game."
In mid-October 2014 HawaiiGas (The Gas Company) proposed converting 30% of the fuel from Synthetic Natural Gas (SNG) to Liquefied Natural Gas (LNG). SNG is a byproduct produced by Hawai`i's local refineries while LNG would be imported from Canada.
HawaiiGas aggressively pushed for a Public Utilities Commission decision by December 31. Instead the regulatory proceeding (Docket No. 2014-0315) will play out over the 2015 Legislative session.
Hawaii Gas, the Consumer Advocate and Life of the Land have agreed to a proposed schedule.  During February and early March the Consumer Advocate and Life of the Land will file two rounds of Information Requests (Discovery) and HawaiiGas will respond. On April 2 the three entities will file Statements of Position to be followed by Reply Statements of Position filed on April 17.
Hawaiian Electric Company (HECO) has asked the Public Utilities Commission for permission to pass on to ratepayers the cost of studies analyzing an O`ahu-Maui inter-island cable. In a previous docket HECO received approval to pass on the costs of studies analyzing O`ahu to Moloka`i and Lana`i cables.
The Parties in the Stage 2 Study proceeding (Docket No. 2013-0393) are HECO, MECO, Sally Kaye, I Aloha Moloka`i, Life of the Land and the Consumer Advocate. They have agreed that discovery will occur from March to May and that the Statement of Positions will be filed in June.

These two proposed procedural orders must be approved by the Public Utilities Commission. The members of the Commission are Chair Randy Iwase, Commissioner Mike Champley and  Commissioner Lorraine Akiba.

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Tuesday, January 27, 2015

What was Governor Ige’s Energy Message?

By Henry Curtis
Governor Ige delivered his first State of the State address. Just over four percent of the speech (143 of 3226 words) were devoted to energy issues. But among those listening to his speech, the Governor's words raised far more questions than answers.

Hawai`i State Capitol
Governor Ige mentioned the proposal by HEI to sell the HECO Companies to NextEra Energy.
as discussions with NextEra proceed, I am asking Randy Iwase, the new head of the Public Utilities Commission, to be actively involved in those talks.”
The statement can be interpreted in a number of ways. At one end of the spectrum, as one of three Commissioners on the Public Utilities Commission, Randy Iwase will, along with the other two Commissioners, serve as unbiased decision-makers in determining whether to approve or reject the merger proposal.
At the other end of the spectrum, Randy Iwase will violate ex parte rules and secretly meet with the buyer and seller outside of the presence of other Commissioners and intervening parties and will be directly involved in negotiating merger conditions that will benefit ratepayers.
Or somewhere in between, whatever that means.
In recent years the Legislature authorized the restructuring of the Public Utilities Commission. As a result, this month the Commission is expanding into new offices which will enable the Commission to increase its staffing from about 40 people to about 65 people. 
When Governor Ige stated “we will be restructuring and staffing the PUC to give it the expertise and resources needed to deal with its due diligence” was he referring to what the Legislature already authorized or some new legislation?
Most renewable energy generated in Hawaii is generated by independent power producers, biofuel producers and homeowners with rooftop solar. The HECO Companies own only a few small hydroelectric facilities. The utilities have often resisted expanding the use of renewable energy. 
But rather than highlight the role of those actually producing renewable energy, Governor Ige chose only to mention Hawaiian Electric. “As our largest provider of energy, Hawaiian Electric will have a lot to do with our success or failure.”
In the old days the Attorney General assigned deputy attorneys to the Public Utilities Commission. In recent years, under bills passed by the Legislature, the Commission hires its own attorneys. The current Chief Lawyer is Tom Gorak. 
When Governor Ige stated, “I will also be assigning a special counsel to protect the public’s interest for the short and long term” did he mean that he was replacing Gorak? Or creating a new position? Or going back to the old practice of assigning a Deputy Attorney General to the agency?
 The Governor asserted, “We have the locally generated resources that can allow us to be self-sufficient. We just need to move in concert toward that goal.” 
Was Governor Ige acknowledging that we are already moving in that direction? Or was he suggesting that the Administration will be advocating a faster transition? 
Act 73-2010 (HB2421 HD2 SD2 CD1) increased the barrel tax (a.k.a. the environmental response, energy, and food security tax) from five cents to $1.05. Most of the funds were earmarked to support the General Fund. 

Some of the funds went to pay for studies to assist HECO including the proposed inter-island cable. Some funds were also used to pay for positions at DBEDT and to enable the UH Hawaii Natural Energy Institute (HNEI) to hire retired HECO Executives.

Governor Ige has submitted HB 892 to the 2015 Legislature as part of the Governor’s Package.  It seeks to re-write history.
The legislature further finds and declares that the environmental response, energy, and food security tax was intended to support critical investments in clean energy and local agricultural production to reduce the State’s dependence on imported fossil fuels and food products. As currently apportioned, only a total of 30 cents of the $1.05-per-barrel tax is being allocated to the energy security special fund and the agricultural development and food security special fund, with just 15 cents going to each fund, while the majority of the funds, 60 cents per barrel, is deposited to the general fund. The legislature finds that this was clearly not the intent of Act 73.” 
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Monday, January 26, 2015

Protest over Governor's choice for DLNR Director heats up

By Henry Curtis
The Governor announced on Friday that he was nominating Carleton Ching to be Director of the Department of Land and Natural Resources.
 By Monday a MoveOn Petition had gathered 5300 signatures. The Petition states, “Gov Ige has appointed a Castle & Cooke developer (lobbyist) to head the Hawaii Dept of Land and Natural Resources. This is putting the fox to guard the hen house. Do not confirm Carleton Ching.
 Twenty-one groups issued a press release opposing the nomination. Since then three other groups have joined on.
The Governor may decide to withdraw the nomination. The candidate may decide to withdraw. If neither happens the Senate Committee on Water and Land will hold the confirmation hearing. They will make a recommendation. Regardless of whether they vote the nomination up or down, their recommendation then goes to the Senate floor for the ultimate decision.
The seven members of the Water and Land Committee are
Chair Senator Laura H. Thielen <senthielen@capitol.hawaii.gov>
Vice Chair Senator Brickwood Galuteria <sengaluteria@capitol.hawaii.gov>
Senator Les Ihara Jr. <senihara@capitol.hawaii.gov
Senator Gil Riviere <senriviere@capitol.hawaii.gov>
Senator Maile S.L. Shimabukuro <senshimabukuro@capitol.hawaii.gov
Senator Russell Ruderman <senruderman@capitol.hawaii.gov
Senator Sam Slom <senslom@capitol.hawaii.gov>



GROUPS OPPOSE DLNR NOMINATION AND PROPOSAL TO ELIMINATE THE LUC
 HONOLULU, HAWAI’I (January 26, 2015) -- Over a dozen environmental groups are asking the Governor to withdraw his nomination of Castle & Cooke lobbyist Carleton Chingto head the Department of Land and Natural Resources and to drop any plans to weaken or eliminate the Land Use Commission.  
 In a joint statement, the groups said:
We are extremely disappointed in Governor Ige’s openness to eliminating the State Land Use Commission.  The Land Use Commission serves an essential role in the proper planning of land uses, developing land appropriately, and protecting public trust resources and the public interest.  We question the motivation behind this proposal to dismantle the backbone of our state’s land use system.
We oppose the Governor’s choice of Carleton Ching to lead the Hawai‘i Department of Land and Natural Resources and ask that the nomination be withdrawn because he has no demonstrated expertise in managing the cultural and natural resources that fall under the department’s purview, including but not limited to endangered species, iwi, ceded land, water resources, forests, beaches, coral reefs, fishing and hunting resources, historic sites, and state parks.
 It is still early in Governor Ige’s term, and we urge him to make the proper course corrections for the benefit of our natural environment and the people of Hawai‘i nei.  We look forward to working with him and his administration to make Hawai‘i a better place for all the people of these islands, our children, and generations to come.
Among the groups are: Sierra Club, The Outdoor Circle, Conservation Council for Hawai‘i, KAHEA: The Hawaiian-Environmental Alliance, Hawai‘i’s Thousand Friends, Life of the Land, Friends of Lana‘i, Progressive Democrats of Hawai‘i, Earthjustice, Defend O‘ahu Coalition, Surfrider Foundation, Hawai‘i Wildlife Fund, Hawai‘i Alliance for Progressive Action, Hui Ho‘omalu I Ka ‘Aina, Kupa‘a No Lana‘i, LOST FISH Coalition, MANA (Movement for Aloha No Ka ‘Aina), Maui Tomorrow, Puna Pono Alliance, Wailua-Kapa‘a Neighborhood Association, and the West Maui Preservation Association.
The Director of the Department of Land and Natural Resources serves as the chair of its governing body (the Board of Land and Natural Resources), the Chair of the Commission on Water Resource Management, and as the state’s Historic Preservation Officer, in addition to overseeing many critical programs.
Marti Townsend, Executive Director of The Outdoor Circle urged the Governor to withdraw Ching's nomination to head up DLNR citing Ching’s “lack of experience in protecting natural resources, which is the agency's primary responsibility."
Anthony Aalto, Sierra Club spokesperson, pointed out that Ching “lobbied for developer Castle and Cooke, served as a director on the Building Industry Association of Hawai`i and as vice-President of the Land Use Research Foundation, which according to its website is ‘devoted exclusively to promoting the interests of the development community.’ Both organizations have consistently lobbied to weaken laws that protect the state’s cultural and natural resources.” 
After the media alert went out three additional groups signed on: Kanehili Hui, O'ahu Chapter of Aha Moku Council and '─¬lio'ulaokalani Coalition

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Governor Ige nominates a Developer to Protect the Environment

By Henry Curtis
In 2005 developers including Carleton Ching, director of community and governmental relations for Castle & Cooke Homes, asked Legislators to reduce or abolish the Land Use Commission. Honolulu Advertiser’s Gordon Pang reported on the hearing. 
“Asked by one senator how long it should take to approve a housing development, Ching deadpanned, ‘Just sign a document and tell us go,’ drawing laughter from yesterday's participants.”
In 2008 House Speaker Calvin Say pushed HB 2863 through the State House. The proposed CD1, written by Castle & Cooke, would have killed all public participation, all utility reviews, all interagency approvals, all county reviews, and given one person, the DBEDT Director, power to approve renewable energy projects BEFORE the Final Environmental Impact Statement (EIS) has been written. The Senate stood strong and killed the bill.
Ching currently serves as a Vice President of the Land Use Research Foundation of Hawaii (LURF) which describes itself as “the only Hawaii based organization devoted exclusively to promoting the interests of the development community.”
Carleton Ching aggressively pushed for Big Wind on the Neighbor Islands and the Koa Ridge Housing Development project on O`ahu.
Governor Ige appointed Carleton Ching as the Director of the Department of Land and Natural Resources (DLNR).
According to the DLNR website, The Department of Land and Natural Resources, headed by an executive Board of Land and Natural Resources, is responsible for managing, administering, and exercising control over public lands, water resources, ocean waters, navigable streams, coastal areas (except commercial harbors), minerals, and all interests therein.

The department’s jurisdiction encompasses nearly 1.3 million acres of State lands, beaches, and coastal waters as well as 750 miles of coastline (the fourth longest in the country). It includes state parks; historical sites; forests and forest reserves; aquatic life and its sanctuaries; public fishing areas; boating, ocean recreation, and coastal programs; wildlife and its sanctuaries; game management areas; public hunting areas; and natural area reserves.”
As DLNR Director, Ching would serve on the Board of Land and Natural Resources (BLNR) and the Commission on Water Resource Management (Water Commission). 
For the past twenty years, Life of the Land has not taken a position on any candidate or nominee for any elected or appointed position. 
Life of the Land has made an exception to this policy position by opposing the nomination of Carleton Ching. 
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Sunday, January 25, 2015

Proposed Garbage-to-energy plant incinerated

By Henry Curtis

The County of Hawaii has cancelled its proposal to build a waste-to-energy incinerator. Hawai`i Mayor Billy Kenoi announced on Friday that he will not move forward on the $100 million project.

Last summer the County assumed that the proposed waste-to-energy incinerator would pencil out at 17 cents per kilowatt hour. At the time HELCO’s avoided cost was around 20 cents per kilowatt hour.

The price of oil has dropped from $100 per barrel to under $50 per barrel. The new "avoided cost" range for HELCO is around 8-10 cents per kilowatt hour. Thus a waste-to-energy incinerator no longer makes economic sense.

Every energy policy has winners and losers. The steep drop in the price of oil is likely to have massive impacts in Hawai`i, affecting the number of tourists, shipping rates, efforts to change behavior to encourage people to use less electricity and the value of LNG and geothermal when compared to petroleum.

Waste Management Inc.’s Wheelabrator Technologies Inc., Green Conversion Systems Inc. and Covanta Energy Corp., the operator of Honolulu’s HPower incinerator had sought to build the facility.

The low oil prices may be around for a few years, long enough to monkey up the current system, before reverting back to a long-term upward trending price.


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Saturday, January 24, 2015

NextEra - HEI Merger Briefing

Four Hawaii State Legislature Committees will hold an informational briefing on the proposed HECO-NextEra merger.


ENERGY & ENVIRONMENTAL PROTECTION
Rep. Chris Lee, Chair
Rep. Nicole E. Lowen, Vice Chair

COMMITTEE ON ENERGY AND ENVIRONMENT
Senator Mike Gabbard, Chair
Senator Josh Green, Vice Chair

CONSUMER PROTECTION & COMMERCE
Rep. Angus L.K. McKelvey, Chair
Rep. Justin H. Woodson, Vice Chair

COMMERCE AND CONSUMER PROTECTION
Senator Rosalyn H. Baker, Chair
Senator Brian T. Taniguchi, Vice Chair


“The purpose of this informational briefing is to hear plans for the proposed acquisition of Hawaiian Electric Industries by NextEra Energy Inc. Topics will include the process and timeline for acquisition, and what NextEra Energy Inc. has planned for Hawaii.”

The briefing by representatives of Hawaiian Electric Industries (HEI) and NextEra Energy Inc. (NEE) will occur on Wednesday, January 28, 2015 starting at 1 p.m. in the State Capitol, Conference Room 325.


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Conflicts between Hawai`i wind and solar energy projects

By Henry Curtis

The 2015 State Legislative session has begun. Some 3,000 bills will enter the hopper and be ground down. Perhaps 7% will be enrolled to the Governor by the time the Legislative session ends in early May.

Several bills have been submitted on energy. One of them deals with curtailment. 

The utility argues that the increased deployment of Net Energy Metered (NEM) systems can harm existing utility contracts. Wind farms sometimes produce electricity during the day that cannot be integrated into the grid. This curtailed energy is wasted.

Large centralized wind generation facilities are on a queue. The last one to come on line is the first one to be curtailed.

Historically. small Rooftop Solar has never been curtailed.  The utility asserts that as more and more of these rooftop NEM systems are installed there will be more intermittent (variable) solar and wind power instabilities on the grid leading to higher curtailment of the wind generators.

In response to an earlier version of this blog, an energy expert wrote, 

HECO et al. have been requiring remote controllable disconnect switches (direct transfer trips) for large, commercial/industrial PV systems on their grids, which allows the utilities to disconnect (curtail) the output of the system at their discretion in case certain conditions arise on the grid.


And, very importantly to homeowners and PV integrators, HECO et al. has proposed to the PUC in their Tuesday filing to require the same for all new systems going in sub-100 kW under the new TDG interconnect agreement. If approved by the Commission, all new grid-tie PV systems going in between 1-100 kW would need to have, at the customer’s expense, a remote controllable PV disconnect switch installed.”

One solution around this is to allow the wind/solar companies sell their excess wind/solar energy directly to another grid-connected third party as long as they transfer the electricity in a way that bypasses the grid. But if the receiving party then reduces their demand for utility electricity that would add to grid instability which would increase curtailment and defeat the end-run around the curtailment issue.



Another solution would be to allow the wind/solar companies to sell their excess wind'solar energy to a non-grid connected customer, such as a hydrogen manufacturer. Thus the excess wind/solar could be used to power hydrogen vehicles, helping to renew the transportation sector.

The risk in this scenario has to do with cross-subsidies. In the proposed Aina Koa Pono (AKP) biofuel power purchase contract, the biofuel owner proposed a number of products some of which would be regulated and others that would not be regulated. The danger in that case was that ratepayers would pay high fixed costs and assume all the risk while the “green” company could hide the amount of money pouring in to their coffers from the non-regulated products.

Allowing wind/solar companies to sell curtailed wind energy while protecting ratepayers from getting ripped off requires two actions.

Senator Gabbard introduced SB 698 to cover the first action.  

The public utilities commission shall not approve any power purchase agreement, nor approve any amendment, modification, or renewal of any power purchase agreement, if the power purchase agreement prohibits the sale of energy to third parties or requires utility consent to sell energy to third parties."


The other action required has also appeared in bill form in previous sessions and will perhaps show up as a bill this session, or be added to SB 698. It would require independent power companies wishing to sign contracts with utilities to file – under confidentiality agreements– their financial records to the Public Utilities Commission.

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Friday, January 23, 2015

Governor David Ige to speak on the future of Hawai`i

By Henry Curtis

Neil Abercrombie founded Pacific Strategies LLC on October 3, 2014. The agent for the one-person Domestic Limited Liability Company (LLC) is attorney Michael J. O'Malley, with HECO’s law firm Goodsill Anderson Quinn & Stifel LLP.

Pacific Strategies has an office at 76 N. King Street, Suite 203, at the corner of Smith Street. If the address sounds familiar it is because that is the very office that Life of the Land had for many years.

Mina Morita resigned from the Public Utilities Commission but offered to stay on until the next Chair was appointed and sworn in. Then she spoke at the Hawaii Energy Policy Forum briefing in the State Capitol. Morita opposes NextEra’s attempt to take over the local utility. Within the hour she was removed from the PUC. She is now a staff member with the House Finance Committee.

NextEra has made two statements almost back to back which most media have not connected. In October they stated that an inter-island cable is in the public interest. In December NextEra said they would only build the cable if it is in the public interest. Some have silo-ed the second statement to mean NextEra is re-thinking the cable. They never stopped thinking about the cable.

Former HECO #2 Robbie Alm wanted to become #1 but Connie Lau and the Board chose Richard Rosenblum who led the company for five years. Now Connie Lau wants to sell Hawaii’s utility to a company located 5,000 miles away. Under the agreement only three people can be laid off in the first 2 years, and if they are laid off they get Golden Parachutes.

Robbie Alm announced in December that he opposed the NextEra deal. With Mina removed so quickly at the Public Utilities Commission some are wondering if the Governor is re-thinking his position on the undersea cable. Robbie Alm now has an unofficial position in the Governor’s office.



Pacific Business News ran a story on January 19, “Hawaii Gov. David Ige wants ratepayers to benefit from $4.3B NextEra-HECO deal.”

"The parties are paying a significant premium to executives of HEI," Ige told PBN. "So where is this significant premium paid to ratepayers? I hope the PUC and Consumer Advocate [take that into account]."


Among the 50 states Hawaii ranks fourth in two categories: millionaire’s per capita and highest tax rate on the poor. 

The Wall Street induced Economic Collapse of 2008 led to a rise in homelessness. Some feel the solution to homelessness is to criminalize the homeless by putting them in prison.

For years local and national crime rates have been dropping. Researchers have found that it is possible to lower crime rates, increase safety, save money and decrease recidivism. One just has to be smart on crime.

Alternatively one can adopt policies designed to maximized overtime and maximize agency budgets and whip up public hysteria by adopting policies that increase crime and recidivism.

After years of going to first way, Hawaii is on the verge of hiring a mainland profit-maximizing firm to take Hawaii down the second road.

Governor Ige had to withdraw the nomination of Elizabeth Kim to be director of the Department of Labor because her appointment violated the State Constitution Article V, Section 6 which requires that directors be a resident of the State for at least a year.

Neil Abercrombie’s last State of the State named only one company: NextEra.

David Ige promised during his campaign to be open and transparent. Now nearly two months into his term, the Governor will address the House and Senate in his first State of the State address on Monday.

This address will define his vision for the future of Hawaii.


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Thursday, January 22, 2015

Gutting and Replacing the popular Net Energy Metering Program


By Henry Curtis

The Hawaiian Electric Companies proposed in the Hawaii Clean Energy Initiative (HCEI) Energy Agreement (2008) that the Net Energy Metering (NEM) be terminated and replaced with a Feed-in Tariff (FiT) mechanism whereby rooftop solar owners would receive less money for exporting electricity to the grid than what they would pay to receive electricity from the grid.

HECO Press Conference: Darren Pai, HECO Senior VP Jim Alberts and HECO VP Colton Ching

The Public Utilities Commission currently has a number of open regulatory proceedings (dockets) on a variety of issues dealing with interconnecting distributed generation such as NEM systems to utility transmission grids.

The Hawaiian Electric Companies are now asserting that the review is taking too long and that the utilities deserve interim relief. 

Furthermore, the interim relief should apply to O'ahu even though the problems facing O`ahu lag far behind the islands of Maui and Hawai`i.


Island
NEM Capacity/System Peak


Lana'i
15.8
O'ahu
25.6
Hawai'i
33.8
Maui
40.2
Moloka'i
51.0



The utility is once again raising the issue of fairness. The NEM customers must pay their fair share of the fixed costs of maintaining the grid.

This point is not in dispute. Energy stakeholders generally agree that there must be a realignment of the costs. There is a general regulatory principle that the cost causer should pay the costs.

But what are the benefits and the costs of rooftop solar? That is what the dispute is all about. 

Furthermore, one regulatory shoe does not fit all rooftop solar systems. Some systems are smarter than others and can automatically adjust output due to distribution line conditions. The utility can monitor some systems, interact with some of them, and predict the output of some systems through monitoring cloud conditions. Furthermore the utilities are operating Smart Grid pilot projects.

Hawaiian Electric is currently implementing several pilots with multiple local and national PV and storage vendors in Hawai'i to provide concrete, real-world performance data and operating experience on the ability to manage load using PV-only, battery-only and PV/battery combined systems. 

These investigative pilots, which the Companies anticipate could reach as many as 1,000 total projects, are intended to characterize and quantify the benefits that these types of systems can provide with the aim of accelerating the use of distributed storage systems on the customer side of the meter to support localized circuit-level and system-level needs.”

Open Public Utilities Commission proceedings include the HECO Companies Power Supply Improvement Plans (Docket No. 2014-0183), the HECO Companies Distributed Generation Interconnection Plan (Docket No. 2014-0192) and the interconnection of distributed generating facilities operating in parallel with the companies' electric system (Docket No. 2014-0130).

HECO filed their Transitional Distributed Generation tariff proposal in the Distributed Generation Interconnection Plan docket.

Several entities have pending Motions to Intervene in that docket: Hawaii Solar Energy Association, Life of the Land, Renewable Energy Action Coalition of Hawaii, Hawaii Renewable Energy Alliance, Hawaii PV Coalition, The Alliance for Solar Choice, Sunpower Corporation, Department of Business, Economic Development, and Tourism, Blue Planet Foundation and Ron Hooson.

The Companies respectfully request that any Commission order on the requests presented in this Motion be issued on an expedited basis, within sixty days from the date of this filing (or by March 20, 2015) so that these program modifications and elements can be made available to customers as soon as possible.”

The utility traditionally ignores environmental concerns. But in this case they assert that they are advocating for the environment.

The levels of DG are so high in Hawai'i that this resource is essentially squeezing out room on the Companies' grids for other lower cost utility-scale projects that provide the same environmental benefits but have increased economic benefits for all customers, and reducing the ability to accept energy from existing and planned renewable energy projects.”

HECO fears that solar power will displace geothermal.

The Companies are concerned that NEM projects will prevent the Companies from procuring lower cost energy from other forms of renewable energy, such as geothermal facilities, biomass, waste-to-energy, and lower cost distributed generation resources.”

HECO estimates that “the estimated O'ahu monthly typical residential bill impact is $3.30.”

HECO asserts that NEMS “is a public policy issue that must be addressed.” But according to HECO, the policy-making Legislature should defer to the policy implementing Public Utilities Commission. 

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