Tuesday, April 28, 2015

Smart Grid must be cost-effective

By Henry Curtis
The Hawai`i Public Utilities Commission clearly broke from any perception that it was a puppet of the utility, a captured regulator at the beck and call of the utility, when it issued several landmark rulings on April 28, 2014.  Attached to these rulings were white papers.
In rejecting the HECO Companies Integrated Resource Planning (IRP) Report the Commission attached a 30-page “Inclinations on the Future of Hawaii's Electric Utilities Aligning the Utility Business Model with Customer Interests and Public Policy Goals.”
The Inclinations discussed the need to develop new business models for modernizing the grid.  The Inclinations called for “Creating a 21st Century Generation System,” and for “Policy and Regulatory Reforms to Achieve Hawaii's Clean Energy.”
“Hawaii has unique challenges and opportunities requiring the State to leap ahead of many other jurisdictions by modernizing the electricity generation system to integrate clean energy resources that cost less than today's oil-fired generation.
With the high cost of today's system and long lead times required to implement projects in this sector, the electric utilities need to move with urgency to modernize the generation system on each island grid as delays are lost savings opportunities.”
“An advanced distribution system is a condition precedent for high penetration of distributed generation, supporting other new customer energy options such as electric vehicles (EV), and improving customer service through enhanced outage detection and timely restoration.
These investments would allow a transition from today's one-direction distribution network into a smart distribution system where distribution circuits and substations are capable of bi-directional power flows.
The future distribution system must have the capability to act both as a delivery service and an aggregator of customer-sited distributed energy resources to benefit the customer and the grid.”
The distributed resources including electric vehicles, solar array inverters and energy storage must be interconnected into the grid in a seamless way.
The Inclination also included several caveats among them being blank checks, privacy and Non-Transmission Line Alternatives.
No blank check for Smart Meters (advanced metering infrastructure).
The HECO Companies have proposed a smart grid program to include advanced metering infrastructure. Although the Commission believes advanced metering technologies are the key foundational infrastructure for an advanced distribution system, the Companies will need to provide strong supporting evidence and justification that this major investment will improve customer service and system efficiencies from the outset and complement broader efforts to upgrade their distribution systems.”
Privacy Concerns.
The HECO Companies must “develop data privacy policies prior to widespread rollout of smart grid infrastructure and ensure continual reassessment and updating of such policies.”
Non-Transmission Line Alternatives
“New transmission projects must consider non-transmission alternatives - New, replacement or upgrade high-voltage transmission projects generally represent significant, lumpy capital investments that will be given careful scrutiny. Non-transmission alternatives (NTAs) such as local peaking or back-up generators, energy storage, demand response and smart grid resources are technically and commercially viable alternatives and must be evaluated as part of any economic justification for new transmission system projects.”
The essence of the Inclinations document was the need for re-alignment.
Traditionally utilities make money on investments, not on the flow of fuel through their equipment. Thus the more generators and transmission lines they build, the more money they make. The need for power during peak periods of demand, which may occur only a few hours per year, drive the demand for infrastructure and hence increase profits.
Running counter to utility interests are state and consumer interests aimed at lowering cost, decreasing energy consumption, flattening the demand curve, increasing the use of renewable energy and decoupling sales from profit.
There was no need for utilities to change when there were no alternatives. But today on the Neighbor Islands a non-grid connected solar-battery combination is cheaper than remaining attached to the utility grid. As the price of solar and batteries continue their downward trend, this exit ramp to stand-alone systems may snowball.
Re-aligning the business, regulatory and consumer interests may allow for a smooth transition during this period of technological instability.
This re-alignment is not unique to Hawai`i.
A recent Utility Dive blog post covered New York State’s ongoing effort to manage the transition. “Today’s utility industry faces a long list of challenges — from aging infrastructure and stagnant demand growth to federal emissions standards and renewables integration. But rather than tackle any number of these issues separately, the REV seeks to solve one overarching problem at the root of them all: The utility business model is not aligned with societal goals.”

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Monday, April 27, 2015

The Smart Grid Revolution: Creating the 21st Century Electricity Marketplace

By Henry Curtis
Hawai`i, New York, California, Florida, South Korea, Japan and the United Kingdom are on the leading edge of the technology-driven effort to modernize the electric transmission and distribution grid. They are seeing to create a Smart Grid by integrating electricity, telecommunications and computers.
The National Association of Regulatory Utility Commissioners (NARUC), founded in 1889, will be meeting in New York City in July. The first keynote speech, "Financing the Future," will be presented by Lisa Edgar, a ten-year veteran of the Florida Public Service Commission (PSC) and current NARUC President.
"We are often told the 'Utility of the Future' is more than just a George Jetson fantasy. Distributed generation resources could empower consumers like never before, and smart-grid technology may result in an unparalleled level of interaction between consumers and their utilities. Just like the smart phone revolutionized the telecommunications industry, many experts believe the utility industry is on the cusp of similar, disruptive changes.
Indeed, the telecom sector is often held as a model of how new policies can transform a business sector, often in unimaginable ways. But despite the hype, just how far off is this new utility paradigm? Are there enough convergences or similarities between the electricity and telecommunications industries that make these comparisons apt?
What financial and regulatory tools may be necessary to spur the necessary innovation? In this session, financial experts, consumer advocates, and industry executives will discuss these issues and more in an innovative, dynamic discussion that could only be held in New York City."
How can the revolution be regulated? How do you regulate the shifting terrain from old stodgy centralized power grids to dynamic interactions between central and distributed systems, electricity and telecommunications, production and storage, the internet and cell phone applications?
The New York State effort involves over 200 players including Wal-Mart, General Electric, General Motors, Verizon, Honeywell, Siemens, Lockheed Martin, Shell Energy, several county, state and federal agencies, AARP, and various environmental groups.
How do you take regulated monopolies and transform them into team players in rapidly changing dynamic marketplaces?
Hawai`i has unprecedented levels on intermittent wind and solar on small island grids. Thus Hawai`i is similar to Caribbean countries which are tourist-driven economies powered by imported petroleum. The Caribbean and Hawai`i islands are heavily endowed with significant indigenous renewable resources, mainly solar and wind but also hydro and geothermal for some islands. Electricity is provided by vertically integrated utilities.
The New York State Public Service Commission (PSC) is overseeing the Reforming the Energy Vision (REV) Proceeding. The unique challenges facing New York City are density and terrain. Tall buildings make conventional wireless communications difficult. The vast majority of the electric infrastructure is underground.
Another effort is being led by the United Kingdom (Great Britain) Office of Gas and Electricity Markets (Ofgem). The Ofgem Smart Grid initiative is known by an acronym RIIO (Revenue = Incentives + Innovation + Outputs).
South Korea and Japan are involved in Smart Grid pilot projects on Maui. In 2009 South Korea established the island of Jeju as the testbed for energy innovation. The island is about the same size as Maui, or 20 percent larger than O`ahu, and has a population of 600,000.
The Hawaii Public Utilities Commission opened a docket (2014-0192) to examine Distributed Energy Resource Policies.
The parties are The Alliance for Solar Choice (TASC), Hawaii Solar Energy Association (HSEA), Hawaii PV Coalition (HPVC), Renewable Energy Action Coalition of Hawaii, Inc. (REACH), SunPower Corporation (SP), Hawaii Renewable Energy Association (HREA), Blue Planet Foundation (BPF), Life of the Land (LOL), Hawaiian Electric Company (HECO), Maui Electric Company (MECO), Hawaii Electric Light Company (HELCO), Kauai Island Utility Cooperative (KIUC), Department of Business, Economic Development, and Tourism (DBEDT) and the Hawai`i Consumer Advocate (CA)
On March 31, 2015 the Public Utilities Commission issued an Order which directs the HECO Companies to collaborate with the Parties resolve the distributed energy resources (DER) issues identified through a two phase schedule. Phase 1 is a 90-day super-intensive effort to create short-term solutions to rooftop solar interconnection problems.
The issues established for the first phase of this proceeding are considered by the commission to be of the highest priority, based on the urgent need to clear the existing interconnection queue backlog, assist in providing needed grid-supportive capabilities, enable customer choice, and allow DER to continue to grow cost-effectively in the future without adversely affecting non-participating customers.
How should a customer self-supply option be technically specified, such that a customer opting to self-supply with minimal grid impact may be permitted to interconnect immediately without need for lengthy review or study?
What revisions to applicable interconnection-related tariffs should be made to accommodate a customer self-supply option?
What other high priority revisions should be made to applicable interconnection-related tariffs to enable customer choice and continued DER deployment, including mandatory requirements for advanced inverter functionality?
What modifications should be made, if any, to the Net Energy Metering Program to ensure DER will be acquired cost-effectively until a longer-term DER market structure can be established?
The discussions are being conducted as settlement negotiations. Parties are being asked to offer compromise positions to enable a free-flowing discussion. Under Rule 408 these compromise positions are not public and not part of the record. No one can be quoted. Rather they seek to drive parties towards a possible stipulated agreement.
Every two weeks the Parties meet with the Public Utilities Commission. In between these meetings are a series of meeting between the Parties.
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Sunday, April 26, 2015

The Lion at the Gate

By Henry Curtis
Colton Ching is HECO’s Vice President of Energy Delivery. In November he sent out an email to HECO personnel regarding his trip to see NextEra’s operations in Florida.
“The execs at Nextera/FPL studied us in advance. They knew a lot about us as individuals. Our careers. Our education. Family.”  
“Company is numbers and metrics driven.  Every employee that we interacted with (folks under the tent and those that weren't) spoke numbers and could articulate their units numerical goals and relate their work to their goals.  They are ruthless in their pursuit of efficiency.  Its top of mind of everyone.”
Shelee Kimura is HECO’s Vice President of Corporate Planning & Business Development. She also attended the November trip to Florida to discuss Liquefied Natural Gas (LNG).
 “Their culture is metrics/performance driven with a continuous improvement mindset throughout the company.  They live by the six sigma approach and every VP tracks the number and color of "belts" in their areas. 
If projects proposals do not use their standard tools and problem solving approach, one VP indicated it will not be understood or accepted.  They are also strong in data analytics and use it for decision making at all levels as well as predictive/proactive operations practices.”
The quotes are from responses made by HECO and NextEra to questions asked by Life of the Land in the current discovery phase of the proposed merger proceeding being conducted by the Public Utilities Commission.
NextEra assert that they do not have a plan and yet they want to suspend rate cases for four years after the merger is approved.
Some people believe that NextEra wants high ratepayer-derived revenue to be maintained for four years while they wring all of the “waste” out of the utility, cutting expenses to the bone and pocketing the windfall savings. Part of this will be used to compensate NextEra for overpaying to buy HECO and part will be used to strengthen NextEra’s profit margin.
In the meantime NextEra executives are travelling around the State, meeting individuals and groups in small meetings, seeking to understand group dynamics, organizational structures, differences of opinion and approaches, and financial information about players who might support or oppose them, or might be persuaded to change sides.
Florida people in the know assert that NextEra goes far beyond other utilities in researching and understanding societal dynamics. They assert that NextEra is the lion at the gate looking to take advantage of unsuspecting communities.
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Saturday, April 25, 2015

Unearthing the mystery behind NextEra’s entry into Hawai`i

By Henry Curtis
The Hawaiian Electric Companies’ (HECO)-NextEra Energy (NEE) Application asserts that the proposed merger will benefit HECO ratepayers.
Will NextEra Energy subsidiary Florida Power and Light (FPL) be an asset in the transition? Is it in the public interest that Hawaiian Electric Industries (HEI), the holding company that owns HECO, be dissolved?
The methods, technologies, and experience that FPL and NextEra Energy have developed in their drive for continuous improvement make them well positioned to provide comparable support, resources and other capabilities that will ultimately result in improved reliability and lower bills for the Companies’ customers.”
The Consumer Advocate and the 29 intervenors have six months (April through September) to ask questions directed to NextEra and HECO. In the past couple of days DBEDT and the Consumer Advocate fired off their first round of questions.
DBEDT asked NextEra to “Identify in detail each of the specific methods, technologies, and experience that NEE and FPL have developed that will improve the HEI Companies’ ability to provide reliable and cost-effective service. Explain why the HEI Companies cannot employ such methods, technologies, and experience absent the transaction.”
Please explain why the HEI Companies would not be able to access technologies, best practices, and expertise of an industry leader through contract vehicles, etc., rather than a change of control.”
NextEra has provided vague statements that they can provide superior know-how.
NextEra Energy brings to bear an unparalleled combination of financial strength, capital project execution skills, operating cost effectiveness, renewable energy acumen, and recent experience in modernizing its utility’s generation and distribution facilities – all of which benefit the customers and communities it serves.”
DBEDT asked, “What is the projected total of synergy savings the NextEra anticipates realizing as a result of the transaction? …To the maximum extent possible, please estimate the proportional contribution of benefits that result from technical resources versus managerial resources versus financial resources.”
Florida and Hawai`i are very different. Does NextEra understand that? DBEDT probed.
“Confirm or deny that neither NextEra Energy nor Florida Power & Light have experience operating a distribution utility in a high-cost service area that has a high volume of generation from distributed solar.”
 “Please explain the degree to which NextEra Energy has reviewed the HEI Companies’ priority feeders, automated lateral switches, automated feeder switches, and underground feeder/lateral cables.”
Several questions have been raised about rooftop solar in Florida versus Hawai`i. So DBEDT asked a series of questions on that issue.
“Confirm or deny that Florida Power & Light backed a proposal to end solar rebate programs in Florida by 2015.”
“Confirm or deny that Florida Power & Light has opposed The Alliance for Solar Choice’s ability to intervene in proceedings before the Florida Public Service Commission?”
“Confirm or deny that neither NextEra Energy nor Florida Power & Light have developed any solutions that could further expedite the interconnection process in Hawai`i.”
The Consumer Advocate also asked about solar.
“Does Hawai`i have more ‘prolific renewable energy resources’ than Florida (more wind, more sun)?  To what extent has FPL developed the renewable energy resources in Florida over the past five and ten-year period?
That is what portion of the generation mix was solar and wind in Florida for FPL 10 years ago, 5 years ago and currently. If the use of wind and solar energy for FPL in Florida over the past 10 years has not grown at the rate that is expected for HECO over the next 10 years, please explain why.”
NextEra came to Hawai`i half a decade ago. But what have they done since that time? The Consumer Advocate asked.
“Please provide a narrative description of NEE's participation in renewable and undersea cable projects in Hawai`i. If any of NEE's representatives offered testimony before the Commission prior to the instant proceeding, please provide copies of any such testimony. Is NextEra planning on selling its natural gas to HECO following the approval of the change of control? Have the Companies discussed that prospect?”
HECO President Alan “Oshima references an ‘integration planning team’. Please provide the names and titles for each member of this team, explaining the assignments, planned process, activities to date, timeline of milestone achievements and other goal and objectives of the "team".
In addition, provide complete copies of all reports, analyses, presentation and other documents prepared by the ‘team’ to date to advise senior management (of HECO/HEI or NEE) of the team's progress, integration problems and issues that have been identified or addressed thus far.”
Florida is a very centralized utility operation in which virtually all of the power is produced from gas and nuclear energy in facilities owned by the utility. The Consumer Advocate asked how this gives NextEra experiences they could utilize in Hawai`i with its emphasis on distributed generation.
NextEra Energy President Eric “Gleason states that, ‘FPL's track record with interconnections of distributed generation in Florida is strong.’ Please provide the following additional information: A side-by-side comparison of FPL interconnection and rate structures for distributed generation, compared to the corresponding Hawai`ian Electric Company tariffs.”
“Copies of all available testimony before regulators or legislators, sponsored by a NextEra representative in the past five years, addressing policies, procedures or ratemaking for distributed generation interconnection in Florida or any other state.”
“Identify and describe any differences in distributed generation interconnection and rate policies that have been advocated by or for NextEra Energy or its affiliates, compared to the recommendations advanced by the HECO Companies in the Motion for Approval of NEM Program Modification and Establishment of Transitional Distributed Generation Program Tariff, filed January 20, 2015 in Commission Docket No. 2014-0192.”
One major issue is how NextEra plans to trim the existing staff levels at the HECO Companies through layoffs or out-of-state relocations. To understand this issue one must know about the existing staff levels and the proposed changes. The Consumer Advocate thus inquired.
“Please provide quarterly statistical data, showing the number of HEI, HECO, MECO, HELCO and bank employees by process area for each quarter of 2013, 2014 and 2015, to date, with explanations for individually significant changes in staffing levels between quarters (for example, transfers, force adjustments, outsourcing, etc.). In addition, provide comparable forecast data, in as much detail as available, showing planned staffing at each entity at year-end 2015.”
“Please provide a detailed, department by department, post-merger management organization chart, indicating the planned executive management positions that will be occupied by employees who will reside within Hawai`i and their reporting relationships to each layer of NEE senior management (indicating the location of each position/employee at each level).”
The end goal is important. Hawai`i is in the middle of a technological revolution. Will the merger accelerate that transformation, the Consumer Advocate wondered?
“Please provide a narrative description of the corporate wide transformation process that is currently underway at HECO (what is changing and how is it being implemented) and explain why the change of control, if approved, would accelerate that process and make it less costly.”
“Mr. Oshima states, ‘partnering with NextEra Energy will put us in a much better position to be at the forefront of technological innovation.’ He then reiterates the common vision, shared commitments to renewables and other clean energy initiatives and combined expertise. Please state with specificity each new technology the HECO Companies are less able to utilize independently, than under NextEra common ownership, explaining each reason why the merger improves upon the opportunity to use that technology.”
Mr. Gleason states, ‘We believe that NextEra Energy's strengths are in many areas additive to the capabilities of the Hawai`ian Electric Companies and will help facilitate and further the Hawai`ian Electric Companies clean energy transformation.’
Based upon integration work performed to date, please elaborate providing as many examples as possible where specific strengths and capabilities of NextEra have been identified for deployment in Hawai`i, indicating what resources will be used, what they will cost the HECO Companies through intercompany charges, and what quantified benefits will be realized. Provide workpapers with stated assumptions and calculations supportive of your response.”
The Consumer Advocate regularly crunches numbers. Thus they asked a large number of financial related questions.
“What is the annual reduction in capital costs expected as a result of the proposed change in control? Please provide support for your response. … By how much, based on marginal cost rate and annual savings, will the change of control lower HECO's debt costs? If the Companies have not performed that calculation, please so state and explain why.”
Each set of questions must receive responses within two weeks.

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Friday, April 24, 2015

NextEra's proposed Acquisition of HECO enters Discovery Phase

By Henry Curtis
The proposed acquisition of the HECO Companies by NextEra Energy Inc. is entering a new regulatory phase. 
Traditionally when a party makes a filing at the Commission it must send a hard copy of the filing to every other party, often by mail. For the very first time the Commission has approved a process whereby the Commission will get hard copies but all other parties will receive a simultaneous email containing the filing as an attachment. The 34 parties have a total of 76 email addresses.
Each of the parties are filing Protective Orders (confidentiality agreements). There are multiple levels of confidentiality: documents that only the Commission will see, those that can also be seen by the Consumer Advocate, those that can also be seen by non-competitors and those that can be seen by all people who have signed protective orders.
From now till the end of September the Consumer Advocate and the 29 intervenors can ask the 4 Applicants a series of Information Requests (IRs) which are really not requests in that they have to be answered on a very timely basis.
So far four sets of questions have been asked, two sets by Life of the Land, one by Ka Lei Maile Ali`i Hawaiian Civic Club and one set by the Consumer Advocate.
The Application filed in January was a mere 374 pages, and the Direct Testimonies, Supporting Exhibits filed earlier this month was a mere 791 pages.  
The responses to Information Requests may reach a 100,000 pages or more.
HECO and NextEra has replied to the first set of Information Requests filed by Life of the Land with 4,157 pages of publicly available documents and 1,181 pages of confidential documents.
This included a 5-page statement by the Applicants of 19 “general objections” to Information Requests. 
"3. Applicants object to each Information Request to the extent that it seeks information or documents that are beyond the scope of the issues in this proceeding.  The purpose of this proceeding is to address the Application filed by the Hawaiian Electric Companies and NextEra Energy. 
In granting intervention in this docket, the Commission stated that “participation will be limited to the issues as established by the commission in this docket” and it will “preclude any attempts to broaden the issues or to unduly delay the proceeding.”  
In addition, the Commission reminded all parties “that it is imperative that their involvement in this docket reflect a high standard of quality, relevance, and timeliness.”
 The objection document concludes with the statement, “Notwithstanding any of the foregoing general objections and without waiving these objections, Applicants intend in good faith to respond to these Information Requests.”
There are four Hawai`i state agencies involved in regulatory proceeding.
The Public Utilities Commission (PUC) is the regulator and decision-maker. (HRS §269-6
The Department of Commerce and Consumer Affairs (DCCA) Division of Consumer Advocacy (Consumer Advocate) represents consumers in all Public Utilities Commission administrative proceedings. (HRS §269-51) Jeff Ono was the Consumer Advocate under Governor Abercrombie and remains the Consumer Advocate under Governor Ige.
The Department of Business, Economic Development and Tourism (DBEDT) advances business interests and promotes the state energy plan. (HRS §201-2). Deputy Attorney General Gregg Kinkley represents DBEDT. He is a former Consumer Advocate and a former Commissioner on the Public Utilities Commission.
The Office of Planning, reviews state and county plans, programs, projects and regulatory activities and seeks to understand conflicts between them. (HRS §226-53)
The Office of Planning is currently represented by a Deputy Attorney General and has contracted with national energy guru Scott Hempling.
The Office of Planning has just posted a legal notice announcing that they want to hire outside counsel for this proceeding. The candidate must be able to “provide highly specialized legal services” including litigation strategy, review pleadings, conduct discovery, and participate in hearings, meetings and settlement negotiations.
Current admission to the bar of the State of Hawaii and the United States District Court for the District of Hawaii are required and current admission to the United States Court of Appeals for the Ninth Circuit is welcome.

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Thursday, April 23, 2015

How can HECO become a utility 2.0 company?

By Henry Curtis
Everyone recognizes that HECO must change its business model or perish, regardless of whether the company is acquired by NextEra. But what will a utility 2.0 company look like?
The National Association of Regulatory Commissioners (NARUC) will take up the issue at its Summer Meetings in New York City.
Modern Utility / Modern Regulation: Several States are considering new utility business models and regulatory structures in light of low load growth and new grid-enabled products and services. Learn what they are proposing and why.”
Moderated by Susan Ackerman (Oregon Public Utility Commission), the first panel features Lorraine Akiba (Hawaii Public Utilities Commission), Carla Peterman (the Public Member position on the California Public Utilities Commission) and Audrey Zibelman (Chair of the New York State Public Service Commission.
The second panel will focus on the consumer and will also be moderated by Susan Ackerman. The panelists will be David Hepinstall (Executive Director of the New York City’s Association for Energy Affordability), Bill Malcolm (AARP) and Sonny Popowsky (Consumer Advocate of Pennsylvania).
NextEra Energy has attended 14 major energy conferences outside of Florida during the years 2013 through 2015. Seven of them were meetings of the National Association of Regulatory Commissioners (NARUC).
The Electric Power Research Institute (EPRI) has a 32-member Advisory Council. Twelve of the members are appointed by NARUC, including Lorraine Akiba who will serve thru August 2016.
NARUC holds three major conferences each year, a winter meeting in Washington D.C., a summer conference and a fall annual meeting.
NARUC meetings offer a chance for regulatory commissioners around the country to gather, discuss, dialogue and educate themselves on a wide range of cutting edge issues in electricity, gas, telecommunications, water and transportation.
Nearly 1500 people attended the 2015 Winter Meetings. This included three people from NextEra, the majority of the Hawaii Public Utilities Commission and the Florida Public Service Commission and no one from HECO.
The NARUC 127th Annual Meeting will focus on “Consumers, Convergence and Change.” The meeting will be held in Austin, Texas from November 8 - November 11, 2015
There are smaller meetings such as the Western Conference of Public Service Commissioners and NARUC workshops and seminars. NARUC also offers on-line seminars.
Pricing for Sustainability, PURC Online Course (April 6 - May 17, 2015)
Comprehensive Regulatory Impact Analysis, PURC Online Course (April 6 - May 17, 2015)
Western NARUC Utility Rate School (May 11 - May 15, 2015, San Diego, CA)
A National Town Meeting on Demand Response and Smart Grid (May 26 - May 28, 2015, Washington, DC)
Western Conference of Public Service Commissioners (May 31 - June 3, 2015, Phoenix, AZ)

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Wednesday, April 22, 2015

Sierra Club opposes Maui coal contract

By Henry Curtis

Campbell Industrial Park Coal Plant
Maui Electric Company has requested that the Public Utilities Commission (PUC) approve an amended Power Purchase Agreement (PPA) with Hawai`ian Commercial & Sugar Company (HC&S). Sierra Club has filed a motion to intervene in Docket 2015-0094.
In 2014 the Hawai`i Department of Health fined HC&S over $1M for violating the Clean Air Act more than 400 times. The violations included opacity problems, that is, particulate matter which can cause heart attacks, strokes, asthma attacks, birth defects and premature death.
MECO described the HC&S facility as "an internal bagasse fired power plant," and asserted the Pu'unene Sugar Mill's boilers are "clean," "nonfossil-fuel," and "renewable power." In reality the plant relies on coal and some oil for close to one quarter of its fuel input.

Attached to the MECO Application is the 55 page proposed amended contract. There is one reference to coal in that document.

“Seller shall provide to Maui Electric by January 31 of each year a report identifying the fuel sources used and the energy produced by each fuel source. The information provided shall include total energy generated in kW hours, which includes energy exported to Maui Electric and energy consumed by Seller, as well as the kW hours and/or BTU from each fuel source including, but not limited to: hydro, bagasse, wood, diesel, coal, cooking oil, and used oil.”
Perhaps more importantly that the amount of coal used is the fact that the facility can use some of the bagasse-based electricity for its internal use, but adds fossil fuel to even out the electricity output to make it more compatible for sale to the utility.
The Sierra Club researched the history of the plant and noticed that some of the benefits that MECO described, such as “nonfossil-fuel” aren’t defined in state law.
In the last few years Sierra Club has become active in Hawai`i Public Utilities Commission proceedings. Nationally the Sierra Club is waging a “Beyond Coal” campaign.
Last year MECO asked the Public Utilities Commission for permission to open discussions with HC&S for modifying and extending the Power Purchase Agreement. Sierra Club’s motion to intervene was rejected. The Public Utilities Commission approved the negotiations. This new docket is the fruit of those negotiations.
In this new docket Sierra Club asserts that it is entitled “to intervene in this proceeding on grounds that the proposed extension of MECO's PPA with HC&S will impact Sierra Club members' health and aesthetic and recreational interests. In addition. Sierra Club holds an organizational interest in reducing Hawai'i's dependence on imported fossil fuels and advancing a clean energy grid and economy for the state going forward.”
“Sierra Club believes this statement of interest presents a sufficiently strong basis for the Commission to grant it intervenor status; however, Sierra Club also submits affidivits from members who live near the Pu'unene plant to further demonstrate its interests in this proceeding.”
MECO asserts that “this Project serves as a viable hedge against the uncertain cost of energy generated from petroleum diesel, Low Sulphur Fuel Oil, or other fuel oil.”
“The Project also helps to create energy independence and security by shifting a portion of the millions of dollars that currently are spent on imported oil and reinvesting those dollars in Hawai'i on projects that do not rely solely on oil or other imported resources to provide energy to the Company's customers.”
But the contract actually would decrease the hedge from 12 MW to 4 MW.
The Existing PPA provides that HC&S sell, and Maui Electric purchase, 12 MW of capacity and associated electric energy from the Facility. In March 2014, HC&S exercised its one-time right under the Existing PPA to decrease firm capacity to 8 MW effective for the 2015 contract year. The Amended PPA proposes that HC&S will provide, at Maui Electric's request … up to 4 MWs of scheduled energy during certain designated months, and up to 16 MWs of power in emergencies.”

The existing contract requires MECO to pay the on-peak and off-peak avoided cost rate and "an annual capacity charge of $1,790,880 for their commitment to provide firm capacity." The new contract would establish one rate of 19.1 cents per kilowatt-hour and eliminate the capacity payment. 

The new contract would extend the 1989 agreement all the way until 2017!

Hawai`i State Law includes a barrel tax on oil which is used to fund renewable energy projects. Interestingly, efforts to include coal were rejected.
A few years ago the Public Utilities Commission rejected the Aina Koa Pono biofuel proposal on cost and environmental grounds. Now the Commission has open dockets on a proposal by the Gas Company to import fracked liquefied natural gas (LNG) which Life of the Land intervened on and this proposal for more coal which the Sierra Club intervened on.
 Sierra Club is being represented by local attorney Colin Yost and national Sierra Club attorney Andrea Issod. Affidavits were filed by Sierra Club members Clare Apana and Christine Andrews who live very close to the Pu'unene facility.
The utility also has imposed a deadline for the Public Utilities Commission which is also aimed at would-be intervenors seeking to protect the public interest. The utility favors waiting until the last moment and then saying, hurry up, time is running out.

“Time is of the essence … Maui Electric and HC&S … mutually agreed that if the Commission does not approve the Amended PPA by or before September 30, 2015, either Party may provide notice to terminate the Existing PPA.” 
HC&S is one subsidiary of A&B. The other subsidiary is East Maui Irrigation (EMI) Company. It will be interesting to see how the EMI water issue plays out now that Bill Tam, the DLNR Deputy for Water, has left.
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Tuesday, April 21, 2015

Army releases Draft EIS for Schofield Biofuel Generation Station

By Henry Curtis
Hawaiian Electric Company (HECO) filed an Application with the Public Utilities Commission for the proposed Schofield Biofuel Generation Station on March 16, 2014. HECO and the Consumer Advocate are the only parties in Docket No. 2014-0113.
The Consumer Advocate’s Statement of Position was due on November 20, 2014. If HECO needed to reply, their Reply Statement of Position was due on December 18, 2014.
Since then the Consumer Advocate has asked for various extensions of time. On March 11, 2015 the Public Utilities Commission extended the date that the Consumer Advocate’s Statement of Position was due to March 23, 2015. On that date the Consumer Advocate asked for another delay which has yet to be granted.
The issues in the proceeding are whether HECO should be authorized to commit funds for the generation station, whether an overhead sub-transmission line should be built, whether the facility should use 50% biofuel, whether the plant should use a minimum of 3.5 million gallons of biofuel annually, whether to approve the proposed Lease and Operating Agreement and whether to approve the capitalize lease payments made to the Army prior to the in-service date of the Project.
Now that the Public Utilities Commission part is done, or nearly done, the Army is proceeding with its Draft Environmental Impact Statement (EIS) for the Schofield Generating Station Project.
The purpose of the Draft EIS is to evaluate impacts associated with leasing Army land to HECO, the granting of an easement for less than an acre of conservation land by the Department of Land and Natural Resources (DLNR), and HECO’s construction, ownership, operation and maintenance of the plant and electric line.
The military had power plants in Hawai`i during WW2. The military transferred its grid to HECO after the war. HECO agreed to cover the costs in exchange for the military dismantling their generators.
About ten years ago an independent proposal was floated for a cogeneration unit at Schofield. That deal was reversed when HECO strenuously objected.
Recently by Presidential Executive Order and Department of Defense directives, the military has increased its use of renewable energy and is in the process of designing military grids to withstand utility grid failures.

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Monday, April 20, 2015

The Fight for Solar in Florida

By Henry Curtis
The Georgia Legislature passed the “Solar Power Free Market Financing Act of 2015” (HB 57) which allows homeowners and businesses to install and pay for solar panels through leasing arrangements. The law limits solar energy to personal use only.
Now there are only four states with laws expressly prohibiting residents and businesses from buying solar directly from anyone other than the electric utility: Oklahoma, Kentucky, North Carolina and Florida.
Floridians for Solar Choice is a broad left/right coalition of Floridians seeking passage of a 2016 ballot initiative to promote rooftop solar.
Floridians for Solar Choice represents a broad cross-section of society
The Tea Party Network
Florida Retail Federation

Greenpeace USA

Christian Coalition of America
Solar Energy Industries Association
Physicians for Social Responsibility
Conservatives for Energy Freedom
Florida Solar Energy Industries Association
Clean Water Action

Libertarian Party of Florida
Florida Alliance for Renewable Energy
Sierra Club Florida

Republican Liberty Caucus of Florida

Southern Alliance for Clean Energy

Intellectual Decisions on Environmental Awareness Solutions (IDEAS) – University student organization

Republican Liberty Caucus of Tampa Bay
Evangelical Environmental Network
Wind Turbine & Energy Cables Corporation (WTEC)

Jim Pierobon, a Washington D.C. renewable energy marketing and advertising analyst wrote a column, “Eight Hurdles to a Proposed Constitutional Amendment for Solar Choice in Florida.”
Pierobon asserts that the opposition will come from Duke Energy Florida, NextEra subsidiary Florida Power & Light and the Florida Municipal Electric Association (FMEA).
A sea-change is brewing in Florida and it’s shaping up to be the most closely watched 2016 referendum on any state’s election ballot. …
Prepare for and fight back against the inevitable onslaught of advertisements and aggressive PR tactics by Duke Energy Florida and Florida Power & Light. Their business models depend on holding on to their exclusive rights to sell electricity. Rest assured they will stop at nothing legal to defend it.
Among the ways ballot advocates can prepare or fight back is to draw a sharp contrast between how the parent companies of Florida Power & Light (NextEra Energy) and Duke Energy Florida (Duke Energy) are investing in solar systems for their shareholders outside of Florida but at nowhere near the same pace within Florida. 
NextEra brags about ‘becoming America’s clean energy leader;’ but what about back on its home turf? Communicating that hypocrisy is no easy task. To be credible, it will require deft messaging and execution.”
Key ballot provisions are:
A local solar electricity supplier, as defined in this section, shall not be subject to state or local government regulation with respect to rates, service, or territory, or be subject to any assignment, reservation, or division of service territory between or among electric utilities. 
No electric utility shall impair any customer’s purchase or consumption of solar electricity from a local solar electricity supplier through any special rate, charge, tariff, classification, term or condition of service, or utility rule or regulation, that is not also imposed on other customers of the same type or class that do not consume electricity from a local solar electricity supplier.
An electric utility shall not be relieved of its obligation under law to furnish service to any customer within its service territory on the basis that such customer also purchases electricity from a local solar electricity supplier.
Notwithstanding paragraph (1), nothing in this section shall prohibit reasonable health, safety and welfare regulations, including, but not limited to, building codes, electrical codes, safety codes and pollution control regulations, which do not prohibit or have the effect of prohibiting the supply of solar-generated electricity by a local solar electricity supplier as defined in this section.
The Ballotpedia web site details the complex nature of ballot procedures in Florida. 
In late March Floridians for Solar Choice announced it had collected the 72,000 verified signatures required to start the next step in the ballot process.
The Florida Division of Elections sent the proposed ballot petition to the Florida Attorney General who must ask an advisory opinion from the Florida Supreme Court. 
The justices must determine that the language is unambiguous and conforms to the single-subject requirement.
Earlier this year Zogby Analytics was commissioned by Clean Edge, Inc. and SolarCity to poll Americans U.S. Homeowners on Clean Energy: A National Survey asked what are the three most important energy sources for the future of the country. The top four answers were solar (50%), wind (42%), natural gas (33%) and energy efficiency (25%). 
Gallup polls found similar results. Gallup asked, “Do you think that as a country, the United States should put more emphasis, less emphasis or about the same emphasis as it does now on producing domestic energy from each of the following sources?”The three sources with the highest percent favoring more emphasis were solar, wind and natural gas.

More Emphasis (2013)
More Emphasis (2015)
Natural Gas

Gallup found that “the practice of hydraulic fracturing, or ‘fracking,’ has emerged as a divisive issue across the U.S., reflected in Americans' opinions about it; 40% of Americans say they favor the procedure, while 40% oppose it, and a substantial 19% do not have an opinion. This is amid the Obama administration last week announcing the first nationwide safety rules for fracking.”
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