Friday, October 9, 2015

HECO Proposes a Complex Community-Based Renewable Energy Program

By Henry Curtis

Currently about 13 percent of single family homes in the HECO, MECO and HELCO territory have rooftop solar.

The 2015 Hawaii State Legislature sought to address the issue of making solar available to everyone instead of a minority of customers.

While residential solar energy use has grown dramatically across the State in recent years, many residents and businesses are currently unable to directly participate in renewable energy generation because of their location, building type, access to the electric utility grid, and other impediments. 

The community-based renewable energy program seeks to rectify this inequity by dramatically expanding the market for eligible renewable energy resources to include residential and business renters, occupants of residential and commercial buildings with shaded or improperly oriented roofs, and other groups who are unable to access the benefits of onsite clean energy generation.

SB 1050 (Act 100) required the HECO Companies to develop a program and submit it to the Public Utilities Commission. 

The HECO Companies used to opportunity to attack the Net Energy Metering program.

Under Net Energy Metering a customer with Rooftop Solar can transfer one unit of energy to the grid during the day and pull one unit of energy out in the evening. The customer pays a small minimum monthly bill.

HECO has asserted that this results in customers without solar subsidizing those with solar. Several independent national analyses have shown that this isn’t true. But it sounds good and utilities across the country have sought to use this argument to reign in rooftop solar.

Under HECO’s proposed community-based renewable energy program (CBRE), a customer would be able to purchase a share of the solar energy produced from a centralized solar facility. They would not be part owners of the facility itself.

There would no longer be a one-for-one swap. The ratio would increase to two or three to one. Thus if their share of the solar facility output amounted to 200-300 kilowatt-hours per month, they could reduce the amount of their residential customer bill by 100 kilowatt-hours per month.

 The 73-page proposal by HECO adds a lot of complexity to the simple idea.

The program is not open-ended but is restricted to 32 megawatts total on five islands. On Lana`i and Moloka`i the facilities would generate wind-power -- not solar-power -- rom five 100-kW systems per island.

Customers who sign up for the program would have to pay initiation fees and monthly fees to both the developers and the utility.

Customers would be restricted on how many shares they can buy.

But perhaps more importantly, the program is available not only to those who can’t put solar on their roofs, but also to those who can but choose not to.

Thus the Legislative goal of providing an opportunity to those who are “unable to directly participate in renewable energy generation” will instead be available to virtually every Hawai`i-owned residence and business.

In fact, the program is designed such that it is possible that only those who could put solar on their private homes get all of the benefits and those who are “unable to directly participate in renewable energy generation” will continue to be unable to participate in the solar revolution.

HECO’s proposal can be accessed on the Public Utilities Commission’s Tariff Page  by writing *Hawaiian Electric* on the Company Name tab. (The asterisks are required). The web site will then produce a list of tariffs. The new proposed tariff is Transmittal Number 15-09.

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Clarification regarding Biofueling Schofield Generators

Several readers have asked about the use of biofuels in the proposed Schofield Generating Station Project (SGS).

Where would the biofuels come from?

Would they be blended with fossil fuels?

Biofuel are currently used in HECO's existing Campbell Industrial Park (CIP) Combustion Turbine (CT-1). The generator burns 100 percent biofuel. That practice would end. The facility would instead burn fossil fuel. 

The biodiesel would be re-routed to the Schofield Facility and blended together with fossil fuel to power the proposed Schofield Generators. 

“Hawaiian Electric's intent is to minimize the overall cost of biofuels by using biodiesel more efficiently. The Campbell Industrial Park CT-1 unit ("CIP CT-1") is a flexible simple-cycle combustion turbine, approximately 120 MW in capacity, which is designed to operate as a peaking unit.”

“Currently, CIP CT-1 operates solely on 100% biofuel.”

“If the SGS Project is installed, it will be a more appropriate choice as the primary location to use higher-cost biofuels since the SGS engines will use fuel more efficiently than CIP CT-1. This may provide an opportunity to modify the fuel requirements placed on CIP CT-1 to minimize the cost impact to customers of using higher-cost biofuels.”

The Commission issued its Decision and Order in Docket 2014-0113 on September 29.

“HECO shall shift its current biofuel use at CIP CT-1 to the SGS Project. HECO shall take the necessary steps and file the necessary applications to shift its current biofuel use at CIP CT-1 to the SGS Project in order to minimize the impact on ratepayers of the cost of biofuel.

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Thursday, October 8, 2015

Special Tax Rules for Rich Corporations

By Henry Curtis 
A new report has just been released on tax dodges for large corporations.
 Offshore Shell Games 2015: The Use of Offshore Tax Havens by Fortune 500 Companies (October 2015) was released by Citizens for Tax Justice and the U.S. PIRG Education Fund
Apple is Number One. The company has over $180 billion in offshore save havens. If the funds were kept in this country, Apple would owe $59.2 billion in U.S. taxes.
All told, Fortune 500 companies are holding more than $2.1 trillion in accumulated profits offshore for tax purposes.
At least 358 companies in the Fortune 500 maintain subsidiaries in offshore tax havens. Combined these entities have 7,622 tax haven subsidiaries which are holding over $2 trillion in accumulated profits.
Bermuda and the Cayman Islands are the two most popular sites for offshore tax havens.
A 2013 Senate investigation found that Apple has structured two Irish subsidiaries to be tax residents of neither the United States, where they are managed and controlled, nor Ireland, where they are incorporated. This arrangement ensures that they pay no tax to any government on the lion’s share of their offshore profits.” 
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Coalition Against HECO-NextEra Merger Remains United

By Henry Curtis

Yesterday the intervenors and the Consumer Advocate had the opportunity, but not the requirement, to file rebuttal testimony in the Public Utilities Commission formal contested case proceeding regarding NextEra’s bid to take over the three investor owned electric utilities in Hawai`i: HECO, MECO and HELCO.

All parties continue, at some level or another, to oppose the acquisition at this point in time.

Hawaii Renewable Energy Association (HREA) chose this opportunity to update their Direct Testimony. “I expressed disappointment that NextEra has revealed very little in their approach to planning,” wrote Warren Bollmeier. “In sum, this lack of response on details gives me pause.”

Some intervenors took a more conciliar tone.

Renewable Energy Action Coalition of Hawaii (REACH) asserted that during the rest of this docket NextEra could “create a planning process oriented to a goal of 100% renewable energy” and take the first step to implement the plan. If they do so then “it could be said that the Proposed Transaction is in the public interest.”

The Gas Company (Hawai`iGas) said “appropriate conditions need to be implemented if the Proposed Transaction is approved.”

The Applicants took a curious approach in replying to Blue Planet’s testimony.  As discussed below, the Applicants have apparently misunderstood the thrust of Blue Planet’s positions in many instances, or have chosen to paint Blue Planet’s position in a negative light, contrary to both the intent and the content of that testimony. Blue Planet is repeatedly characterized as an opponent of the merger, when in fact Blue Planet has asserted that the merger should be evaluated closely, but has not opposed the merger under all conditions.”

Many of the testifiers chose to stick to addressing the new and modified commitments of NextEra and HECO.

The Consumer Advocate acknowledged that “some of these new commitments will have value for customers, if the proposed transaction is approved, but many of the new commitments do not offer significant value to customers … the Applicants have rejected many recommendations by the Consumer Advocate, often with very little justification or explanation.”

The Sierra Club brought in a heavy-hitter new witness to counter some of NextEra’s misstatements about how great Florida Power & Light is.

Nathan A. Skop is an attorney and Vice President for Kellstrom Defense Aerospace, Inc. He is a former Commissioner on the Florida Public Service Commission and a former business manager for FPL Energy (now known as NextEra Energy Resources).

Skop served on the National Association of Regulatory Utility Commissioners (“NARUC”) Committee on Electricity and as a faculty instructor for the NARUC Utility Rate School.

Skop participated in the engine build-up design and technical integration of the Boeing 777 aircraft as a Boeing propulsion engineer, participated in the design of the SEAWOLF class nuclear submarine and the initial criticality and power range testing of the USS Santa Fe (SSN 763) nuclear submarine reactor plant as a nuclear project engineer for General Dynamics Corporation.

NextEra sought to remove Skop from the Florida Public Service Commission for not giving the utility whatever they wanted.

The County of Maui asserted that “the Applicants’ responsive testimonies and its supporting responses to information requests have not materially improved the Applicants’ initial application. … At best, the proposed transaction commitments are well intentioned public relations actions, and at worst, a distraction from the crucial issues relating to whether or not the Applicants can show this merger is truly in the public interest.”

The County of Hawai`i “believes that the Island of Hawai‘i is poised to reach the 100% Renewable Portfolio Standard well before the year 2045 with or without the Merger.”

Hawai‘i has been a paradise for Monopolies … Rather than conducting a comprehensive, ‘blank slate,’ impartial and objective analysis of what an optimal system can be, Applicants seem to be proceeding forward on the assumption that continuation of the traditional, capitalintensive, vertically integrated utility, with its associated ratebase regulatory model, is the appropriate system design and business model for the future.”

The Department of Business, Economic Development and Tourism (DBEDT) was willing to give the benefit of the doubt to HECO and NextEra at least with respect to intent.

Applicants’ Responsive Testimony … appear to be a good faith attempt to respond to many of the concerns that have been raised … Unfortunately, however, many of the new or modified Transaction Commitments suffer from the same flaws that plagued the original proposal.”

The Department of Defense focused on ring fencing. That concept deals with protecting assets on both sides of the fence from disturbances on the other side. For example, what happens if NextEra owns HECO and there is a nuclear reactor accident in Florida?

DoD noted that NextEra “fails to include commitment to modern effective ring-fencing measures similar to those that have been agreed-to and required in other recent change of control proceedings involving regulated public utilities.”

In fact, NextEra witnesses have taken hardline positions against certain ring fencing concepts that those witnesses have openly embraced as the new utility standard in other recent merger proceedings.

Friends of Lana`i not numerous “new or modified commitments that do not have a clear cost component.” Over 20 have “no penalty provision for non-compliance,” almost a dozen are proposed to be implemented at some unspecified period in the future, and a few require that ratepayers pay for them.

Life of the Land pointed out that many new commitments were hardly new at all, they were either existing Commission requirements or pledges to continue existing utility practices.

Applicants do not, and cannot, fix the flaws in a transaction whose central purpose embodies private interests that conflict with Hawai'i's public interest.” According to Office of Planning witness Scott Hempling Hawai'i should “first should decide the services and skills it needs, then invite to Hawai'i the companies best able to provide these things.

Hempling noted the different approaches taken in this proceeding. NextEra witness “Reed wants NextEra to be considered in isolation from all other options; I recommend that NextEra be considered in comparison to all other options. Mr. Reed wants the decision to be based on achievements in NextEra's past; I recommend the decision be based on commitments made for Hawai'i's future. On the question of how a state government should choose who controls its utilities, Mr. Reed and I differ fundamentally.”

The Alliance for Solar Choice (TASC) opined that the “Applicants in their responsive testimony directly challenge some of the fundamental elements of the future electric utility industry in Hawaii that the Commission articulated in its Inclinations document.”

NextEra has the demonstrated experience and capability to deliver benefits to the State and to HECO Customers” according to Sun Power. “Nextera could have embraced the Commission’s bold vision” but did not. This merger proceeding is “not only the appropriate place but potentially the only place to do so.”

Hawaii Island Energy Cooperative (HIEC) has “concerns that FPL, although a utility with an enviable track record in Florida, does not have the directly applicable skills and experience to provide for improvement in operations of HELCO.”

A major problem with the Applicants’ testimony according to Marco Mangelsdorf is that “seems to lump together municipalization and the cooperative ownership alternative.” Because of problems with forming municipal utilities NextEra witnesses downplayed forming cooperatives.

I believe that the electric utility is facing a disruptive innovation in meeting the challenges of distributed energy generation” stated Puna Pono Alliance (PPA) witness Tom Travis. “Mr. Gleason provides no insight into how NextEra will deal with incorporation of massive amounts of distributed generation.

With a combination of micro-grids, small and large power producers, local and grid wide storage initiative, all with various ownership schemes, the local control needed is the ability of the utility to work with citizens, regulators, businesses, and legislators to “imagineer” different ways of doing business.  This is difficult when those representing the utility in the discussion are responsible for profits, for implementation of corporate values, and for contributing to corporate health. Nothing will stifle creative thought more than a statement, ‚let me check with Juno.’  It is not about who the stockholders are, but instead is about who makes the decisions and where.”

International Brotherhood Of Electrical Workers (IBEW) noted that the “wholesale rejection of the Local Union’s concerns for not only the HECO Companies’ current and future skilled union workforce, but also local union contractors and local service providers, is both alarming and disappointing.”

Ulupono Initiative wrote the longest, most report-like testimony. On nearly four dozen times they cited, referenced, footnoted and/or quoted the Direct Testimony of nine witnesses representing six different parties. They gave numerous citations to older Hawai`i Public Utilities Commission decisions as well as referencing regulatory decisions from Oregon, Maryland, Washington, Utah, and Maine.

Ulupono Initiative would first like to acknowledge that some of the new or modified commitments proposed in the prefiled responsive testimony of Applicants satisfy some of the concerns presented in the prefiled direct testimony of Ulupono Initiative. … [However] many commitments …remain conditional, intangible or uncertain.”

Testimony was also submitted by Hawaii Solar Energy Association (HSEA), Sun Edison and Tawhiri and Ka Lei Maile Ali`i Hawaiian Civic Club (KLMA).

Following in the steps of Parker Ranch’s Paniolo Power, Hawaii Water Services Company became the second intervenor to drop out of the proceedings.

Four parties in the merger proceedings -- AES Hawaii, the Hawaii PV Coalition, the Honolulu Board of Water Supply and Hina Power -- opted not to file additional testimony.

Several non-parties have come out against the merger. These organizations include Hawaii Business magazine, the University of Hawai`i, Manoa student newspaper Ka Leo O Hawaii, Progressive Democrats of Hawaii, the Hawaii Chapter of Americans for Democratic Action, Hawaii State Association of Electrical Workers, IBEW Local 1186, IBEW 1357 and I Aloha Molokai.

A number of groups have chosen not taken positions because the proposed merger is outside of their organization’s kuleana. These groups include Trust for Public Lands, Outdoor Circle, Kua'aina Ulu Auamo (KUA), Sust`ainable Molokai, and Malama Pupukea-Waimea.

A few groups have endorsed the merger, including the Maui Hotel & Lodging Association, A&B Properties, Hawaii Regional Council of Carpenters, and the Molokai Chamber of Commerce.

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Wednesday, October 7, 2015

Schofield Biofuel-Fossil Fuel Generators Approved

By Henry Curtis

The Public Utilities Commission has approved the application by Hawaiian Electric Company to commit funds for the proposed Schofield Generating Station (SGS).

The plant will run on a 50 percent biofuel 50 percent fossil fuel mixture.

One problem with the current O`ahu grid is the size of its largest units. The grid must be able to operate when one of the two largest units is off-line for maintenance and the other one crashes.

Historically grids include ever larger units. The modern 21st decentralized approach would use numerous smaller units.

Currently the two largest generator units on O`ahu are owned by independent power producers.  They are the 180 MW AES coal plant and the 208 MW Kalaeloa combined-cycle Cogeneration Plant.

The proposed generation station would consist of six individual Reciprocating Internal Combustion Engine (RICE) units which can operate individually or in tandem. This type of engine is very reliable and can endure adverse conditions. The engine has been used extensively in marine shipping industry.

Another problem with the O`ahu grid is that all existing centralized generators and most oil storage facilities are located along the coast. If a tsunami hit the Kalaeloa-Kahe area it could knock out 1,000 MW of firm generation. The Schofield project would be located eight miles inland at 900 feet above sea level.

An island black-out on Maui some years back required the grid to be initially re-started by an HC&S generator. Not all generators are able to “black start”, that is, to turn out without relying on power from an external source.

The Schofield units will not only have black start capabilities but also be able to reach full capacity within six minutes.

This contrasts with the current O`ahu system which takes several hours to go from a cold-start to full operations.

The Army would create a micro-grid. Schofield Barracks, Wheeler Army Airfield WAAF, and Field Station Kunia could operate as an integrated energy district which would secure military operations in times of national crisis.

The grid of the future may be a utility-owned transmission spine connected to numerous micro-grids. Each micro-grid could be operated as a stand-alone unit. There could be a University of Hawai`i micro grid, a Honolulu Rail micro grid, and privately or cooperative-owned community systems.

The 100 percent biofuel Campbell Industrial Park Combined Turbine (CT-1) unit and the 50 percent biofuel Schofield system could be a postcard of the future. O`ahu could get half of its power from wind and solar. The other half could come from new small biofuel powered generators.

Several energy stakeholders seek to intervene in Public Utilities Commission policy proceedings on issues ranging from reliability, competition, planning, energy efficiency, distributed generation, feed-in tariffs and net energy metering.

Only Life of the Land has intervened on utility applications for new generators and biofuel contracts.

No entity intervened in the Schofield docket.

One drawback is that the Environmental Impact Statement is supposed to be done at the earliest reasonable time, before the first discretionary permit is issued. As in the case of the Hawaii Superferry and the currently proposed second wind generation facility in Kahuku, the Public Utilities Commission has given approval before the EIS has been completed.

The Schofield Project includes a HECO-Army Lease and Operating Agreement that is still being negotiated. 

The Commission’s decision noted that the lease can't be executed until the State and Federal Environmental Impact Statements documents are completed and an Army real estate internal review process is also completed.

The Commission’s decision allows HECO to shift their biofuel requirement from their Campbell Industrial Park (CIP CT-1) generator to the Schofield Generating Station (SGS) Project. “HECO shall shift its current biofuel use at CIP CT-1 to the SGS Project.”

The Commission’s decision also requires that “within sixty (60) days of the date of this Order, HECO shall file a full explanation of how it plans to operate the SGS Project so as to maximize the economic benefits to ratepayers.”

The EIS preparation Notice was published in January 2014. Only one comment was made at the February 6, 2014 Scoping Meeting. The Wahiawa Community and Business Association supported the project.

The Draft EIS was published in April 2015. The document included several scoping comments and responses. None came from the environmental community.

Blue Planet Foundation commented in the press back in April 2015, “It can match renewables much better than the power plants we have.” This month Blue Planet Foundation asserted in the press, “We’re not enthused about any new investment in fossil generation …But this is flexible generation that can use renewable fuel.”

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Tuesday, October 6, 2015

Gambling on Energy

Exit Fees, Utility 2.0 and 3.0, and a new report: "Hawai`i at the Energy Crossroads"

By Henry Curtis

Should customers wanting the leave the utility grid be forced to pay exit fees?

NV Energy was acquired by Warren Buffett's Berkshire Hathaway Inc. in December 2013. The utility then signed long-term contracts to buy solar energy at prices as low as 3.9 cents per kilowatt-hour from First Solar Inc. and SunPower Corp.

The utility provides electric and gas to customers in Nevada.  NV Energy charges customers nine to ten cents for its electricity, more than twice the price it pays for electricity.

Warren Buffett wants to charge hefty exit fees for those trying to escape his expensive electricity.

Three large casino companies owning dozens of gambling joints in Las Vegas want cheaper electricity. At least thirteen states including Texas and New York allow businesses and residents to buy their electricity from competitive suppliers. Nevada doesn’t.

Rooftop solar already generates electricity at some Sands and MGM properties. But the casinos want to be able to buy electricity directly from wholesalers and solar power companies. They could tap into electricity at 3.5 cents per kilowatt-hour.

A 2001 Nevada law large energy users to switch power suppliers. But the Public Utilities Commission of Nevada (PUCN) has never permitted a customer to leave NV Energy.

The PUCN has proposed that the three casinos pay a total of $130 million in exit fees to cover costs that would fall on other customers. That amount of money is equivalent to several years’ worth of electricity and would make leaving the system prohibitive.

Earlier this year the PUCN voted two-to-one to reject an application by the data storage company Switch to exit as a customer of Nevada Power Co.

John Farrell spoke at the Maui Energy Conference. Farrell asserts that bold regulators are pushing for utility 2.0 while his organization, the Institute for Local Self Reliance is pushing for utility 3.0.

The future utility business model, commonly called utility 2.0, seeks to protect utilities while encourage distributed generation, rooftop solar, electric cars and energy efficiency. But what happens when major commercial customers want to break away from state-regulated monopolies?

Some entities like the Institute for Local Self Reliance (ILSR) are calling for utility 3.0 based on energy democracy that focus of what is good for consumers rather than what is good for the utility.

While utility 2.0 asks, “How can we incentivize utilities to do the right thing,” utility 3.0 asks, “How can customers take control of their future?”

It’s rare that a report from the Department of Public Service can become a banner for the transformation of the energy system, but the April 2014 release of “Reforming the Energy Vision” (REV) from New York’s Department of Public Service has set the standard for the meaning of Utility 2.0.

The report is notable because it challenges two of traditional paradigm’s core principles: ‘that there is little or no role for customers to play in addressing system needs…and that the centralized generation and bulk transmission model is invariably cost-effective, due to economies of scale.’”

Like Hawai`i, decoupling was adopted to cut the link between utility revenue and energy sales. As sales go up rates drop keeping revenue (not profits) on an even keel. But decoupling does not promote competition or customer-owned solar. The incumbent utility still gains by crowding out others.

Today the Institute for Local Self-Reliance released a report, “Hawai`i at the Energy Crossroads,” written by Matt Grimley and John Farrell.

One part of the report focuses on the proposal by NextEra to acquire the HECO Companies.

The merger is controversial, not just for the change in ownership and control of the island state’s largest utility, but because it also reinforces the     centralized approach to clean energy. 

NextEra’s unregulated subsidiaries build utility-­scale renewable projects, but have no experience in managing rooftop solar or soliciting bids from third-­party developers.

Likewise, subsidiary Florida Power & Light (FPL) has a history of actively opposing renewable energy, especially rooftop solar, and is highly reliant on centralized power generation from nuclear fuel and natural gas. 

Several signs point to the new merged entity becoming another Florida Power & Light: NextEra has expressed interest in replacing imported oil with imported liquefied natural gas to fuel Hawai`i’s power plants, along with constructing an interisland undersea transmission line to serve O’ahu’s energy needs from large renewable energy projects sited on less populated islands.”

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Monday, October 5, 2015

Disrupting the Traditional HECO Business Model

By Henry Curtis
The Legislative Reference Bureau audited the Public Utilities Commission and the Consumer Advocate in 1975, 1989 and 2004. All three audits found that the regulators were reactive not proactive.
 The 2004 Audit stated, “Core deficiencies result from a lack of vision and plans.”
“Lack of strategic planning and direction cause both agencies to react to, rather than direct, the outcome of certain legal processes and requirements.”
 In April 2014 all of that changed. The Public Utilities Commission published a series of White Papers. The most read white paper was attached to their rejection of the HECO Companies Integrated Resource Planning (IRP) Report.
Commission's Inclinations on the Future of Hawaii's Electric Utilities Aligning the Utility Business Model with Customer Interests and Public Policy Goals.”
Unofficially among energy stakeholders Inclinations was widely believed to be the work of two Commissioners, the Commission’s Chief Researcher and the Commission’s Chief Legal Counsel. 

It is also believed that the actually internal vote by Commissioners was 2-1 although all three Commissioners signed the document. Many insiders felt that the Chair had defended HECO on to many occasions to be an instigator of the document.
“The Commission is compelled to offer the following perspectives on the vision, business strategies and regulatory policy changes required to align the HECO Companies' business model with customers' interests and the state's public policy goals.”
“The Commission also notes several potential elements of a potential new business model for the power generation sector.”
“Under this alternative business model, the HECO Companies would effectively over time become the ‘independent’ power supply integrator and operator of Hawaii's power supply system similar to the roles performed by mainland Independent System Operators (ISOs) who independently dispatch generation and operate the bulk power system to minimize energy costs while maintaining reliability. 
ISOs typically plan and operate portfolios of generation and transmission assets owned by (or contractually controlled by) IPPs, electric utilities and power marketers.”
Thus the discussion on alternative business models was initiated by the Commission itself.
But what is a business model? Is it how a business makes money or is it a big picture comparison of alternative business structures?
In the U.S. for-profit companies can own non-profits, and non-profits can own for-profit companies.
Dean Nishina is the Public Utilities and Transportation Officer for the Department of Commerce and Consumer Affairs (DCCA) Division of Consumer Advocacy, a.k.a. the Consumer Advocate.
He spearheaded the Consumer Advocate’s testimony in the HECO-NextEra merger docket. He described the testimony of the other witnesses.
Mr. Chan Hodges discusses the need for the HECO Companies to become benefit corporations, or B corporations, to make transparent how the HECO Companies will benefit Hawaii, its people and the environment.
B Corporations are entities that lie between for-profit and non-profit corporations.
But does one size fit all? In 1968-70 HECO acquired MECO and HELCO. In 1989 MECO acquired Molokai Electric. If the move is now to decentralize the utility, to break it back down into separate island utilities, do they all have to have the same business model?
HECO could become a B Corporation. MECO could become a municipal utility. HELCO could become a cooperative.
The use of the phrase “business model” means different things to different people.
The U.S. Environmental Protection Agency (EPA) posted a June 2015 webinar “Electricity 101” produced by the U.S. Department of Energy (DOE) Office of Electricity Delivery and Energy Reliability.
There are “over 3000 utilities with diverse business models – Investor Owned Utilities, Electric Cooperatives, Public Power/Municipal Utilities, [and] Federal Government [utilities].”
Joan Magretta (Harvard Business Review, 2002) takes the traditional view of the meaning of business models. She wrote, "’Business model’ was one of the great buzzwords of the Internet boom, routinely invoked, as the writer Michael Lewis put it, ‘to glorify all manner of half-baked plans.’"
"Creating a business model is, then, a lot like writing a new story. … Broadly speaking, this chain has two parts. Part one includes all the activities associated with making something  ...Part two includes all the activities associated with selling.
Harvard Business Review Senior Editor Andrea Ovans wrote a piece, “What Is a Business Model?” earlier this year.
“In The New, New Thing, Michael Lewis refers to the phrase business model as ‘a term of art.’  And like art itself, it’s one of those things many people feel they can recognize when they see it (especially a particularly clever or terrible one) but can’t quite define."
"Clay Christensen presented a particular take on the matter in ‘In Reinventing Your Business Model’ designed to make it easier to work out how a new entrant’s business model might disrupt yours."  
Clay Christensen asked what models enable businesses to withstand disruptive onslaughts. 
Harvard Magazine noted last year that Clay Christensen’s “doctoral thesis became the seminal 1997 book The Innovator’s Dilemma—a tremendously influential, best-selling volume that established Christensen as the architect of, and worldwide authority on, ‘disruptive innovation.’ In 2011 The Economist named it one of the six most important business books ever written.”
There are many alternative utility business models being proposed in Hawai`i today. Shareholder-owned utilities, cooperatives, municipals, energy service providers, etc.
The Public Utilities Commission could idly sit by while others debate the issue. One entity could bring a proposal before the Commission. The Commission would then be restricted to analyzing that one application.
Alternatively the Public Utilities Commission could open an investigatory docket, as they have for energy efficiency, distributed generation, feed-in tariffs, and a half dozen other transformative policies.
The energy picture is undergoing rapid revolution with the growth of cost-effective wind and solar, and decentralization. The Hawai`i, California and New York Commissions are leading the charge, examining and developing alternatives.
As in all intense transformations there needs to be out-of-the-box thinking, development of alternatives, room for dissenting views, and time and resources allocated.
In between the whistle starting a sports game and the posting of the final score, a lot happens. Some would prefer to shut their eyes and just look for results. Others complain that the process is too messy, too time-consuming. But that is the way transformations occur.
The telecommunications revolution is 20- years old and yet half of us still have land lines.
On September 24 Life of the Land filed a petition with the Public Utilities Commission “to open an investigation on different business models and utility structures including B-corporations, electric cooperatives, private utilities, municipal utilities, share-holder owned utilities, grid-only utilities (independent system operators) and micro-grid utilities.”
Entities seeking to intervene in PUC proceedings have 20 days after an application has been filed, thus Wednesday October 14 is the deadline for timely motions. 
Hawaii Business magazine Editor Steve Petranik wrote an Editorial calling for the HECO Companies to be converted in electric cooperatives. 
There are many cooperative utility business models in the U.S. Some are federally regulated, some are regulated by States, some are not regulated. Except for Hawai`i, Alaska and Native American utilities, cooperatives either own generation or distribution but not both.
Former Public Utilities Commission Chair Mina Morita opposes the idea that the Commission should proactively examine alternative nusiness models. She believes the Commission should instead react to an application when it is submitted.
“I guess if you make the title long enough there might be plenty of buzz words to get others to jump onboard.  In this case, I think Life of the Land (LOL) should withdraw its petition and spare the PUC and Consumer Advocate the time and expense trying parse the purpose of this petition.
First of all, the petitioner lacks an understanding of what a business model is meant to accomplish and who is responsible for its development.  
If people want to argue the merits/demerits of a publicly-owned or municipal utility do it before the State Legislature or County Councils.  If the merits outweigh the negatives, then those elected officials should layout the game plan for eminent domain and address the charter and statutory changes necessary before bringing the ownership transfer issue to the PUC.  
Proponents of an electric cooperative should establish their non-profit corporation and be able to put their money on the table to begin negotiations with the Hawaiian Electric Companies for its purchase.  You don’t need a PUC investigation to initiate any one of these change of ownership actions and it sure separates what's real from all the bs when you put the responsibility where it belongs.
A PUC investigation should begin only when there is something concrete to be evaluated where, if the Consumer Advocate prevails, the standard of review will be an evaluation of the substantial net benefits for the consumer. However, can't talk substantial net benefits when you are just plucking stuff from the air.”
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Sunday, October 4, 2015

UPDATE re NextEra's bid for HECO


Hawaii Business Magazine endorses cooperatives to replace the HECO Companies. 

"I believe co-ops are the best solution for each of the islands now powered by the Hawaiian Electric companies." Steve Petranik, Editor of Hawaii Business magazine since 2009. 

Petranik served as News Editor of the Honolulu Star-Bulletin from 1986 to 2004, and the Honolulu Advertiser from 2004 to 2009.

Who Should Own Hawaiian Electric?
By Hawaii Business Senior Writer Dennis Hollier

Designing energy policy as if health mattered

By Henry Curtis

Three health stories recently made the news.

The Hawaii Public Health Conference “Health is Everyone’s Kuleana” will be held at the Hawaii Convention Center on October 9, 2015.

The conference will delve into Health and the Built Environment, Social Determinants of Health, and Health Disparities within a Health-in-All-Policies Framework.

Hawaii Gas announced that it is moving ahead with its planned massive importation of liquefied natural gas (LNG). Hawaii Gas has no plans to look for renewable fuel and refuses to look for unfracked sources of gas.

The Hawaii Gas web site proudly proclaims “We Are Clean, Green Energy. Gas is the most efficient source of heat energy and a cleaner burning fossil fuel making it the perfect bridge to Hawaii’s clean energy future.”

National Public Radio (NPR) reported that Delhi, India is the most polluted city in the world. Half of the 4.4 million children in the city have irreversible lung cancer.

Currently India has 30 percent of the global poor and 24 percent of the global population without access to electricity. Three hundred million people are without electricity.

Over the next two decades the Indian population is expected to grow from 1.25 billion to 1.5 billion. The migration of rural people moving to cities will increase.

Analysis by the World Health Organization (WHO) found that Asia has the 29 most polluted cities and 47 of the top 50. The three most polluted cities outside Asia are in Egypt and Mauritius. 

The only Chinese city to make the list was Lanzhou at number 36.

The four most polluted cities -- Delhi, Patna, Gwalior and Raipur -- and 20 of the top 50 cities are in India. 

China and India consume 60 percent of all coal extracted around the world.

Energy Source
Natural Gas
Other Renewables

The 2015 United Nations Climate Change Conference will be held in Paris, from November 30 to December 11.

UN Climate Summit and NextEra-HECO Evidentiary Hearing will both start on November 30. 

The Hawaii Public Utilities Commission will be hold a formal, legalistic, court-like Evidentiary Hearing in the proposed NextEra takeover of the Hawaiian Electric Companies.

In light of the U.N. conference, the Indian Minister of Environment, Forest and Climate Change, Shri Prakash Javadekar announced a bold path forward for India.

India is the fifth largest wind power producer in the world. The country is working aggressively to expand wind, solar, cleaner biomass, clean coal and nuclear energy.

India has declared a voluntary goal of reducing the greenhouse gas emissions intensity of its GDP by 20–25%, over 2005 levels, by 2020.

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