Wednesday, March 25, 2015

Geothermal-based Electricity may expand beyond Puna rift zone

By Henry Curtis

Puna-based Geothermal has triggered community concerns over health and safety. 

But is geothermal viable on a cost and reliability basis, and would the community object, if geothermal-to-electricity generators were built in other areas of the State?

  Volcanic releases in the Hawai'i Volcanoes National Park

Geothermal on the Kailua Kona side of the Big Island comes up for discussion at the Board of Land and Natural Resources (BLNR) meeting this Friday at the Kalanimoku Building’s Land Board Conference Room at 1151 Punchbowl Street in downtown Honolulu.

Carty S. Chang is the Interim BLNR Chairperson pending Governor Ige’s finding a replacement for his first nominee Carleton Ching.

The Institute of Geophysics and Planetology at the University of Hawai`i proposes to use Magnetotelluric Surveys (MT) to analysis rock formations in the area mauka of, and mostly north of, Keahole Airport. 

The Hualalai West Rift Zone MT Survey Points would analyze land owned by Kamehameha Schools, GKK Makalei LLC, Palamanui, Palani Ranch, Queen Liliuokalani Trust, and State lands at Pu`u Wa`awa`a including land leased by Franklin Botehlo and Hualalai.

The BLNR meeting starts at 9 a.m. and frequently lasts all day. There are 29 items on the agenda. The items are normally taken out of order, depending upon who has signed up to testify and whether the Board wants to quickly dispose of or delay items. 

There are at least three other items on the agenda that could draw public participation.

As attorney and sometimes blogger Tam Hunt notedIt seems, then, that geothermal isn’t a very good idea for the highly volatile Puna region. HELCO’s 2014 Power Supply Improvement Plan, a major document that shows how HELCO can get to 92 percent renewables by 2030, calls for 25 megawatts of new geothermal to be added on the Kona side of the island, which would reduce lava risk substantially, and probably reduce earthquake risks too. 

Apparently, a plant on the Kona side can’t be built cost-effectively, judging by the fact that none of the 2014 geothermal bids submitted for projects on the Kona side were selected by HELCO.

A historic problem with geothermal power has been its inability to vary its output to offset fluctuations in solar and wind generation output. Geothermal plants that vary their output place undue thermal stress on their intake or outtake pipes. One options would be to maintain steady-state output and to siphon off excess energy into hydrogen production. This method of hydrogen production has been successfully tested at Hickam Air Force Base but violates the HECO Companies Power Purchase Agreements.

The Big Island has exceeded the State’s 2030 goals for renewable energy. The island has rising solar installations, falling demand and excess baseload (24/7) energy generation facilities. A new baseload unit certainly is not needed for five to ten years.

Another major issue on the BLNR agenda focuses on a new wind generation facility proposed for Kahuku on O`ahu. The Department of Land and Natural Resources is requesting that the DLNR Chairperson be authorized to negotiate, approve, execute, amend and extend a Memoranda of Understanding (MOU) with Na Pua Makani Wind Energy for a Draft Habitat Conservation Plan (HCP) and a Safe Harbor Agreement (SHA).

The Office of Environmental Quality Control (OEQC) Environmental Notice for March 8, 2015 announced a May 8 deadline to comment on the proposed Habitat Conservation Plan.

An EISPN has already been published for this action, and a Draft EIS is expected to be available soon. The Division of Forestry and Wildlife will also hold a public hearing on O‘ahu to receive public comments on the draft Habitat Conservation Plan. The date and location of the public hearing will be made available to the public via legal notice.”

Another agenda item is a request by the Honolulu Board of Water Supply (BWS) Engineering Division for a DLNR Dam Safety Construction/Alteration Permit for the Nu'uanu Reservoir No. 4.

Also on the agenda is an enforcement action. Leo Ohai is a tenant at Pier 18 where he runs a commercial fishing facility and has administrative offices. DLNR proposes a Termination of Harbor Lease H-99-3 for Breach of Lease Due to Illegal Structures, Illegal Sewer Connection and Non-Compliance with Chapter 343 Environmental Requirements.

 Written testimony may be submitted by email addressed to “Board Members”  and sent to the kuulei.n.moses  at"

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Tuesday, March 24, 2015

What if Hawai`i truly decentralized its electric grid?

By Henry Curtis

I received a press pass and blogged about the 2014 Maui Energy Conference. I was asked this year whether I preferred blogging or being a speaker under one of my other hats as Executive Director of Life of the Land. I said if I had to choose I would attend as ililani media and blog but I preferred doing both. The organizers agreed. Here is an expanded version of my talk yesterday at the 2015 Maui Energy Conference.

We are in an age of tremendous change. As the new millennium rolled in who dreamt of the possibility of using cell phones as computers, data storage and transfer mechanisms, video cameras and tape recorders?

Who thought that library photocopiers would be replaced by cell phones? That phone booths, floppy discs, fax machines and microfiche would disappear along with long distance phone calls?

That around the corner all libraries may contain only electronic documents, that newspapers from the century before last are now electronically available including 100 Hawai`i papers, that virtual classrooms might replace school campuses and that 4-D movie theaters (3-D viewing with real wind, rain and movable chairs) might become the rage.

Yet we are still using 19th century methods to produce and transport most of our energy (electricity, coal, natural gas and gasoline).

We are on the edge of a vast energy transformation. Hawai`i is ahead of the rest of the world when it comes to integrating intermittent (variable) solar and wind into the grid.

Some countries and islands have baseload (24/7) geothermal or hydroelectric resources. With the exception of geothermal on the Big Island and some limited hydroelectric, Hawai’i does not have baseload renewable energy.  Our energy is intermittent or variable.

Many large transmission grids have greater renewable energy resources in one area and less in other areas allowing for balancing to occur. However the grids in Hawai`i are not interconnected.

Canada, the lower 48 U.S. States and northern Mexico are all part of three transmission grids. Hawaii has five transmission grids. We also have a distribution grid on Lana`i and generators on Niihau and Kaho`olawe.

The island of Maui is at the leading edge of the intermittent energy transformation. The Big Island and Moloka`i are close behind.

The vast transformation has old and new risks. Larger grids have led to blackouts affecting well over 100 million people all at once. Acts of God – hurricanes, cyclones, earthquakes, tsunamis, volcanoes and droughts can undermine existing infrastructure.

Hunter and Amory Lovins wrote a report (Brittle Power: Energy Strategy for National Security) for the military about the weakness of the energy infrastructure. The public version was released in 1982. In 2013 the threat became real.

In April 2013 an attack against the PG&E South San Jose Metcalf substation disabled the facility for 27 days. Jon Wellington was appointed to the Federal Energy Regulatory Commission (FERC) by President Bush and was elevated to Chairman by President Obama. Wellington asserted that a coordinated attack against nine critical substations across the U.S. could black out the continent. (See: Rebecca Smith, Wall Street Journal; and  Foreign Policy Magazine)

There are increasing levels of cyberattacks around the world. Tens of millions of passwords are routinely stolen at one time. Someone, perhaps North Korea, attack Sony Pictures. The Stuxnet malware attack went worldwide but is perhaps best known for knocking out Iranian nuclear equipment. Other worms, Trojan horses, viruses and malware are popping up to attack everything that is connected electronically, which is increasingly everything. External cell phones can be hooked up to home-based security cameras or take control of smart cars.

The current Hawai`i utility debate is between two alternative paths: a vertical monopoly which controls everything and relies heavily on centralized generators, and a highly decentralized model with numerous rooftops solar systems and some small wind turbines and micro-hydroelectric systems.

The latter is far more popular and far less polluting. Aa currently envisioned it requires smart inverters and/or smart meters and/or smart grids to handle all of the intermittent resources. In essence it requires a vast telecommunication system overlay, a vast computer management system and a large number of data entry points which may encourage hackers to try their luck.

These are not the only paths forward. There are many other known paths which have been or are being tested. There are benefits and risks to each path. There are known unknowns and unknown unknowns. Probably most paths forward rely on ideas not yet formulated.

One solution might take advantage of the fact that Hawai`i has five transmission grids. Unless we decide to make them one grid -- we can test five or more different approaches based on the different renewable energy resources available and the different community values that occur on each island.

Or …what about a truly distributed path? The price of solar is plummeting. Almost everyone has batteries in their cell phones and their personal computers. Battery prices are falling. The Japanese have proven that electricity can flow two-ways between car batteries and residential electrical systems. High rises can use internal water and wastewater systems for micro-hydro energy storage and power generation.

The possibilities are endless. We could each become our own micro-utility. The macro-utility solution might be a former traditional utility to be re-directed in order to facilitate and support multiple micro-utilities.

Some might assert that home-based systems cost a little more. But home systems may be less vulnerable to Acts of God, physical attacks, cyberattacks and the prying eyes of Big Brother. 

It would also end the long and complex accounting, economic and tax policy modelling currently being conducted to determine who is subsidizing what.

What is clear is that we must make the transformation quickly for economic, security, resiliency and environmental reasons.

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DBEDT holds public meeting today

By Henry Curtis

A Hawaii Clean Energy Initiative (HCEI) Public Stakeholder Meeting will be held today from 3:00 p.m. – 5:00 p.m at the Maui Arts and Cultural Center. Tomorrow and Thursday the Center hosts the Maui Energy Conference. 

The first hour of the HCEI Public Stakeholder Meeting will be devoted to presentations by Julie Yunker (DBEDT), Luis Salaveria (DBEDT Director), Alan Arakawa (Maui Mayor), Dawn Lippert (HCEI Advisory Board Chair), Mark Glick (DBEDT), Jennifer DeCesaro (DOE) and Carilyn Shon (DBEDT).

The Hawaii Clean Energy Initiative (HCEI) was born through efforts of the administrations of Republican Governor Linda Lingle and Republican President George W. Bush. With the changing of the guard it has been embraced by Democratic Governors Neil Abercrombie and David Ige and Democratic President Barack Obama.

The HCEI Steering Committee was established to push the HCEI Agenda. “The Hawaii Clean Energy Initiative is focused on three priorities that are critical to achieving our goal of 70% clean energy by 2030.” One of them is “Collaborating with island utility companies to increase renewable energy generation.” 

In the last few years the HCEI data has been folded into the DBEDT web site.

Bi-annual stakeholder meetings will serve as forums for illuminating and addressing clean energy issues. In addition to the bi-annual stakeholder meetings, charrettes will bring selected knowledgeable stakeholders (i.e., land owners, academics, subject matter specialists, and public advocates) together for intense short-term sessions designed to generate deep thinking and answers to critical problems.” 

The Hawaii Clean Energy Initiative (HCEI) Executive Management Team consists of five individuals: the DBEDT Director, the Administrator of DBEDT’s State Energy Office, the Chair of the Public Utilities Commission, the Consumer Advocate and the HCEI Advisory Board Chair.

Last September the “Hawaii Clean Energy Initiative HCEI 2.0 – Public Stakeholder Meeting” was convened as part of the on Asia Pacific Clean Energy Summit which was held at the Hawai‘i Convention Center. 

The HCEI meeting today will be followed by an invitation-only reception for speakers at the Maui Energy Conference which starts tomorrow.

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Sunday, March 22, 2015

NextEra receives massive federal subsidies

By Henry Curtis
On December 3, 2014 NextEra asserted they were going to buy the HECO Companies. 
Two days later NextEra Energy CEO Jim Robo told Pacific Business News that he's biased towards large systems. "This is a scale business and scale matters, which leads to lower cost," Robo stated.
Good Jobs First found that NextEra was the top American company in terms of funds received. Nextera received $1,938,811,949 dollars.

The database, which collects more than 160,000 awards from 137 programs, expands Good Jobs First’s Subsidy Tracker, which since 2010 has posted economic development data from states and localities.
Good Jobs First is a non-profit and non-partisan research center which focuses on economic development. The Washington D.C. firm based their data on “company-specific federal subsidy data.” Both the study written by Philip Mattera and Kasia Tarczynska and the data are available on the web.
“Over the past 15 years, the federal government has provided $68 billion in grants and special tax credits to business, with two-thirds of the total going to large corporations.”
The analysis excluded multi-company tax breaks in the form of exploration and development expensing, depletion reductions and Internal Revenue Code provisions. These mainly rewarded the old fossil fuel industry -- the oil, gas and coal producers.
These are among Good Jobs First “assembled more than 160,000 award records from 137 federal programs.”  The federal data was enhanced with a subsidiary-parent matching system.
NextEra Energy received about 90 percent of its grants from Section 1603 of the 2009 American Recovery and Reinvestment Act. This section allows wind companies “to receive cash payments in lieu of tax credits for the installation of renewable energy properties.”
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Energy Options to be discussed on Maui

By Henry Curtis

This week the Maui Energy Conference kicks off. Among the speakers scheduled are Hawaiian Electric Industries (HEI) Chairman and Chief Executive Officer Connie Lau, Hawaiian Electric Company (HECO) President and Chief Executive Officer Alan Oshima, HECO Senior VP Customer Service Jim Alberts, HECO Vice President for Regulatory Affairs Joe Viola and NextEra Energy Hawaii President Eric Gleason.
Why can’t Hawai`i generate all of its electricity from renewable energy? All of the Hawaiian islands get plentiful sunshine. Each island also has unique resources.
The island of Hawai`i has geothermal and more land-based wind resources than the rest of the State combined.
Kauai has what many have referred to as the wettest land-based mountain on the planet which fills streams with water for hydroelectric power.
O`ahu has Lake Wilson which holds a billion gallons of water and could be used for hydroelectric power or as the most common form of energy storage in the U.S., pumped storage hydroelectric.
“Costa Rica got 100 percent of its energy from renewables for 75 days straight this year, the state-run Costa Rican Electricity Institute (ICE) announced this week,” as reported by Think Progress. Costa Rica is a small Central American country which currently generates just over two-thirds its electricity from hydroelectric facilities, another 15 percent from geothermal and the rest from wind, solar and biomass.
Iceland generates over 80% of its electricity from hydroelectric power stations. The rest of its electricity and all of its heat generation for warming buildings comes from geothermal energy.
One solution would be to break apart the generation and transmission of energy. The Public Utilities Commission investigation on restructuring the electric industry was initiated in 1996. Life of the Land proposed that each HEI shareholder get stock in a transmission company and a generation company. This would make the transmission company totally agnostic about where it imported electricity from.
Intervenors in the HECO-NextEra merger docket has proposed alternative models including co-op owned grids and privately-owned grids or micro-grids. These intervenors in the Hawaii Island Energy Cooperative (HIEC), Puna Pono Alliance, Paniolo Power, Hina Power and Life of the Land.
The merger docket is a formal contested case proceeding. That means it is not merely good enough to say, why can’t O`ahu have an electric co-op? Why can’t generation and transmission be handled by separate companies?
In a contested case proceeding parties making proposals have to present credible cases based on documents and witness testimony. The evidence they present on cost, reliability, benefits and risks has to withstand discovery by other parties. The witnesses will be cross-examined by opposing parties.
The contested case proceeding is a once-in-a-generation opportunity to offer alternatives. The proposal has to be well-developed. Failing to present a strong alternative proposal deprives the public with what could be the optimal path forward.

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CORRECTION: Governor Ige and Carleton Ching were not classmates.

In a blog (Talk Story with Carleton Ching and Kekoa KaluhiwaI stated, without attribution, that Governor Ige and his DLNR nominee, Carleton Ching, went to intermediate school together. 

That was an error. The governor graduated from high school in 1975, that same year, Ching earned a degree from Boise State University. 
 The mistake was brought to my attention by blogger Ian Lind, who in turn had learned of the error from Mike McCartney, the governor’s chief of staff.

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Saturday, March 21, 2015

PUC Commissioner Champley spoke at national energy meeting

By Henry Curtis
Michael Champley, a Commissioner with the Hawaii Public Utilities Commission, spoke at a half-day conference held in Washington D.C. on March 19, 2015.
Earlier in the week Washington D.C. had reached 70 degrees but by Thursday the high was near 50. Rain possibly mixed with snow was slated for that night.
Twenty-five speakers spoke at the five hour conference which was followed by a reception. The conference was sponsored by the Edison Foundation, a 501(c)(3) charitable organization dedicated to promoting the benefits of electricity.
The invitation-only event has a confidential list of attendees. “Join a group of electric utility executives; technology company executives; policymakers; regulators; and other thought leaders for a day of dialogue and discussion.”
Champley was one of five speakers who were panelists on the half-hour “Evolving Power Grid – Different Perspectives” panel.
As new energy services and technologies multiply, today’s electric distribution grid is evolving into a broad platform—connecting an increasingly diverse set of both supply- and demand side resources. For electric utilities that operate this plug-and-play distribution grid, this means seamlessly integrating new energy resources, technologies, and services, and continually meeting the evolving needs of various stakeholders. 
As the grid continues to evolve, only utilities have the end-to-end visibility and the mandate to provide safe, reliable, affordable, and increasingly clean electricity. How might the electric utility business and the associated regulatory paradigm change to keep pace with the transformation of the power sector that is well underway in the U.S.? How does this align with the pace of change of technology?”

Public Power Daily, the blog by the American Public Power Association (APPA), covered the event and focused on the remarks made by Champley. 
"Rooftop solar revolution, ground zero, which is Honolulu, Hawaii, and as you pretty well know, we are leading the edge in terms of the penetration of residential rooftop solar" stated Champley, adding "we had exponential growth in solar for the last five years.” There are a "number of significant technical, economic and policy issues associated with rooftop solar, with DG, [that] we don't fully understand or fully appreciate."

During q/a Champley notes that a strategic plan is needed. Regulators should “not over bureaucrat it at the beginning of a process. To let pilots work, but also knowing when to wean off a pilot, get the rules right and then move forward. We went forward way too far, probably, without really having a master plan."

Champley noted that there are two classes of customers. “We have 50, 60,000 customers in Hawaii that have rooftop solar," but that number is much smaller than the number without rooftop solar. "So we have two distinct classes now of customers and we have to make sure that the 60,000 that want choice do it in a way that causes no harm…and that's a tough balance."

"I look at where do we need to go to the future to have a sustainable program and I believe that we're going to have to have a whole lot of optional rate tariffs, as opposed to one size fits all."
Champley said that "where I think we need to go is to get a sustainable model for customer choice. Customers want choice and we should find a way to let them have it, but we have to do it in a way that is sustainable” such as time-of-use rates and dynamic pricing options.

"In Hawaii, we suffer from excess solar energy at solar noon. We need to charge EVs [electric vehicles] at noon, not at night. We need people to shift their consumption from the evening to the daytime because we're throwing away zero marginal cost power and so, that to me, says that the whole pricing paradigm has to change."

Next week Champley will be attending the Maui Energy Conference where fellow Commissioner Lorraine Akiba will be a speaker on the Changing Regulatory Compact panel.
What does the future business model for the utility look like and how does the customer fit in? Are changes in the regulatory environment a necessity and what role does the investment community play in the utilities’ viability?
 The panel will be moderated by Joe Viola, Hawaiian Electric Company’s Vice President for Regulatory Affairs.
While the high cost to attend the Maui Energy Conference has restricted attendance to virtually only government and industry, the event will be covered by the media. Akaku Maui Community Television will tape it for rebroadcast. 
Also scheduled to attend are Brian Perry, Eileen Chao, Matthew Thayer and Claudine San Nicolas from the Maui News; Cindy Schumacher from Lahaina News; Duane Shimogawa from Pacific Business News; Kathryn Mykleseth from the Honolulu Star Advertiser; Henry Curtis from ililani media blog and Jan TenBruggencate from the Rising Islands blog.
The attendance is primarily corporate. Some 200 people will represent various business interests including Connie Lau and more than two dozen MECO and HECO executives. Also attending will be 60 people from governmental entities and 25-30 from the community/media/public interest sectors.
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Friday, March 20, 2015

NextEra-HECO Merger: What is behind door #1?

By Henry Curtis

NextEra believes that their merger proposal is very simply. HEI owns HECO which in turn owns MECO and HELCO. NextEra simply wants to replace HEI as the owner of HECO. Nothing will change within HECO, MECO and HELCO. NextEra is large and have access to piles of money which they can borrow at very low interest rates. Therefore they can more cheaply implement HECO’s plans and reduce electric bills for Hawai`i ratepayers.

The Public Utilities Commission sees things differently. The PUC regulates HECO, MECO and HELCO. They can approve, reject or conditionally approve the merger. Earlier this month the PUC expressed its initial views.

“It would be difficult to understate the importance of this docket, not only to the ratepayers of the HECO Companies, but to the State of Hawaii's citizens and its economy.”

“As the commission has observed on many occasions, the HECO Companies face significant challenges, ranging from meeting the State's Renewable Portfolio Standards ("RPS") goals, to reliably integrating more renewable energy sources, to reducing reliance on fossil fuel fired generation, to maintaining reliability of the grid.”

 “In short, the HECO Companies are in the midst of addressing a series of complex and challenging issues that will determine how they will develop and implement a sustainable and progressive business model that results in quantifiable benefits for ratepayers and the State's citizens and economy. While the Proposed Transaction will be addressed on its specific merits, the commission cannot ignore the current regulatory landscape in conducting its review.

Thus, in this Order, the commission is establishing procedures to determine not only whether the benefits promised by the Applicants would be realized if the Application is approved, but whether the Applicants will adequately address those issues currently before the commission, as well as the State's renewable energy goals.”

Initially twenty-eight entities filed motions to intervene in the proceedings. HECO and NextEra asked the PUC to reject 24 of them. The PUC admitted all 28 into the proceedings.

The U.S. Navy handles utility regulation for the Department of Defense. A few days ago the Navy asked if DoD could become a party. That motion is pending.

The parties are currently skirmishing about how the proceedings will move forward. Ultimately the PUC will decide. For now parties are discussing among themselves and in filings with the PUC various proposals being made by various parties.

NextEra and HECO want a short process with limited discovery. The Hawai`i Department of Commerce and Consumer Affairs (DCCA) Division of Consumer Advocacy, also known as the Consumer Advocate, wants a longer proceeding.

Parker Ranch subsidiary Paniolo Power wants the merger docket to be merged with the HECO Companies Power Supply Improvement Plans (Docket 2014-0183) files last August.

Blue Planet does not oppose Paniolo's Motion to Consolidate, and notes that to the extent that the Commission may grant Paniolo's Motion, consideration should also be given to consolidation of this docket with the Decoupling Review (Docket No. 2013-0141), Distributed Generation Interconnection Plan (Docket No. 2014-0192), and/or Integrated Demand Response Portfolio Plan (Docket No. 2007- 0341).”

The Consumer Advocate opposes adding other dockets into the merger docket. Other parties believe putting all key dockets into one big kettle will result in clearing out numerous inter-related proceedings in one massive swoop.

Citations are required to present a credible case to the PUC; to persuade them that a given filing has merit. The strongest citations are those that cite sources from the other side. Citations can reference documents or sworn testimony in an evidentiary hearing. 

Discovery is the process by which parties seek to discover sources which bolster their position and undermine the position of those with contrary views. Thus discovery is a key component of the proceedings.

Discovery commences after the PUC rules on the process and the nature of the confidentiality agreement. Simply put, parties may file interrogatories (Information Requests) and HECO/NextEra must answer them.

It is rarely that simply. Some questions are answered and some of those answers are more or less complete. Many times HECO will use a variety of non-answers or statements on why they can’t or won’t answer.

The HECO-NextEra merger proposal is short on details. That is unfortunately not unique. Often applications made to the PUC are vague. Some key documents are sometimes only revealed under confidentiality. These may include rejected responses to competitive bidding processes. Other documents are allegedly so sensitive that they not available for view at all. These super-secret documents include the inter-island cable memorandum of understanding.

The Consumer Advocate asks several hundred questions in rate cases with more than a 1000 total subparts. The utility forks over documents buried in their answers. These documents offer key insight into the utility.

In the most recently completed MECO Rate Case (Docket 2011-0092), the Consumer Advocate asked MECO 600 primary questions. MECO asked the Consumer Advocate some questions. Then the PUC asked MECO and the Consumer Advocate some questions.  Embedded in one of MECO’s response to the Consumer Advocate was the Maui Energy Storage Study written by Sandia National Laboratories.

The Consumer Advocate asked questions on staffing. Please update the actual staffing by position information for all months of 2011, and add a column comparing to test year projected staffing levels. Explain planning and status for filling any vacant positions at year-end 2011. Explain any changes in staffing plans for the Department for the test year. For each position expected to be added in 2012 provide the currently anticipated hiring date and explain the status of MECO's efforts to fill each position. Please provide all supporting documentation relied upon by MECO.

How many people work for HECO, MECO and HELCO? How many work in each division and each department? The Consumer Advocate asked, the utility answered, and I blogged about it.  Staffing the Hawaiian Electric Company. Staffing at MECO & HELCO.

Some parties might want to know what NextEra’s plans for future staffing levels are. How many jobs will be full-time, part-time, in-house, contracted out and out-sourced? Will the jobs be located in Hawai`i or in Florida? These answers are important for local employment levels, local economic activity and determining how much money can be saved, if any, should NextEra replace HEI as the owner of HECO.

Applicants could lay their card on the table. Often they do not. For example, Hawaii BioEnergy proposed growing some crop somewhere and converting them to biodiesel on some island and selling it to HECO at some point in the future at some price (Docket 2011-0369). The two parties in that docket were the Consumer Advocate and Life of the Land which then had to use discovery to figure out what was going on and whether they should recommend that the PUC approve the proposal, and if so, under what conditions?

HELCO proposed using experimental microwave technology to convert energy crops into biodiesel (Docket No. 2012-0185). The price proposed by Aina Koa Pono (AKP) was initially set so high that HECO felt the Big Island ratepayers could not afford it, and suggested that HECO ratepayers on O`ahu subsidize the operation to the tune of a quarter of a billion dollars over 20 years.

The County of Hawai`i was a party and asked numerous questions. Does the proposed biodiesel contract increase direct externalities cost? If so, which externalities are affected? What are the demonstrated economics and projections of the commercial scale economics? What are the comparison to alternate approaches to achieving renewable-based power? What project management resources are in place to ensure that the project is constructed at a reasonable cost?

The PUC ultimately rejected this extraordinarily high priced politically-connected boondoggle. Pacific Business News suggested that PUC Chair Hermina Morirta should not be re-appointed because the PUC favored ratepayers over politically connected entrepreneurs.  The Strange Biofuel Saga
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Thursday, March 19, 2015

The Governor finally speaks on Ching

By Henry Curtis

Governor David Ige nominated Carleton Ching to be the Director of the Department of Land and Natural Resources (DLNR).  The Senate Committee on Water and Land posted a great deal of information in advance, held a hearing on GM 514 and recommended that the nomination be rejected. Yesterday the full Senate was to have voted on this nomination.

It was difficult to determine how the Senate was going to vote. Most Senators did not publicly state their position in advance of the vote. Several Senators had shifting positions. A number of Senators felt uncomfortable about alienating core constituencies. In the collegial legislative body, efforts are made to shelter the public from internal struggles.

In the end, for a variety of reasons, Governor Ige withdrew Ching’s nomination.

Governor Ige then held a press conference on the fifth floor of the Capitol in the Office of the Governor.

Some 25 or so television reporters and camera people, newspaper columnists, web-based journalists, videographers and bloggers attended.

Carleton Ching expressed no regrets. “I was willing to serve because of his request. I believe in him. I believe in what he’s doing,” Ching said, adding “We move forward. This is not a setback for me. You continue to do what you do. You move forward.”

On more than one occasion the press asked questions about the nomination process. “I think the way the process shakes out, the public input is the confirmation process” stated Governor Ige.

Governor Ige stated that until this morning he expected Ching to be confirmed. It is too early to be considering whether there is another place for Ching in the Ige Administration. Furthermore, Governor Ige has not started looking around for a replacement for the DLNR position.

I’m entering a process that allows me to find the best candidate and best leaders that I can find” asserted the Governor. “The advice and consent process is the public’s opportunity to respond to the nomination made.”

Videographer Choon James asked, “What is your definition of collaboration?”

I’m committed to engaging the public. You know we have a number of initiatives that’s really focused about and bring the community together. You know I’ve been advocating and including in my budget a request, a review of the State Functional Plans, and that process in of itself is a statewide process looking to engage the community to determine priorities in all of the departments.”

Governor was asked if he would use a search committee approach as has some previous Governors. Governor Ige asserted, “The Cabinet is a personal decision,” adding that “There are people I’ve approached who don’t want to be identified as a candidate for these positions.”

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Wednesday, March 18, 2015

Is NextEra operating in bad faith?

By Henry Curtis

Representative Chris Lee introduced House Resolution (HR) 158 / House Concurrent Resolution (HCR) 227 “Requesting the Public Utilities Commission to Protect the Public Interest in Reviewing the Proposed Acquisition of Hawaiian Electric Industries by NextEra Energy, Inc.”

The Resolution has been scheduled for a hearing by the House Committee on Energy and Environmental Protection (EEP) tomorrow morning, March 19, 2015, at 8:30 a.m. at the State Capitol room 325. 

The Legislative Website offers a way to electronically file testimony. The site offers a comment box where testifiers can instead write a quick thought or two.

Legislative Resolutions serve a variety of purposes. They fill a time-period while bills are being deliberated in their second body and/or conference committees ironing out differences between Senate and House versions of bills. They are introduced when bills covering the same material are unable to pass. They ask for reports from agencies. They introduce new ideas into the Legislature.

Agencies implement joint House-Senate resolutions and selectively choose whether to comply with single House or Senate resolutions. Often resolutions are submitted as pairs, in this case HR 158 and HCR 227.

The description used to describe why HCR 227 is needed is almost more important than what it asks of the Public Utilities Commission.

The resolution notes that NextEra’s subsidiary Florida Power and Light “has aggressively blocked competition from rooftop solar adoption in Florida, as reported by the Associated Press,” has “successfully lobbied to reduce energy efficiency goals in Florida from two-hundred and twenty-nine gigawatt hours to four gigawatt hours by 2019, as reported by the Tampa Bay Times,” and “has spent millions of dollars in political contributions and funding for campaigns to block federal and state regulations that would promote utility competition, as reported by the Washington Post.”

Florida Power and Light is heavily engaged in the political arena and is a major lobbying force. “The company has spent millions of dollars in political contributions and funding for campaigns to block federal and state regulations that would promote utility competition, as reported by the Washington Post” and gave “more than $7,000,000 in political contributions in the 2014 election cycle alone, as reported by the Tampa Bay Times.”

Florida utilities have a large presence at the State Legislature where they “hire, on average, one lobbyist for every two legislators, as reported by the Orlando Sentinel.”

Florida Power and Light uses carrots and sticks to get what it wants from regulators. Florida Power and Light has “used its political clout to remove Florida public utility commissioners who denied a widely publicized rate increase that would benefit the utility, as reported by the Citrus County Chronicle and the Orlando Sentinel.”

At the same time, Florida Power and Light “has a history of giving former top staffers and public utility Commissioners lucrative utility jobs, as evidenced by its hiring of five former Florida public utility commissioners, as reported by the Tampa Bay Times.”

The company succeeded in getting Florida regulators to shift risk from the company to the ratepayers including "the significant financial risk and costs associated with the construction of nuclear power plants … and fracking for natural gas, as reported by The Palm Beach Post and the Tampa Bay Times.”

In Hawai`i NextEra has used aggressive hardball tactics. “NextEra Energy, Inc., has acted in a manner that does not reflect the good faith.” NextEra has “aggressively opposed virtually all stakeholder participation in the Public Utilities Commission docket proceeding regarding the proposed takeover.” 

After the PUC granted party status to intervenors NextEra “vigorously proposed limiting discovery on the merger proceedings to the detriment of broader public transparency and oversight.” NextEra sought to “prevent solar customers from interconnecting to the electrical grid unless the Public Utilities Commission enacted sweeping policy reforms benefiting the utility.”

NextEra represents a throwback to the “vertically integrated business model” of yesteryear and away from “the modern utility business model, which adapts to new technology and distributed generation.”

HCR 227 asks that the Public Utilities Commission “protect the public interest in reviewing the proposed acquisition of Hawaiian Electric Industries by NextEra Energy, Inc.” and “to consider, at a minimum, imposing strict conditions” on the merger.

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Will HECO and NextEra oppose the military’s untimely request to intervene in the merger proceedings?

By Henry Curtis

The deadline to intervene in the NextEra-HECO merger proceedings before the Public Utilities Commission was February 18, 2015. The Honolulu Board of Water Supply filed one day late and was admitted as a party.

How almost a month late, the Department of the Navy on behalf of the Department of Defense has filed a Motion to Intervene.

The Navy asserted that it had to delay its motion to intervene in the proceedings since “the Movant's contracts for professional expertise had expired and negotiation of new contracts had not been completed.”

Thus the Navy “could not in good faith enter an appearance” since the Navy “could not assist the Commission in the development of a reasonable and sound record” until it hired experts.

The Navy notes that “the Commission has yet to schedule or hold hearings to gather evidence in order to rule on the application.”

The Navy’s motion to intervene was submitted by James J. Schubert and Dr. Kay Davoodi. Attorney Schubert is Associate Counsel at Naval Facilities Engineering Command (NAVFAC) Pacific. 

Dr. Davoodi is head of the NAVFAC HQ Utilities Rates and Studies Office located in Washington D.C. The office represents the interests of all branches of the military and Federal Executive Agencies (FEA) in all utility regulatory actions. Dr. Davoodi has held the position for more than a decade and represented the Navy in HECO’s Rate Case filed in 2009.

HECO and NextEra objected to the Honolulu Board of Water Supply’s untimely motion to intervene. “Movant did not seek an enlargement of time (via a motion for enlargement of time).”  Furthermore the “Applicants contend that Movant has failed to carry its burden of demonstrating that its failure to file a timely motion to intervene was the result of excusable neglect. As stated by the Commission in various prior regulatory proceedings, ‘the excusable neglect standard is a strict standard requiring a showing that the failure to timely file with the Commission was due to circumstances beyond movant's control.’”

HECO and NextEra summarized their objection to BWS's untimely motions to intervene by noting that “any deviation from these Commission rules and Commission decisions dismissing untimely motions to intervene, as discussed above, would establish a dangerous precedent (i.e., other entities in this proceed or future proceedings would seek similar treatment notwithstanding untimely motions to intervene).”

Will HECO and NextEra reverse their position or oppose the military?

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