Saturday, August 27, 2016

Is HECO Seeking to Game Solar Installations?

By Henry Curtis

The Hawaiian Electric Companies proposed a “Community-Based Renewable Energy Program” in 2015.

HECO asserted that centralized community-based solar gardens would allow renters and others who can`t or don’t choose to install distributed rooftop solar--to participate in the solar revolution--by buying shares of the solar gardens, to offset their electric bills.

The Public Utilities Commission opened an investigate regulatory proceeding to review the proposal made by Hawaiian Electric Company (HECO), Hawai'i Electric Light Company (HELCO), and Maui Electric Company (MECO).

Several parties filed motions to intervene.

As has become common in Commission proceedings, the Commission approved intervention by governmental agencies, denied motions to intervene by others, and instead granted participation status to non-governmental organizations. This decision allows the Commission to restrict participants to substantive issues and does not permit participants to get involved in procedural issues.

Some entities have decided to instead directly file motions to participate. The Hawaii Supreme Court has ruled that those who originally filed to intervene have a right to appeal, even if the Commission lowered them to participant status. The court has not ruled on the right of participants to appeal.

The intervenors and participants in the community solar docket are the Department of Business, Economic Development, and Tourism (DBEDT), Hawaii Renewable Energy Alliance, Hawaii Solar Energy Association, Ulupono Initiative, The Alliance for Solar Choice, Renewable Energy Action Coalition of Hawaii, Blue Planet Foundation, Hawaii PV Coalition, Life of the Land, SunPower Corporation, and Energy Freedom Coalition of America.       

HECO asserted that “the CBRE Program is an important initial step to increase customer awareness of and access to the benefits of renewable energy for those who are not able to, or choose not to, install renewable energy resources.

“Under the CBRE Program, Participants will have the option to purchase an interest in energy production of a Facility at a level that is expected to offset up to 100% of their historic average kWh energy consumption for the previous twelve months. Participants will be required to purchase an interest equal to at least 25% of their historic average kilowatt-hour energy consumption for the previous twelve months.”

“To ensure fair access, an additional limit will be imposed such that no single Participant will be able to purchase more than 20% of the total output of any single CBRE Program Facility.”

The HECO Companies proposed a three-phase adoption of CBRE over a period of several years. Each phase would have multiple tiers to allow different sized systems. Caps would be placed on the program to limit the amount of solar that would be accepted.

“The Companies seek to improve the transparency and competitiveness.”HECO would issue Requests for Proposals. HECO would pick the winners. “Hawaiian Electric may propose a self-build project.” Thus HECO may select itself as the winner.  

Earlier this week HECO reached out to some, but not all, of the intervenors and participants. HECO wants parties and participants to sign a letter to the Commission.

“We support Hawaiian Electric’s request for Commission approval of its proposed Community Solar Pilot Program (`Pilot Program`). We have had an opportunity to meet with Hawaiian Electric about the Pilot Program. We understand that the Pilot Program will be limited in scope to support Hawaiian Electric’s understanding and development of the internal processes necessary to implement a broader CBRE program, and that the Pilot Program will not compromise the ongoing development of a broader CBRE program in this proceeding.”      
The questions raised are, whether HECO needs to study how to implement solar, or whether they want a jump-start to get ahead of others, in order to gain positive publicity.

Nine years ago HECO submitted an application to the Commission to install solar on the roof of their Archer Substation located adjacent to their Ward Street offices.

HECO noted then that there are “many positive attributes are associated with PV technology, including having zero emissions of noise and air pollutants, minimal O&M, the ability to use unused rooftop spaces, and no use of fossil fuels.”

HECO engaged in informal talks with Sun Edison, Provision Technologies, Hoku Scientific, Renewable Energy Services, Energy Industries, Bank of Hawaii, and Solar Design Associates.

HECO issued a Request for Proposal, conducted a site visit with 25 representatives from 17 companies, answered written questions by bidders, and selected Hoku Solar to build a 167 kWdc PV system on the HECO roof.

The Commission approved the application on May 13, 2008.

HECO informed the Commission on July 1, 2010, that the project was dead.

“The photovoltaic ("PV") project targeted for installation at Hawaiian Electric's Archer Substation was not constructed by Hoku Solar due to its inability to secure financing for the project”

“Hawaiian Electric has decided not to rebid the Archer PV project at this time since the original project objectives can be achieved through various renewable energy project developments and procurement initiatives that are currently being pursued. These initiatives include the pending feed-in tariff, bilateral negotiated power purchase agreements for third-party-developed PV projects, and Hawaiian Electric's proposed PV Host Pilot Program.”

“Hawaiian Electric will, however, continue to consider the potential deployment of renewable energy generation and integration technologies at Archer and other utility sites.”

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Appointed of Tom Gorak Was Legal

Hermina Morita

By Henry Curtis

Former Hawai`i Public Utilities Commission Chair Hermina Morita sued Public Utilities Commission Commissioner Tom Gorak, charging that he had illegally been appointed to the Commission by Governor David Ige.

Hermina Morita was represented by former Hawai`i Republican Attorney General Mark Bennett.

State circuit court Judge Edwin C. Nacino heard the case on Thursday, and grant Summary Judgement against the complaint on Friday.

Article V, section 6 of the Hawaii Constitution provides that “when the senate is not in session and a vacancy occurs in any office, appointment to which requires the confirmation of the senate, the governor may fill the office by granting a commission which shall expire, unless such appointment is confirmed, at the end of the next session of the senate.”

Judge Nacino also ruled that Hermina Morita lacked standing.

“The Court is not persuaded by Plaintiff’s arguments regarding standing and finds that plaintiff lacks standing to pursue this count.”

The circuit court will enter a final order shortly. The petitioner has 30 days to appeal. A copy of the decision was posted by the Attorney General.

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Friday, August 26, 2016

Hawai`i`s Energy Future is Almost Here

By Henry Curtis

Energy marches on. During the World Conservation Congress, in which 10,000 people will descend on Waikiki from September 1-10, there will also be technical meetings for two of the four major regulatory Hawaii Public Utilities Commission energy proceedings.

On September 1, the Public Utilities Commission is sponsoring a Demand Response Technical Conference. This proceeding is focusing on ways the utility can pay customers to stabilize the distribution grid.

Then on September 8th HECO will host the 12th Distributed Energy Resources (DER) Stakeholder Meeting. The DER proceeding is examining Distributed Generation is a post-Net Energy Metering world: interconnection standards, inverter standards and rate structures. Since March there have been eleven regular meetings, and additionally, a series of very technical meetings.

One participant in the DER meetings is Chris DeBone, representing E-Gear, a renewable energy innovation company offering proprietary patented and patent pending smart, real-time, edge-of-grid energy management and storage solutions.

On May 3, DeBone sent out a YouTube link to a cutting-edge energy guru.

Tony Seba's Clean Disruption Keynote presentation (“Clean Disruption - Why Energy & Transportation will be Obsolete by 2030”) was presented at the Swedbank Nordic Energy Summit in Oslo, Norway, on March 17th, 2016.

Tony Seba is a visionary who sees a radically different world just around the corner.

Today Cell Phones can do a lot of things no one imagined just 20 years ago. The speed of innovation is picking up. The Energy revolution will end traditional utilities, car ownership, and gasoline-powered vehicles, within 15 years.

The first level is Grid Parity, the point when the cost of electricity from rooftop solar is cheaper than power purchased from the grid. Grid Parity has been achieved in many places including the Big Island. “In Australia, it occurred in around 2012, and now the cost of solar has continued to fall so quickly that the cost of solar generation is probably little more than one-third of the cost of grid power.”

The second level is Storage Parity, the point when the cost of electricity from a rooftop solar plus energy storage system is cheaper than power purchased from the grid. Storage parity has been reached on the Neighbor Islands.

The third level is God Parity. That occurs when the solar-plus-battery is cheaper than the cost of the electric transmission and distribution network. Even if grid-based electricity was generated at no cost, and sold for free, the cost of delivery exceeds the cost for self-generation and storage. Seba believes that God Parity is not too far off.

The GOD point occurs when all grid-based energy sources are priced out of the market. This will occur first in places with abundant renewable energy resources and very high electric rates.

The GOD point could arrive in the Neighbor Islands within five years. Whomever owns the grid would take a bath, unless laws and regulations are written to penalize those seeking cheaper rates, that is to say, an exit fee is imposed on any ratepayer disconnecting from the grid.

Tony Seba is currently associated with Stanford University Continuing Studies Program.

Seba believes that the Solar Revolution is here to stay. Since 1970 the cost of solar has dropped 200-fold. Installed solar base has doubled every two years since 1990. With seven more doublings (14 more years), solar will have 100 percent of the global energy market.

Since 1970 Solar PV has improved cost by thousands of times relative to most conventional forms of energy

Solar Cost Improvement vs. Conventional Energy
Unsubsidized Solar PV Cost Improvement relative to:
Times improvement (1970-2016)
Natural Gas

Seba believes in Business Model Innovation. There are now third party financing companies that offer zero money down solar – they pay for it, own it, and maintain it.

Deutsche Bank asserted that 80 percent of the world`s population will reach grid parity next year. That is, the cost of rooftop solar and grid-based solar will be equal. But that is not the critical point.

The critical breaking point is the GOD point. When the cost of unsubsidized rooftop solar is cheaper than the cost of transmission anything to the building, when even zero-cost centralized power plus transmission costs more. That breaking point has already occurred in Australia, will occur globally in 2020, and with additional cost of solar-plus-storage, will occur in 2022.

Today, the cost of unsubsidized solar is 5 cents per kilowatt-hour, which is equivalent to a $10 barrel of oil. And the price of solar is still falling.

What is a Disruption? WHEN A NEW PRODUCT OR SERVICE HELPS create a new market AND significantly weaken, transform, or destroy an existing product, market category / industry.

A radical transformation in which experts and the insiders will deny and will dismiss disruptive opportunities with all kinds of excuses even if the product is cheaper, faster, more flexible, and superior.

For the same cost, computing power doubles over two years. Sensors have dropped 1000-fold in price since 2007.

The dollar per kilowatt-hour for laptops has increased by 14 percent per year between 1995 and 2010. With car and energy companies getting into lithium in 2009, the rate has increased to 16 percent per year.

Lithium is mined in Chile, refined in China, processed in Japan and South Korea and sold in California. The Tesla Mega Battery Factory in Nevada will cut down on shipment inefficiencies.

Seba believes in Storage as a service model. Existing peak power plants (peaker) provide power from 4:30 – 8:30 pm. They account for one-third of the cost to generate electricity, but are used just six percent of the time. With four hours of storage, existing peakers will become stranded.

Internal Combustion Engines (ICUs) used in vehicles are 17-21 percent efficient. The rest of the energy is discharged as smoke and heat. An electric car (EV) is 90-95 percent efficient. Electrons (electricity) are easier to transport and cheaper than atoms (gasoline, diesel). An ICU car has 2000 moving parts. The Tesla S Model has 18 moving parts. Hence maintenance costs are a lot less for EVs. Furthermore, EV`s have a more powerful electric drive train.

The Tesla S can go from zero to 60 mph in 2.8 seconds. Only two million dollar cars can start faster. The Tesla S can go 300 miles without recharging.

The break-even point is when the average priced US car ($30K) costs the same amount as an EV, and the EV can travel 320 miles without a recharge. This will occur in 2019-20. Lower end EVs will sell for 20K in 2022. By 2025 all new vehicles sold in the world will be EVs. Not only will they be cheaper to buy, but the maintenance costs are 10-100 times cheaper.

Most disruptions come from the outside. Computer companies are getting into EVs since EVs are simply Computers on Wheels. Some chain stores are offering free car charges. Houses and cars can, today, charge each other. Car Companies will become mobility service companies.

Norway has two million cars and vans. When they are all electric they will store energy equivalent to half of the daily electricity demand. Power plants on wheels

Currently, there self-driving cars without steering wheels and pedals. Fully self-driving (Level 4 – no human needed) will be available in 2018-20.

Lidar (laser and radar) is used to determine what is in the vicinity. A Car Lidar system emits about a million laser pulses, 100 meters out, 360 degrees per second, that bounce back to a super computer in the trunk that crunches up all the data. The cost reduction for a Lidar system has been astonishing: $70K (2012), $10K (2013), $1K (2014), $250 for Generation Two solid state Lidar (2016), and under development, $90 (Generation Three (postage stamp) lidar available for cell phones).

In 2000 the world`s first TeraFlops Computer occupied 150 square meters, cost $46 million and required 850 kW of power. Last year the NVIDIA Drive™ PX 2.3 TeraFlop Computer cost $59 and required 15 watts of power, a 1,000,000-fold cost improvement.

The average American spends 12K per year for their car. The car is utilized four percent of the time. That is very low utilization: on average, 96 percent of all cars at any one time are parked. Furthermore, 40% of the time we`re driving we are looking for parking.

Seba sees a new Car Innovation Model, where a Car is a service. In San Francisco Uber riders get a discount for car-sharing. Half of all riders share cars.

Car ownership will become obsolete. Uber and Lyft are alternatives to taxis. Uber and Lyft cars can be used 40-60% of the time. Zipcar is an American car-sharing company, a subsidiary of Avis Budget Group. Zipcar provides automobile reservations to its members, billable by the hour or day. Without owning a car one can get the same level of service for ten percent of the cost. With car services the fleet can be reduced 80 percent and the number of parking spaces reduced 90 percent. By 2030, all cars and vans will be electric, self-driving and car shared.

HELCO has proposed purchasing an existing power plnt in Hamakua. MECO recently proposed releasing a Request For Proposal to build a new firm power plant in Central Maui. HECO is breaking ground on the new Schofield Generation Facility. 

The Schofield generator will burn biofuel, but under an agreement, another HECO power plant will swich from biofuel to fossil fuel, thus biofuel use will remain fairly constant, and there will be a net gain in fossil fuel use.

Seba is betting on a future in the next 5-15 years, that the HECO Companies Power Supply Improvement Plans are not considering a possible scenario in the next 30 years.

Will these generation facilities lower rates, or become stranded assets, that ratepayers will have to finance? Only the future will tell. 

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Thursday, August 25, 2016

Maui Energy Forum will be held Next Week

By Henry Curtis

Maui Electric celebrates 95 years of innovative energy history on August 27.” 

The Maui Electric Energy Fair will be held on Saturday, August 27, from 10 a.m. to 1:30 p.m., at the Queen Kaahumanu Center.  MECO was founded in 1921. Forty years earlier, on the night of September 22, 1881, the first recorded, land-based, electric lights in the islands, were lit at the Spreckelsville Mill.

The Maui County Council will hold an Energy Forum on Tuesday, August 30, 2016 at 1:30 pm.

The Economic Development, Energy, Agriculture, and Recreation (EAR) Committee wants the discussions to focus on ownership models and energy technologies that are applicable to the county. The public may attend the informational meeting. Testimony will be accepted.   

The invited speakers are Sharon Suzuki, Maui Electric Company (MECO); David Bissell, Kauai Island Utility Cooperative (KIUC); Jeanne Unemori Skog, Maui Economic Development Board (MEDB); Doug McLeod, DKK Energy Services LLC; Frederick Redell, Energy Coordinator, Office of the Mayor; and Lorraine Akiba, State Public Utilities Commission (PUC).

One of the issues may be the need for new, firm, centralized power.

Ordinance No. 2879-2000 (Bill No. 60) changed the zoning of a parcel of land in Central Maui so that a new MECO power generation plant could be built there. MECO filed their 16th annual update to the Council on July 19, 2016.

MECO apparently filed two applications with the Public Utilities Commission to jumpstart the Requests for Proposals (RFP) process in order to build the proposed Wa`ena Generation Station.

The first was in 2011 (docket 2011-0038) in which MECO instituted “a proceeding relating to a competitive bidding process for firm generation.” The Public Utilities Commission denied intervention by Life of the Land and DBEDT.

“The commission finds that LOL and DBEDT, as well as any other interested party, may be involved in this proceeding without formal intervention. As such, the commission denies the Motions to Intervene.”

The proceeding was closed on July 11, 2013, based on MECO`s Adequacy of Supply letter (AOS), filed on January 30, 2013 and MECO`s Integrated Resource Planning (IRP) Report, “which detail the utility's planning process for determining need for firm capacity, it appears that this RFP and proceeding governing such RFP process are premature. Accordingly, the commission determines that this proceeding shall be closed.”

MECO`s July 19th letter to the County Council states that MECO revived the process on May 5, 20016 with “a request to begin the process of acquiring approximately 40 MW of new firm generation for Maui Electric to ensure reliability and support an increased use of renewable resources. As stated in the Company’s Power Supply Improvement Plan (“PSIP”) filed on April 1, 2016, this new generation will serve as replacement for the anticipated retirement of Kahului Power Plant in 2022. The new generation will also help mitigate under-voltage issues in the South Maui area, where the community has expressed concerns about proposed upgrades to the overhead transmission lines. The process of adding new firm generation will take several years, so prompt approval by the Commission to start the process is necessary."

To date the Commission has not reopened the old docket nor created a new docket.

Commission Chair Iwase stated earlier this month that there are four major regulatory proceedings before the Commission which will shape approval of applications for the next several years. They are the dockets on Demand Response, Distributed Energy Resources, Power Supply Improvement Plans, and the Decoupling.

Don S. Guzman and Elle Cochran are, respectively, the Chair and Vice Chair of the Committee. Five of the other seven councilmembers are voting members of the committee, the other two are non-voting members.

The Energy Forum will be held at the Council Chamber, Kalana O Maui Building, 8th Floor, 200 South High Street, Wailuku, Hawaii.

Live Cablecast will be available on Akaku: Maui Community Media, Channel 53.

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Wednesday, August 24, 2016

Hawai`i Clean Energy is in the Weeds

By Henry Curtis 

During the Governor Linda Lingle Administration, the federal and state governments signed the Hawai`i Clean Energy Initiative (HCEI) Memorandum of Understanding in January 2008. 

Then Hawaiian Electric and the State signed the HCEI Energy Agreement in October 2008.

Neither document defined clean energy. That would take five years.

"In an effort to identify the problems and propose solutions to Hawaii’s energy future, The Hawaii Independent proposed questions to individuals who could contribute their unique insight in the energy dialogue." The answers provided by Life of the Land`s Henry Curtis was published on July 19, 2011. 

“The statement that there is only one path forward and people either support that path or are wrong. The truth is: We are at a crossroads and can take any of a dozen paths “forward.” Different paths have different winners and losers. Different economic, social, and global impacts. Different risks and different side-effects.”

“The State’s use of terms like “alternative fuel,” “renewable energy,” and “clean energy,” none of which have any relationship to economic, environmental, social, and cultural impacts. These need to be defined in a sustainable manner.”

Governor Abercrombie introduced HB 1405, a bill relating to the Public Utilities Commission.

On March 14, 2013, Public Utilities Commission Chair Hermina Morita submitted written testimony to the Senate Committee on Energy & Environment, chaired by Mike Gabbard.

Chair Morita proposed modifying HRS §269-121b to include a new definition.

"Clean energy technology" shall mean any commercially available technology that enables the State to meet the renewable portfolio standards, as provided for under section 269-92, or the energy efficiency portfolio standards, as provided for under section 269-96, and approved by the public utilities commission by rule or order.” 

Senator Gabbard wrote in the committee report,

"Your Committee has amended this measure by …Adding a new part amending section 269-121, Hawaii Revised Statutes, to …Define "clean energy technology" to mean any commercially available technology that enables the State to meet the renewable portfolio standards and energy-efficiency portfolio standards approved by the Public Utilities Commission by rule or order.”

Hawaiian Electric Company often engages in a "high level overview" of a given subject. But to understand how an issue is implemented, one must get in the weeds and look at the definitions and assumptions. 

In the case of figuring out what is and is not clean energy in Hawai`i, one has to look through Commission rules and orders.

Other people and places define clean energy differently.

President Obama`s State of the Union (SOTU) speech in 2011 addressed clean energy. 

 “A global race is underway to develop and manufacture clean energy technologies, and we are competing with other countries that are playing to win. America has the most dynamic economy in the world, but we can’t expect to win the future by standing still. …To give utilities the flexibility to generate clean energy wherever makes the most sense, all clean sources – including renewables, nuclear power, efficient natural gas, and coal with carbon capture and sequestration – would count toward the goal.”

According to Fortune Magazine“California’s definition of clean energy only includes utility-scale solar and wind energy.”

For the California Energy Commission, clean energy innovation, as opposed to clean energy, means reducing energy use through innovation. “Lowering the cost of renewable energy systems, …proving waste can power industry with demonstrations …testing a breakthrough engine that provides efficient, low-emission heat and electricity for on-site energy security.”

Earlier this month Hillary Clinton stated, “Let's build a cleaner, more resilient power grid with enough renewable energy to power every home in our country as well. Some country is going to be the clean energy super power of the 21st century and create millions of jobs and businesses. It’s probably going to be either China, Germany, or America. I want it to be us. We invent the technology, we should make it, and use it, and export it, which will help to grow our economy.”

Donald Trump published his book, Crippled America: How to Make America Great Again, in November 2015. “There has been a big push to develop alternative forms of energy--so-called green energy--from renewable sources. That's a big mistake. To begin with, the whole push for renewable energy is being driven by the wrong motivation, the mistaken belief that global climate change is being caused by carbon emissions. If you don't buy that--and I don't--then what we have is really just an expensive way of making the tree-huggers feel good about themselves.” 

Earlier this year, Life of the Land proposed turning the picture around, to examining what is not clean energy.  A new section would be added to Chapter 269 re Public Utilities Commission.

"Fossil fuel" means coal, natural gas, petroleum, and their byproducts. Where fuels are made from a mix of renewable and fossil fuel sources, the energy content of the fossil fuel source materials shall count as the fossil fuel component of the final product.

"Fossil fuel standard" means the greater of the percentage of sales or generation that is represented by fossil fuel.

Fossil Fuel Standard.  (a)  All public utilities regulated by the public utilities commission shall have a maximum fossil fuel standard of zero per cent by December 31, 2045. (b) The commission may establish reasonable interim percentages, variances, and penalties.
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Tuesday, August 23, 2016

Electric Utility Acquisition in Hawai`i

By Henry Curtis

There have been several successful and unsuccessful efforts to acquire electric utilities in Hawai`i beyond NextEra`s recent failure to acquire the Hawaiian Electric Companies.

The top-down successes included the purchase on Maui Electric Company (MECO) in 1968 and Hawaii Electric Light Company (HELCO) in 1970 by Hawaiian Electric Company (HECO), Kauai Island Utility Cooperative (KIUC) purchase of Citizens Utility Corporation`s Kauai Electric Division in 2002, and Larry Ellison`s purchase of Lana`i utilities.

An alternative top-down approach was the creation of Hawaiian Electric Industries (HEI) holding company by HECO in 1981-83.

Top down failures to date included the first proposal by KIUC to acquire Citizens Kauai Electric Division in 2000, the proposal by Ku`oko`a to acquire the HECO Companies and Puna Geothermal Ventures (PGV), and the failed proposal by Princeton Energy Group to create Ikehu Molokai.

Hawaii Island Energy Cooperative (HIEC) is currently proposing to acquire HELCO, and Parker Ranch is currently proposing to develop a Waimea Microgrid.

Bottom up efforts have included the establishment Camp Smith`s Inner and Outer Microgrid in Aiea, the creation of a small-scale microgrid at the VERGE Energy conference held in Honolulu last June, and Hickam Air Force Base`s proposed microgrid.

There have been proposals for several other microgrids at the Natural Energy Laboratory of Hawaii Authority (NELHA) on the Big Island, a Maui Community College microgrid, and the effort by Larry Ellison’s Lanai Resorts LLC to hire Byron Washom to develop a Lana`i microgrid.

There are also competing political factions which favored or opposed different acquisitions, and these factions have often used political positions to justify their positions.

Governor Abercrombie reached out to NextEra, referencing the company in a State of the State address, and worked with NextEra to build an inter-island high-voltage transmission line. Then after a humiliating defeat in the Democratic primary, Abercrombie forces decried Governor Ige for using the Governor`s office to take a position on NextEra.

Comparing the rate structures of alternative utility ownership structures is difficult, because utilities during pre- and post-merger periods, have different starting points, different paths, different mixes of resources and technologies, different transmission and distribution schemes, different short-term and long-term trend lines, and different ownership models.

Different utilities have different reliability levels, different abilities to absorb rooftop solar, and different amounts of power produced by independent power producers.

Utilities make decisions based on speculative forecasting of relative fuel prices which may or may not pan out. HECO proposed using rainforest palm oil and NextEra proposed using Liquefied Natural Gas (LNG). Both could be justified by relying on friendly analysis or opposed by analyzing life cycle impacts.

There have been efforts to compare the HELCO and KIUC rates at a point-in-time to determine whether cooperatives make sense.  

This blog has covered many of the proposals. including the Hawaii Island Energy Cooperative (HIEC), Interview with Ku`oko`a and HIEC advocate Richard HaKu`oko`a: Transforming Hawai`i's Economy, the birth and death of Ku`oko`aA Concise History of Hawaiian Electric Company (1891-2000), the creation and growth of Hawaiian Electric Industries (HEI), the Camp Smith and VERGE microgridsPrinceton Energy Group`s Ikehu Molokai, and the proposed Parker Ranch microgrid.

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Monday, August 22, 2016

PUC Chair Randy Iwase on Energy Regulation

Randy Iwase

By Henry Curtis

Randy Iwase, Chair of the Hawai`i Public Utilities Commission, spoke at the Hawai`i Clean Energy Day on August 16, 2016, and then appeared the next day on ThinkTech Hawai`i

At the end of the previous administration, legislation was passed to increase Commission staffing positions, to allow the Chair to directly hirestaff, and to expand office space.

"We`ve increased staffing from 32 to 55, because staffing is critical. I`ve been in government now for 34 years. Commissioners like me, we`re like leaves in the wind, we come and go. But the staff, they provide the continuity, they provide the expertise. And the people we`ve hired are very energized, very committed."

The Commission is authorized to hire another 10 people, but there is a lack of room. Currently office space is undergoing renovation. In the meantime, the staff is located at two different sites.

The Commissioners and clerical staff is located at the Commission office while the “research policy group is next to the district court. We`ll all come back together in about 2018.”

Over the past two years the Commission handled all of the regular business, NextEra`s proposed acquisition of the Hawaiian Electric Companies, and “what I call the four major dockets: Demand Response, Distributed Energy Resources, the Power Supply Improvement Plans, and the Decoupling dockets.”

"As I said yesterday, the NextEra merger case sucked all of the air out of the room.  It was the case that everyone wanted to know about. But lurking there, just as important and in my view more important, were these four dockets, because the NextEra case was about who, would be operating the utility, but not where they`re going to go. These four cases set out the blueprint, the pathway, and whoever runs the utility, will have to travel those pathways.”

The Hawaiian Electric Companies Power Supply Improvement Plans were filed with the Commission in April. “You tell us how you will implement programs and initiatives to get to the State Clean Energy goals. What kind of capital projects, and set framework for submission over the next five years?”

The Power Supply Improvement Plan process involves the utility, and involves stakeholders from across the community.

“I don`t think with so many parties involved, that the word consensus, is an operative word, because when you have three people in a room you`re going to have three different opinions. You add 20, and obviously you`re going to have very divergent views. And so, ultimately it`s going to rest on the PUC, to look at all that has come in, and to make decisions about what should be done, and where we should be going.”

We will issue a final order in late January or early February. That is not the end of the process. Rather it ends this step and then the next plan starts to be developed to take us into the future.

The Power Supply Improvement Plan s asks the utility how you`re going to get there? What is the cost-effective path that will provide energy efficiency, safety, and reliability? We are not dictating as energy sustainability is evolving, ever changing, and it has to be flexibility.

Outside of the formal hearing process, “we have in these dockets what`s called technical conferences. We bring everyone into the room so that, everyone hears what everyone else is saying.”

Two years ago the Commission issued a White Paper called “Inclinations” which suggested to the utility what might be a better path, and what to look at such as ownership. Should the utility handle transmission and someone else handle generation?

When NextEra proposed acquiring the utility, there were “a lot of doomsday speakers” who said “the world will collapse” if the merger was not approved, “hyperbole on my part”, but “HECO did not come to a screeching halt.” Its stock price is now slightly above the pre-merger price.

The Commission laid out a 17-page guidance for any future suitor.

The utility`s efforts to increase renewable energy and energy efficiency has relied upon the low hanging fruit. It will be more difficult going forward. There must be a diversity of renewables.

I am “very confident by 2045” that solutions will be found. Around the world there is enough money and brainpower. Probably someone who is in high school today will develop batteries, and figure out better ways to collect and distribute energy.

“We went from zero to the moon, in eight years, with John Kennedy, with a space capsule that I understand, had probably had less, electronic and computer power in it, than a toaster oven today. So much can happen.”

“The hardest thing is to say, this is the only way you`re going to go, this is the only technology you will use, because you might be wrong in five years.” It is better to provide a “platform for people to put their stuff on.”

There has been back-and-forth discussion on hydrogen versus electric cars. “Can we look at geothermal on the Big Island? Can this State produce hydrogen in a quantity, and at a cost, using geothermal, that is viable? I don`t know the answer.”

For any technology, we want to know if it is cost-effective, where is it located, who will run it?

Jay Fidell inquired about why decisions take so long.

Iwase noted that it “depends on the case, some are very complex, some is staffing.” We started with 32 people in 2015 and now have 55.  

“With respect to NextEra, that was a very complex case. It fell within a range of other cases on the mainland. Some did it quicker than us, others did it about the length of time that we did.”

There were reams of documents for the merger staff to review. “Henry Curtis. Henry does his blogs. I don`t know what he was doing, but he counted, pages, and so, he said it was over a 100,000 pages of documents, so I`m going to take him at his word, because I`m not going to count the number of pages. Thank You Henry.”

The Commission engaged in public listening sessions.

The format of questioning in the formal hearing was Tom Gorak`s idea. We did not want to disrupt or get accused of restricting cross-examination by lawyers.

Iwase referenced a Hawai`i attorney named Ben Matsubara who served as a hearings officer. He said, “don`t get reversed on procedure.” Substance, okay, but not procedure.

In the initial cross-examination, there were “rounds of questions. Everybody was charged up. Towards the end people asked less questions.”

NextEra`s proposed acquisition added notoriety to Commission proceedings. We were not concerned with who would run the utility but “how you`re going to meet the clean energy goals.”

For NextEra, “it was all maybe, no guarantees, we`ll do it after the merger is completed.” We needed to know “whether or not you fit Hawai`i.” We have a unique culture, but It is not a question of just being local. “Can you provide us with info that if you take over” you will be able to meet expectations?

In the Inclinations the Commission made it clear that we “do not want a top down one monopoly controlling everything.” There needs to be competition in centralized and distributed generation.

The Commission has appeared at the Legislature less than during the past administration. The administration should speak with one voice and DBEDT sets the state energy policy. The Commission should offer procedural comments only.

For the Commission, “there has to be an outreach to the community because we don`t have the buy in that we can.” There are many sectors including renters and small businesses who could not put solar on their roofs but will be able to participate in community-based solar.

The four major dockets that will shape the HECO Companies are, the Power Supply Improvements Plans (PSIP, docket 2014-0183), the PUC Investigation on Distributed Energy Resources (DER, docket 2014-0192), the PUC InvestigationDecoupling (DC, docket 2013-0141), and the HECO Companies Demand Response Application (DR, docket 2015-0412). 





Gas Co

Consumer Advocate

County of Hawaii

County of Maui

AES Hawaii

Blue Planet

Distributed Energy Resource Council of Hawaii 


Eurus Energy

First Wind

Hawaii PV Coalition

Hawaii Renewable Energy Alliance

Hawaii Solar Energy Assn

Life of the Land

Paniolo Power

Puna Pono Alliance

Renewable Energy Action Coalition of Hawaii

Ron Hooson


Sierra Club



The Alliance for Solar Choice

Ulupono Initiative

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