An Interview & Also a Visit to a Co-op Finance Corporation

Richard Ha writes:

Henry Curtis of Ililani Media recently interviewed me about the energy co-op. He asked me, “Why a co-op?”

Here’s the interview:

Richard Ha owns Hamakua Springs Country Farms, served as Board Chairman of Ku`oko`a Inc., the entity which sought to buy the HECO Companies, a member of the business-based Big Island Community Coalition (BICC) which seeks lower electric rates, and a partner in the Hawaii Island Energy Cooperative (HIEC) which was granted party status in the Public Utilities Commission’s HECO-NextEra's Merger proceeding. HIEC is represented in the docket by three McCorriston Miller Mukai MacKinnon LLP attorneys: David Minkin, Brian Hirai and Peter Hamasaki….

Read the rest

Also, a couple weeks ago I visited the national headquarters of the National Rural Utilities Cooperative Finance Corporation (CFC) in Virginia. There is a strong national association of 900 utility co-ops that exists to help its members, and it owns that finance company, the CFC, which has assets of $26 billion and is a non-profit, so it pays no taxes.

I met with the CFC's senior staff and briefed them about our attempt to be ready should an opportunity arise that allows us to present a credible offer to purchase Hawaii Electric Light (HELCO) and convert it to an energy cooperative.

They told me their resources are at our disposal.

It was very eye-opening to see that we are not alone. It hit me that ours would not be a small, stand-alone co-op, but one of 900 utility co-ops in the nation, with all the ancillary services that comes with that. The technical expertise we would be able to call upon is huge – exponentially greater than what we would have access to as a stand-alone co-op, out here in the middle of the Pacific.

Back on Dec 21st, I wrote about when a group of Big Island community people organized a briefing by David Bissell, the CEO of Kauai Island Utility Cooperative (KIUC) and Dennis Esaki, one of the original founders of KIUC.

Subsequently, we formed a steering committee to investigate the possibility of creating an energy cooperative for the Big Island. That was three months ago. Since then, we registered the co-op, obtained the services of a law firm, and asked the PUC to let us participate in the docket involving the merger request of NextEra and HEI/HECO. Our request was approved.

We have set up a website with information about our efforts, the folks involved, a press release, news articles, and a place for folks to sign up if they want to help us in our efforts.

A co-op is about all of us, not just a few of us. It’s run by a board of directors that is elected by its members. Each member has one vote. Excess revenues are returned to the members in proportion to their usage. 

We are not alone. 

This morning I saw that State Rep. Nicole Lowen just introduced HR105 expressing support of "further discussion of the possibility of local ownership and control of electric utilities."

I will write more as we move forward.

Planning Your Fruits & Vegetables

Richard Ha writes:

I’ve been meeting in Washington, D.C. as a member of the Department of Agriculture’s Fruit and Vegetable Industry advisory committee, which was reconstituted this past year. Twenty five of us were appointed to advise the Secretary of Agriculture on issues that are important to the nation’s fruit and vegetable growers.

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We broke down into various subject committees last year and there were several meetings throughout the year to determine what the most important issues are at present. This meeting was to decide which issues we would send on to the Secretary of Agriculture and recommend for action.

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Some of the issues are: labor availability, food safety, regionally adapted plant breeding programs, backlogs of container cargo at West Coast ports, citrus greening and appropriate timely reactions to important plant diseases, and GMO labeling.

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Next on our agenda is to develop recommendations for each subject area.

This last photo was just for fun:

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Advocating for Agricultural Policy in Washington D.C.

Richard Ha writes:

I'm in Washington, D.C. for a joint meeting of CARET representatives (I'm the Hawai‘i representative for the Council on Agriculture, Research, Extension and Teaching) and the Administration Heads Section, which consists of the deans of the nation's Land-Grant Colleges. This is my second year as Hawai‘i's CARET representative and I'm getting my feet on the ground.

The University of Hawai‘i is a Land-Grant College, and the College of Tropical Agriculture and Human Resources (CTAHR) is its agriculture component. 

A land-grant college or unversity is an institution that has been designated by its state legislature or Congress to receive the benefits of the Morrill Acts of 1862 and 1890. The original mission of these institutions, as set forth in the first Morrill Act, was to teach agriculture, military tactics, and the mechanic arts as well as classical studies so that members of the working classes could obtain a liberal, practical education. 

Before the Morrill Acts, only rich people could get a university degree. It is significant that President Lincoln signed the act into law. The Land Grant Colleges helped make the U.S. the premier agriculture nation in the world.

I'm happy to help promote the agriculture mission of CTAHR. CTAHR programs were very helpful in our farm being successful for so many years, and I have tremendous respect for the men and women in CTAHR's programs.

After three days of meetings to discuss and strategize which specific programs of the Land-Grant Colleges we will lend support to, each CARET representative will go see his or her own congressional delegation. 

Our situation is a little unusual because our state is so small and we actually know all four of our representatives and senators. My pockets are full. I brought mac nuts and coffee and I've been sharing it around with people. You know, aloha spirit. It's what we do. I think I got them trained already.

There's snow here!

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Shale Oil & Gas: The Overhype

Richard Ha writes:

Art Berman says we don’t have as much shale oil and gas as we think we do. He feels that the shale oil and gas sector is largely uneconomic.

The first time I heard Art Berman speak was on a panel discussion at a 2009 Association for the Study of Peak Oil conference. He studied four thousand Barnett shale wells in Texas and found that the average well gave up 72 percent of its production in the first year.

He definitely had a different perspective than an oil company executive panel member, who said that according to his hyperbolic curve calculations, the average well would produce for 22 years.

I knew someone was wrong. I thought that the oil company executive was just blowing smoke, to sell stocks. I imagined that by the end of the 22nd year, the amount of gas production from his gas well would fill a balloon an hour.

Many thousand of wells later, several credible studies from other sources, such as by this Post Carbon Institutes study by David Hughes, support Art Berman’s initial observations.

We need to pay attention to this because we rely on oil for seventy percent of our energy, and this makes Hawai‘i especially vulnerable. It’s much better to be safe than sorry.

The Big Island is lucky to have an alternative to oil and natural gas to make our base power electricity: Geothermal.

As time goes on, and as oil and natural gas prices rise, future generations will have a competitive advantage over the rest of the world. We will be over our geothermal “hot spot” for 500,000 to a million years.

It takes energy to do work. No energy, no work done. But it is the net energy left over from getting the energy that society uses to grow the economy. And since two-thirds of our economy is made up of consumer spending, it boils down to how much extra money the rubbah slippah folks have that will determine the health of our economy.

So Kumu Lehua was right. He asked me: “What about the rest?” 

That is the key question. What about our kupuna on fixed income? The single moms? The working homeless? If they had extra money, they could spend it and everyone would benefit. Farmers are price takers, not price makers, and they would benefit. If the farmers made money, the farmers would farm.

Asking what about the rest will help us with food security. It all boils down to cost. That is to say, what are the combination of things that gives us the best net energy profile? This is more about common sense than rocket science. If we take our time to look for two solutions for every problem and one more just in case, we will find the solutions that make us competitive with the rest of the world.

This, in the final analysis, is about survival and adaptation. And it is about all of us; not just a few of us.

Ohia & Biotech

Richard Ha writes:

It turns out that ‘ohi‘a dieout is tied to a fungus.

The American chestnut was almost wiped out by a fungus, too. But a biotech solution might save the American chestnut.

Maybe a biotech solution can be found to help with the ‘ohi‘a fungus as well.

From the Hawai‘i Tribune-Herald:

By COLIN M. STEWART
Hawaii Tribune-Herald

Experts call it the single most important tree for the protection and proliferation of native forests across the state.

The ohia is the most widespread, as well as arguably the most beloved and iconic, native tree in Hawaii. And for the last five years, it has been under attack by a troubling new foe that had foresters and scientists scratching their heads.

Until recently.

A scientific paper currently under review reports findings that the disease, known as Rapid Ohia Death, is the result of a fungal pathogen called Ceratocystis, which has been found on other plants here including Okinawan sweet potato and taro. But this is the first instance of it killing ohia.

Read the rest

Hawaii Island Energy Cooperative Files With PUC

Richard Ha writes:

The Hawaii Island Energy Cooperative (HIEC) has gotten quite a bit of press coverage in the past few days. Last week, we submitted an application to the PUC to intervene in the pending sale of Hawaii Electric Industries (HEI) to NextEra Energy.

HIEC logo

Our HIEC spokesman Marco Mangelsdorf answers some questions about it just below. Following his answers, you can see excerpts from and links to newspaper articles about HIEC from the Honolulu Star-Advertiser, the Hawaii Tribune-Herald, Pacific Business News, and Honolulu Civil Beat.

FREQUENTLY ASKED QUESTIONS

Provided by Marco Mangelsdorf, director and spokesman for HIEC, President, ProVision Solar, Inc.

What’s my connection to HIEC?

I was invited by Richard Ha, business owner of Hamakua Springs and community leader, to get involved with a group of Big Island residents who were interested in exploring the possibility of emulating the Kauai Island Utility Cooperative model established on Kauai.  We are seeking to get a seat at the table in the Hawaiian Electric Industries-NextEra docket by proposing an option, depending on the course of the proceedings, that offers the possibility of democratic ownership and control of the island’s energy infrastructure, through a duly elected board, to the residents and communities of the Big Island.

Are you doing this because you see the end of the PV industry in the state?  Are you leaving your company?

I will continue to manage ProVision Solar as the solar electric industry in the state continues to adapt to the unique challenges in our Aloha State.  Solar PV will continue to be a major part of the Hawaii’s efforts to become more energy independent for years and decades to come.

Do you see any conflict between continuing to be at ProVision and working with HIEC?

I see congruence between what I’m doing in my business to empower Big Island homes and businesses as far as promoting energy independence and working toward greater local control of the island’s energy infrastructure.

Is HIEC against the proposed merger?

HIEC takes no position either for or against the proposed merger.  HIEC desires to explore through the proceedings the unique perspective, goals and objectives of the residents and communities of Hawaii Island, and depending on the outcome of the proceedings, consider whether a different ownership model for energy services on Hawaii Island may provide a positive alternative.  A sound discussion should include evaluation of the pending transaction in relation to potential future options that may be in the public interest for the unique interest of the island of Hawaii.  HIEC’s participation can assist the development of a sound record by providing a Hawaii Island focused perspective.

Is HIEC making an attempt to buy HELCO?

It’s important to note that HELCO is not for sale at this time.  So no, HIEC is not submitting an offer to purchase HELCO.  HIEC is positioning itself as a possible option worthy of consideration to take Hawaii Island in a different energy direction, depending on the course of the proceedings.

Would a coop lead to lower energy bills on the Big Island?

HIEC believes that a case can be made that there would be lower energy costs to the consumer over time through tax exempt status, lower cost of capital and no shareholder profits, greater efforts to develop less expensive island-based power sources, promotion of education, markedly improved energy efficiency, and the accelerated adoption of appropriate advanced technologies.

What’s the position of HIEC regarding geothermal energy?

The residents and communities of the Big Island, through an elected board of directors, would decide what choices and directions to take as far as energy sources and policies under the coop.

What’s the position of HIEC regarding a interisland power cable from the Big Island to the other islands?

The residents and communities of the Big Island, through an elected board of directors, would decide what choices and directions to take as far as energy sources and policies under the coop.

What’s the position of the HIEC regarding this or that particular or specific issue on the Big Island?

The residents and communities of the Big Island, through an elected board of directors, would decide what choices and directions to take as far as energy sources and policies under the coop.

What would make HIEC different from a standard electric utility coop?

The cooperative would have a more diversified focus compared to a standard electric utility by focusing on greater overall energy independence, higher renewable energy generation, and enhanced sustainability through a comprehensive and integrated approach to all energy-consuming sectors on the island.

Has HIEC been working with Kauai Island Utility Cooperative? 

HIEC has been in contact with KIUC and they have been supportive.  In the event that HIEC is successful in establishing an energy coop, it is likely that synergies would exist between the two islands that would enable both to benefit by working together in certain areas. 

From the Honolulu Star-Advertiser:

By Susan Essoyan

The Hawaii Island Energy Cooperative is seeking a seat at the table as the Public Utilities Commission considers the proposed merger of Hawaiian Electric Industries and NextEra Energy.

The new nonprofit cooperative association, registered with the state Feb. 9, was formed by business and community leaders to explore the possibility of creating an energy co-op on Hawaii island.

The Hilo-based co-op filed a motion Feb. 11 to intervene in the Public Utilities Commission docket on the proposed $4.3 billion merger between NextEra and HEI. But it is not taking a position for or against the deal, according to Marco Mangelsdorf, spokes­man and a director of the co-op.

Instead, it hopes to ensure that commissioners consider the island's energy needs and the potential benefits of a cooperative model of utility ownership during their deliberations. Read the rest

From the Hawaii Tribune-Herald:

By Colin M. Stewart

What if Hawaii Island residents owned their own electric utility?

That’s the question being posed by a nonprofit group that filed on Feb. 11 a motion with the Hawaii Public Utilities Commission to intervene in the pending $4.3 billion sale of Hawaii Electric Light Co’s parent company, Hawaiian Electric Co. (HEI), to NextEra Energy.

The Hawaii Island Energy Cooperative is a group of Big Island community and business leaders exploring the idea of public ownership, according to group spokesman and director Marco Mangelsdorf.

“We seek to participate in the discussion of the unique perspective of the residents of our island, and, if appropriate, explore an option that would make for a fundamental change in the landscape of energy production and consumption on Hawaii Island,” he said via a press release. “Being able to have more direct control over Hawaii Island’s present and future energy profile would provide us with an extraordinary opportunity to showcase what can be done on our island on many different and innovative levels.” Read the rest

From the Pacific Business News:

By Duane Shimogawa

A group of community and business leaders on the Big Island have formed an organization to explore the potential benefits of a community-based cooperative ownership structure similar to the Kauai Island Utility Cooperative, and they want a closer look into NextEra Energy's $4.3 billion acquisition of Hawaiian Electric Co.

The Hawaii Island Energy Cooperative recently filed paperwork to intervene in the Hawaii Public Utilities Commission docket on the proposed acquisition, which involves HECO's Big Island subsidiary, Hawaii Electric Light Co. Read the rest

From Honolulu Civil Beat:

By Sophie Cocke

Big Island business and community leaders have formed a nonprofit coop called the Hawaii Island Energy Cooperative to explore taking over Hawaii Electric Light Co., a subsidiary of Hawaiian Electric Co.

The co-op would be owned by ratepayers, similar to the Kauai Island Utility Cooperative. However, the co-op is interested all of the island’s energy sectors not just the electric grid.

The co-op association emerged in recent weeks with the announcement that Florida-based NextEra Energy has entered into an agreement to purchase HECO — a deal that is expected to close by the end of the year. Last week, the Hawaii Island Energy submitted an application to Hawaii’s Public Utilities Commission, which must approve the sale, to intervene in the review of the merger. Read the rest

National Policy: Supporting Conventional Plant Breeding Programs

Richard Ha writes:

I am on the USDA Fruit and Vegetable Industry Advisory Committee (FVIAC), which advises the Secretary of Agriculture on issues affecting the Fruit and Vegetable Industry. When we broke out into subcommittees last year, I went onto the grant and research committee.

I want to tell you about one of the issues our subcommittee is talking about, and going to be recommending, because I think it’s significant.

It has to do with the huge decline in conventional plant breeding programs at the country’s Land Grant Colleges. The huge outcry we are seeing now against large seed companies is a protest against a system that is way out of balance. We need to support conventional plant breeding programs, and we are going to recommend this.

It is cheaper and science has come a long way. We have mapped certain plants and we know the characteristics of certain genes now. We have the techniques now to look at seedlings to see if they have desired genes and to select for them at that young stage. This is still conventional breeding, and it saves time and money.

The whole FVIAC meets in a couple of weeks and we will be making national policy suggestions, including on this topic.

You can read more about this below.

Key findings related state-level research on development of regionally adapted and public fruit & vegetable cultivars from the Proceedings of 2014 Summit on Seeds and Breeds for 21st Century Agriculture (2014: Washington DC):

State Breeding Programs are Starved for Resources and Breeders

33% decline in the number of plant breeders in US from 1994-2001; Only eight universities graduated at least seven students in plant breeding per year between 1995 and 2000

Between 1990 and 2010 membership in the Breeder and Plant Physiologist divisions of the Crop Science Society of America dropped 56%

State funding for breeding research has followed federal trend of sharp reductions in public plant breeding

Universities have greatly curtailed investment in public breeding, and are increasingly steering royalty payments to general funds instead of back into breeding programs

Very few universities have even one whole plant physiologist who has the resources to interact with breeders in germplasm identification and enhancement

Budget cuts at land grant universities have resulted in more and more technicians reliant on ‘soft money’ funding that is highly variable and incompatible with the development and maintenance of long-term breeding programs

At most institutions, the value of a program is measured by the value of the overhead monies generated, not by whether it is important and/or productive

Among vegetable crops, only potatoes, tomatoes, cucurbits (and all types combined), berries (all types combined) and tree nuts (all types combined) have more than two programs developing cultivars; carrots, celery, table beets, watermelons, sweet potatoes and sweet corn have only one each

Most produce crops lack significant state check-off programs to fund public breeding programs due to the fragmented nature of horticultural production

Private Classical and Transgenic Breeding Programs Are Not Picking Up the Slack

Private breeding programs remain important in the specialty crop industry, but increasing concentration in the specialty crop seed business has resulted in discontinuation of many lines as larger companies seek economies of scale

The small size of regional specialty crop markets makes them less attractive for significant private breeding programs by large seed companies

Public Cultivar Development is Economically More Efficient

Transgenic variety development typically costs $50 million per released variety, compared to $1 million for a public cultivar

 Recommendations

1. Develop a comprehensive national plan to restore funding and institutional capacity for the development of public plant and animal varieties.

2. Encourage and reward agro-biodiversity on farms and in our commercial seed choices in order to increase resilience against shifting and unpredictable climatic conditions.

3. Address the negative impacts of consolidation and concentration in the ownership of seeds by empowering farmers to save and own seeds and encouraging more independent regional seed companies.

4. Increase farmer and researcher access to innovation in the development of elite cultivars, and confront the negative impacts of utility patents and restrictive licenses.

5. Increase the number of public cultivar developers in each of the seven US climatic regions with a focus on renewing institutional capacity to support future public plant breeders.

6. Create new, innovative partnerships and models to address regionalized and participatory approaches to public cultivar development.

7. Strengthen and democratize public germplasm collection systems and address germplasm access and sharing at an international level.

8. Commit adequate resources to determine critically missing data, budgets and baseline information to better articulate both the challenges and the solutions ahead.

9. Build greater public awareness of the importance of public cultivar development by expanding regional communities of seed advocates and identifying on-the-ground regional priorities and challenges to ensure that solutions meet the needs of stakeholders in each region.

Farming in the Wild West?

Richard Ha writes:

The Hamakua Coast is becoming the Wild Wild West.

A stop sign on Highway 19 is shot full of holes.

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Someone cut through our iron gate with a torch just recently.

Gate

They left a flashlight (by accident?)

Flashlight

We're installing camouflaged infrared monitors at different places on the farm.

Our neighbors at the quarry had fuel stolen and their surveillance camera stolen.

Many farmers are reporting product and equipment stolen.

It's not easy being a farmer.

Hawaii, Shale & Geothermal

Richard Ha writes:

Because Hawai‘i relies so much on oil for its energy, the state will be a major beneficiary of the shale oil phenomenon. Conventional oil development takes a long time – five to ten years – whereas activating a shale oil well takes less than a year.

The result is that whenever the Saudis try to raise the price of oil, our U.S. shale oil drillers will react wherever they can make money.

From The Barrel Blog, the essential perspective on global energy:

Energy Economist: Shale oil’s response to prices may call for industry re-evaluation

Shale oil’s investment cycle is shorter and its decline profile sharper than conventional oil production. Current indicators suggest legacy declines from shale will catch up fast with the industry. This points to a sharp deceleration in US shale oil output. But, while conventional oil takes time to slow down, it also takes time to speed up. It will be shale that is best placed to benefit from any oil price recovery, as Ross McCracken, managing editor of Platts Energy Economists, explains in this month’s selection from the publication. Read the rest

At $70 a barrel, a lot of people make money and at $40, a lot of people lose money. This safety valve is very good for us in Hawai‘i.

This will give us time to make rational energy decisions. Oil and gas are still finite resources. Because two-thirds of our economy is based on consumer spending, we need to find solutions that take care of the rubbah slippah folks. Low prices for them strengthens the economy for all.

Each island has its own basket of energy resources. The Big Island, because of its abundant geothermal resource, has the biggest basket of lowest cost alternatives. O‘ahu has the smallest basket of resources and so it needs help from the other islands—hence, the talk about cabling resources.

The elephant in the room is cabling geothermal resources from the Big Island. That will never happen, though, unless the Big Island residents themselves receive a demonstrated benefit from geothermal.

So now we need to work on getting Big Islanders definite low cost and other benefits from geothermal—like making hydrogen for transportation and even nitrogen fertilizer.

Then we can have a group of Big Islanders, representing the people, sit across the table and negotiate the conditions under which the people would approve exporting energy off island.

I would think education for our keiki might be a good starting point.