Tag Archives: Biofuels

Cutting Edge Info on Peak Oil: Here, Now & in November

Richard Ha writes:

Five Association for the Study of Peak Oil (ASPO) annual conferences later, it’s very clear to me that the information I learn at the conferences is cutting edge. It’s consistently two or more years before what the experts there are talking about shows up in the mainstream news.

From the first ASPO conference I attended, I noticed there were stock traders in the audience. I asked them why there were there, and one told me it was so he could make better investment decisions.

The oil decline situation is much more serious than people realize, and I highly recommend that anyone who wants to be on the cutting edge of knowledge attend the next ASPO conference. It is usually held around the end of November.

I also recommend you visit the ASPO-TV site and take in some of the videos there.

Robert Rapier gave this interesting talk at ASPO last year, which may be of interest to folks who have more than just a passing interest in energy issues.

Robert Rapier – Navigating a New Energy Reality from Peak Oil TV on Vimeo.

Robert, who presented at the conference the last two years, lives
in Waimea now, where he moved to take the job of Chief Technology Officer for Merica International.

He has written a book, Power Plays: Energy Options in the Age of Peak Oil:

In Power Plays: Energy Options in the Age of Peak Oil, energy expert Robert Rapier helps readers sort through energy hype, doom and gloom, and misinformation to understand what really matters in energy, and how it impacts individuals, investors, businesspeople, and policy makers worldwide. The book
covers the overall global energy situation, the particular risks for the U.S. with its present energy mix, the energy outlook for the developed world and emerging economies like China and India, what peak oil really means, and the present and likely future of natural gas, coal, oil, nuclear power, and alternative energy sources. 



The book also addresses common misconceptions. For instance, most readers are likely unaware that the U.S. is the third-largest oil producer in the world. Or that Canada leads the U.S. in per capita oil consumption. It will also highlight interesting facts—for example, China has solved part of its energy challenge by
mandating solar hot water systems in all new construction. Most
importantly, the book will provide specific energy insights unavailable elsewhere and help individuals and business planners chart future actions and decisions. 

In a recent blog entry, Robert talks about why rising natural gas prices will affect the biofuel industry (natural gas is a cost component of the biofuel industry).

He once told me that if a biofuel project has a negative energy balance, it would never be cheaper than oil.

He is highly technically qualified and has a knack of making difficult issues and conclusions easy to understand. I highly recommend both his book and blog.

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My Star-Advertiser Op-Ed: Big Island Biofuels Project Would Raise Oahu’s Electric Rates

My Op-Ed article on the Aina Koa Pono situation, and how it would raise electricity rates for O’ahu residents (though the project is on the Big Island), ran in yesterday’s Star-Advertiser. Here it is in full:

***

The Public Utilities Commission (PUC) is considering approving
a contract between Hawai‘i Island’s HECO-owned utility (HELCO) and a partnership known as Aina Koa Pono (AKP). Its decision is expected within the next several weeks.

Why should rate payers on O‘ahu care about this proposed
contract?

Because if approved, O‘ahu residents would pay about 90
percent of the cost – even though the very expensive fuel would only be used on the Big Island.

The contract between HELCO and AKP calls for HELCO (and you) to purchase fuel from AKP at about $200/barrel. Today, a barrel of oil costs about half that: $107.  If this contract is approved, there will be a surcharge, to cover the difference, on your monthly electricity bill.

Furthermore, note that whenever oil has reached about $120/barrel, world economies have slowed precipitously. Many have gone into recession. This tells us that there is a natural economic “stop” in place that keeps oil from getting anywhere near $200/barrel.

And yet HELCO/HECO is trying to guarantee AKP a fixed price
of $200/barrel.

While a discussion of using renewable energy, rather than
primarily buying foreign oil, is warranted, when the cost of those renewables is so unrealistically high that any buyer would look for other alternatives, then that discussion has reached the point of absurdity.

What lower-cost alternatives exist for the Island of Hawai‘i?

  • The Island has significant geothermal resources at the equivalent price of $57/barrel. Right now, HELCO purchases only about 70 percent of the geothermal power available, meaning there is more geothermal available at well below the equivalent of $200/barrel.
  • HELCO currently purchases power from biofuel and hydroelectric sources that make a reasonable profit at today’s prices, and don’t ask for $200/barrel. Additional power plants are asking to come on line at today’s prices.
  • HECO and HELCO currently buy solar power at prices well below the equivalent of $200/barrel (in fact, from what we can tell, at less than half that price).
  • HECO and HELCO buy wind-generated power for far less than $200/barrel, with more potential sellers lining up to sell to them.

AKP’s plan has technical issues, as well. The process AKP plans to use has never been proven at the scale they propose; the proposed
yield of source material is many times more than ever grown anywhere. There are also cultural and environmental issues.

Finally, you might ask why O‘ahu rate payers should pay for power consumed by rate payers on another island. GOOD QUESTION.

The simple answer is that if rate payers on the Island of
Hawai‘i had to bear the burden, there is no way this could be approved. That kind of tells the whole story right there, doesn’t it?

We suggest you write to the PUC if you oppose this contract:
hawaii.puc@hawaii.gov. You can also contact your State and County legislators and your Mayor.

Richard Ha, owner of Hamakua Springs Country Farms,
submitted this on behalf of the Big Island Community Coalition, of which he is a founding member. Other founding members include Dave DeLuz Jr., John E.K. Dill, Rockne Freitas, Wallace Ishibashi, Ku‘ulei Kealoha Cooper, Noelani Kalipi, Ka‘iu Kimura, Robert Lindsey, H.M. “Monty” Richards, Marcia Sakai, Lehua Veincent and Bill Walter. All operate as individuals and do not represent others. The Big Island Community Coalition (BICC) works primarily with cost issues on the Island of Hawai‘i, where residents pay about 25 percent more for electricity than do O‘ahu rate payers.

###

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We Need More People With Cutting-Edge Energy Knowledge!

Richard Ha writes:

Hawai‘i should be sending more people to the Association for the Study of Peak Oil (ASPO) conference. The folks at ASPO are on the leading edge of energy data interpretation. We need more people with cutting -edge energy knowledge.

aspo logo

For example, for several years now ASPO folks have been utilizing Energy Return on Investment (EROI) as a tool to evaluate energy
options.

If HECO had understood the concept and its parameters, it
may not have committed to Aina Koa Pono’s biofuel project so wholeheartedly.

Biofuels, in general, have very low EROI ratios (net energy). It takes a ratioof 3 to 1 just to maintain society’s petroleum infrastructure. Biofuels, except for cane ethanol, are lower than 2 to 1.

If we can’t make money in Hawai‘i now with cane ethanol, what makes us think we can do cellulosic biofuels, which are more costly and more difficult?

Despite spending hundreds of millions of taxpayer dollars, there are zero commercial competitive cellulosic biofuels in production
today. Zero. We wish AKP well, but it should use its own money, not that of the rate payers.

The shale oil and shale gas story is probably only be an interim solution. Aubrey McClendon, the fracking cheerleader of Chesapeake Energy, has been removed as its Chairman and will soon resign as CEO. The ASPO folks have known for several years that shale oil and gas is a bunch of financial smoke and mirrors.

When HECO responded to Consumer Advocate questions about how it justified its pricing, the utility used the Energy Information Agency (EIA) 2012 AEO report’s high-case scenario for its long-term forecast.

But the EIA’s short-term forecast, just a couple of weeks ago, estimates the 2014 price of oil at $101/barrel – while HECO estimates that oil will cost $180/barrel in 2015. The rate payer wouldn’t care about this if they didn’t have to subsidize the biofuels at $200/barrel.

Putting a secret $200/barrel biofuel surcharge on rate payers, and then telling them, “Trust us, this won’t hurt much” – while raising the pay of top executives – stands in sharp contrast to the CEO of Japan Airlines, who insists on being treated exactly like his workers. Watch that short (2:20) video for a very different approach than we are used to. Really interesting.

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Same Old Piggy With Lipstick & A Dress

Richard Ha writes:

Aina Koa Pono (AKP) just announced plans to bring a trailerable “Micro Dee” process to Ka‘u to demonstrate the pyrolysis oil process.

That liquid is not drop-in diesel.

  • It still needs to be sent through a refinery so that it can meet fuel specifications.
  • After refining, rate payers will still subsidize the fuel to the tune of $200 per barrel.

It kind of looks like the same old piggy but with lipstick and a pretty dress.

From the Aina Koa Pono press release:

….Our plan is to start with one, 33-ton-a-day unit so the community can see and understand the Micro Dee (Microwave Thermo Catalytic Depolymerization) process in place. AKP and its engineering, construction and procurement partner, AECOM Technology, are focused on final plans for this trailerable unit; we’re performing final validation on technology so investors are confident as we move ahead. We expect to locate the 33-ton unit in Hawaii within the next several months and be operational before second quarter, 2014.

AKP has 12,000 acres on which to produce the crop they need to make fuel. Palm oil is the only crop that can compete with oil in the biodiesel space. It yields approximately 500 gallons/ acre.

Assuming – and this is a huge assumption – that AKP gets the same yield as palm oil produces, they might get 6 million gallons annually from their 12,000 acres.

That will be far short of the 18 million gallons the utility is looking for.

Right now the land is mostly in cattle, but it’s clear that AKP will need every inch of land.

I wonder when they are planning to break the news to the cattle ranchers – that the cattle ranchers will need to leave?

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NY Times: Fed Court Says Biofuels Quota Based on “Wishful Thinking”

Richard Ha writes:

Friday’s New York Times article Court Overturns E.P.A.’s Biofuels Mandate is very interesting.

Even more reason for the PUC to set aside the Big Island’s Aina Koa Pono biofuels project!

From the New York Times:

Published: January 25, 2013

WASHINGTON — A federal appeals court threw out a federal rule on renewable fuels on Friday, saying that a quota set by the Environmental Protection Agency for incorporating liquids made from woody crops and wastes into car and truck fuels was based on wishful thinking rather than realistic estimates of what could be achieved.

But actual production has been near zero.

While the mandate springs from a 2007 act of Congress meant to promote advanced biofuels to run cars and trucks, “we are not convinced that Congress meant for E.P.A. to let that intent color its work as a predictor, to
let the wish be father to the thought,” the court wrote….

Read the rest

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Energy & the Future of the Big Island

Richard Ha writes:

This past Friday I participated on an energy panel at the Hapuna Beach Prince Hotel called “Energy: Facing the Reality of Renewables.” Panel members were Jay Ignacio, President of Hawaii Electric Light company; Mike Kaleikini, who is General
Manager of Puna Geothermal Venture; and myself, as steering committee member of the Big Island Community Coalition.

From the Kona-Kohala Chamber of Commerce: “The 2013 Summit will further explore those initiatives via ‘panels of conversation’ on each topic. Three guests per topic have been invited to participate on panels to discuss their work with the Summit audience, ideas that inspire them and what they see as the future for Hawaii Island. Each panel will have 45 minutes of discussion followed by questions from the audience. We are pleased to have Steve Petranik, Editor of ‘Hawaii Business Magazine’ as our moderator again this year.”

There were five panels: Education, Sustainability, Employment, Energy and Health Care.

West Hawaii Today wrote about it in an article called Prospects of an All-Geothermal Isle Unlikely.

I started out by saying mixed messages are being sent out. Some say that the U.S. has enough oil and gas that we will soon replace Saudi Arabia as a world energy supplier. Using data and scientific methods, the Association for the Study of Peak Oil-USA (ASPO) has come to different conclusions. Its agenda is merely to spread the best information it has on this topic. You can learn more by viewing video at the ASPO-USA.org website.

I described the Big Island Community Coalition’s mission, which is to achieve, for the Big Island, the lowest-cost electricity in the state. Striving for a low cost solution hedges our bets. It is better to be safe than sorry. I told them that those interested in supporting this group can get on the Big Island Community Coalition mailing list.

I related how food and energy are inextricably tied together. Food security has to do with farmers farming. And if farmers make money, the farmers will farm! But while only two percent of the mainland’s electricity comes from oil, more than 70 percent of the electricity in Hawai‘i does. The mainland, of course, is our main supplier of food and our biggest competitor. As oil prices rise, Hawai‘i becomes less and less competitive.

As oil prices rise, and electricity prices rise, and farmers and other businesses become less competitive, local families have less spending money.

The answer is to find the lowest electricity cost solution. For if people have extra money, they will spend it. Two-thirds of our economy is made up of consumer spending.

Provided that the expensive and ill-advised Aina Koa Pono biofuel project does not go forward, we have a bright future ahead of us. In the pipeline is Hu Honua’s 22MW biomass burning project, and
next is 50W of additional geothermal. Add to that 38MW of present geothermal, and, assuming the old geothermal contract is renegotiated, that would amount to 110MW of stable affordable electricity. This would be more than 60 percent of the peak power use on the Big Island. Even if we do not count wind and solar renewables, this would put the Big Island on a trajectory of achieving the lowest cost electricity in the state.

What would happen if our electricity costs were lower than O‘ahu’s? We can’t even imagine it.

  • It would change our economy.
  • It would help our County government preserve services.
  • Fewer of our kids would have to go to the mainland to find jobs.
  • More of our money could be used for education, instead of paying for oil.
  • More people would have money to support local farmers.
  • Single moms would have less pressure than they do now.
  • Folks on the lowest rungs of the economic ladder would not be pushed over the edge.
  • There are lots and lots  of younger folks who want to farm. Maybe they could actually make money so they could farm.

I told the audience that we on the panel were all friends. But there is too much at stake for the BICC to give ground on our goal to make the Big Island’s electricity the cheapest in the state.

During the Q & A, someone asked what we each thought about an undersea cable to connect all the islands. I replied that our primary objective is to bring low cost electricity to the Big Island before we do anything else.

The audience liked that a lot and spontaneously applauded.

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Is HECO Seriously Damaging Its Credibility?

A proposed biofuels project that Hawaiian Electric Company (HECO) supports is going through PUC approval process right now.

HECO’s public relations people say that as a result of this new project going through, the average Hawai‘i rate payer’s electricity bill would increase by only about $1 per month.

But let’s look at that in a little more depth. HECO is seeking approval to pay Aina Koa Pono (AKP) $200/barrel for the biofuel it produces on the Big Island at Ka‘ū, and would pass on any extra cost (beyond what oil actually costs at the time) to its rate payers, both on the Big Island and on O‘ahu.

HECO has kept that $200/barrel price secret – they are still keeping it secret – but the Big Island Community Coalition folks figured out the price, and how the “$1/month rate increase” was determined.

Using the Energy Information Agency’s (EIA) Annual Energy Outlook (AEO-2012), one can see that HECO is using the highest price scenario, which projects an oil price close to $180/barrel in 2015. In the AKP discussion, it was said that the price of oil would exceed the actual price projected at the end of the period.

We can see that the line hits $200/barrel in 2035. Since they assume that oil will be $180 in 2015, they can therefore say that the difference (between the actual and projected price) would be very small: Hence, an increase of only perhaps $1/month for the average rate payer.

However, it follows that if the actual price of oil is much lower than $180/barrel, rate payers will be paying the difference between that amount and $200. What if the actual cost of oil in 2015 is $120/barrel? That would cause rates to go up much more than $1/month – especially for high-power users.

I cannot help but think that HECO is damaging its credibility immensely by pushing this project. HECO is spending hundreds of
thousands of dollars on public relations to convince us that it is trying to lower people’s rates – when, in secret, it appears to be doing exactly the opposite.

By the way, HECO says the hundreds of thousands of dollars it spends on PR comes from its shareholders. How can rate payers tell when HECO is speaking on behalf of its shareholders, and when it’s speaking on behalf of its customers?

This Aina Koa Pono project needs to be rejected because it will make our electricity rates rise. Rising electricity rates act like a giant regressive tax, because as folks who are able to leave get off the grid, those who cannot afford to are left to pay for the grid.

This results in farmers and other business folks having higher operating costs. For everyone else, it takes away discretionary income. And we know that two-thirds of our economy is made up of consumer spending.

There are also problems with the project itself. Fuel has never actually been produced using the process and feedstock that Aina Koa Pono proposes. AKP does not know what it is going to grow. So far, the feedstock it is testing experimentally is white pine. The Micro Dee technology that AKP wants to use is still experimental.

There is also a risk that this process might use more energy than it generates. Generating electricity is generally about boiling water and making steam that turns a turbine. It is cheapest to burn the stuff, boil water and make steam.

But Aina Koa Pono’s proposed process is extremely energy-intensive and expensive: It would make electricity to make microwaves to vaporize the cellulose to get the liquid and then take the pyrolysis oil, refine it to make it burnable, and then haul it down to Keahole in tanker trucks to make steam. Why should the rate payer pay for all that?

Cellulosic biofuels are not yet a cost-effective technology. On the mainland, in the middle of last year, the Environmental Protection Agency drastically decreased its 2011 estimate for cellulosic biofuel from 250 million gallons to a paltry 6 million gallons.

In 2010, cellulosic biofuel companies on the mainland needed to buy their feedstock for $45/ton. But because farmers were earning $100/ton for hay, the biofuel firms received a $45/ton subsidy.

I asked how much AKP expected to pay for feedstock, and the AECOM Technology Corporation consultant said between $55 and $65/ton. The problem there is that Hawai‘i farmers have been earning $200/ton for hay for 10 years now.

There is an agricultural production risk, as well. Palm oil is the only industrial-scale biofuel that can compete with petroleum oil. AKP has 12,000 acres and it says it will produce 18 million gallons of biofuel annually, and another 6 million gallons of drop-in diesel. So it will produce 24 million gallons using 12,000 acres. That is 2,000 gallons per acre, and that is four times the production of palm oil. More likely they would need at least four times as much land, or 48,000 acres. But where?

Consider too that Ka‘ū Sugar relied on natural rainfall, and it was one of the least productive of the sugar companies. There is a drought right now. And at 22 degrees N latitude, the area has less sun energy than the palm oil producers located on the equator.

According to Energy Expert Robert Hirsch, in his book The Impending World Energy Mess, the best model for biofuel production is a circular one, where processing is done in the
center of a field (which does not exceed a radius of 50 miles) consisting of flat land and deep fertile soil with irrigation and lots of sun energy. This situation exists in Central Maui, where Hawaiian Commercial & Sugar Company (HC&S) is located. It explains exactly why HC&S is the sole surviving Hawai‘i sugar plantation.

To compete heads up in the world market would require the best possible combination of production factors. These are not them.

It’s also important to consider that locking ourselves into a 20-year contract now would preclude lower cost alternatives. Geothermal, for example, is the equivalent of oil at $57/barrel. Ocean thermal has the possibility of being significantly lower in price than $200/barrel oil.  LNG is on the radar and so is biomass gasification. Who knows what else would come up in 20 years?

Paul Brewbaker and Carl Bonham, both highly respected Council of Revenue members, have said, very emphatically and for a while now, that low energy cost is critical. We should listen to them.

The International Monetary Fund team modeled different oil supply scenarios and did a presentation at the Association for the Study of Peak Oil (ASPO) conference a month and a half ago. They could not model a constant $200/barrel oil. Those would be uncharted waters; and ones, by the way, that would devastate Hawai‘i’s tourist industry. Why should we start paying $200/barrel for oil in 2015 if we don’t have to?

Five people from Hawai‘i attended this year’s ASPO conference. Notably, Kamehameha Schools sent two high-level people. Next year, Hawai‘i should send 20 people to learn what’s happening with oil prices and energy.

In the meantime, the amount of risk involved in the AKP biofuels proposal is just far too great. In the investment world, reward is generally commensurate with risk. Except for protection from $200/barrel oil in later years, the AKP project would provide little reward for all the risk we rate payers would assume.

This is a very, very bad deal for consumers.

Big Island electricity rates have been 25 percent higher than O‘ahu’s for as long as anyone can remember. This probably adds to the reason why the Big Island has the lowest median family income in the state, as well as the social ills that go with it. We need lower rates, not higher rates!

Although this is not an official Big Island Community Coalition (BICC) communication, I would like to point out that the BICC has been very instrumental in getting lots of people to stand up and say, “Enough is enough.”

The BICC is a bare-bones, grass roots citizen group with some of the most recognizable names on the Big Island on its steering committee: Dave DeLuz Jr., John E K Dill, Rockne Freitas, Michelle Galimba, Richard Ha, Wallace Ishibashi Sr., Ku‘ulei Kealoha Cooper, D. Noelani Kalipi, Ka‘iu Kimura, Robert Lindsey, H M Monty Richards, Marcia Sakai, Kumu Lehua Veincent and William Walter.

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Line In The Sand

Richard Ha writes:

The Hawaii Tribune-Herald recently had a front page article
titled HELCO Rate Hike Request Blasted.

By COLIN M. STEWART

Tribune-Herald staff writer

A review of testimony submitted last month to the state Public Utilities Commission reveals overwhelming opposition to proposals by Hawaii Electric Light Co. to increase its electricity rates next year.

…Ono said that Big Isle opposition to the HELCO proposals had been some of the strongest that he has seen.

Big Island folks stood up and said, “Enough is enough!” and the Consumer Advocate noticed.

Last time around, the Consumer Advocate supported the HECO/Aina Koa Pono (AKP) biofuel proposal. But based on the great number of written and oral testimony and the consumer advocate’s letter to HECO/AKP asking for explanation on numerous points—which everyone knows they cannot answer—it does not appear that the Consumer Advocate will be on HECO/AKP’s side this time.

The article doesn’t mention how incredulous people were to find out the HECO/AKP proposal would pay $200 per barrel for biofuel and pass the cost on to rate payers. HECO said they would not say how much they would pay, for “proprietary reasons.” Worse, because HECO assumed a very high oil price, HECO’s PR people made it sound like rate payers would only pay $1 per month. They should have been more evenhanded.

On top of all that, television commercials say that HECO has increased geothermal 25 percent, as if it’s a big deal. Going from 30MW to 38MW is a tiny amount. Spending hundreds of thousands of dollars to say these sorts of things does not help HECO’s credibility.

There could be a PUC decision by late spring or early summer. If we are successful in opposing this, it will demonstrate that the public is not powerless and by following the process, people really can make change. We have drawn a line in the sand. Enough is indeed enough! No more electricity rate hikes!

Instead of doom and gloom, dare we dream of a better life for future generations?

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Navigating a New Energy Reality

Richard Ha writes:

Here in Hawai‘i, Robert Rapier is probably our foremost resource for energy knowledge, and I tell that to as many policy people as I can. He’s a good friend of mine.

Robert rapier

He has the important ability to break down complex issues so the average person understands it. He was the lead speaker on the second day of this year’s Association for the Study of Peak Oil (ASPO) conference.

Robert is fearless. He calls it like it is.

The 2011 ASPO conference video is still current and it makes common sense. In it, Robert talks about why field-grown biofuels are likely not a solution to our energy problems. The video is well worth watching:

Robert Rapier: Navigating a New Energy Reality – Concepts and Principles

Robert has three main tenets.

  1. We must transition from fossil fuel with urgency. For electricity, the Big Island’s best bet is geothermal and biomass-firewood.
  2. We need to develop systems with a much lower fossil fuel dependency. That is why field-grown biofuel crops are such a problem. They depend on fossil fuels so much that their breakeven point moves further away as oil price rise. People who analyze field-grown biofuels call that “the receding horizon.
  3. We must take care of our topsoil.

It sounds simple, but there is a lot of deep thought behind what Robert says.

Read more detail about his three tenets here: Setting the Ethanol Record Straight

Food and energy are intimately intertwined. What solves our electricity problems are biomass and geothermal; both result in stable, low-cost electricity that is not tied to fossil fuel. Low-cost base power for electricity beats high cost electricity every time.

Things may change in the future. But for now we need to remember that proven technology is proven.

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How Much HECO Is Spending On Those Ads, & More PUC Testimony

Richard Ha writes:

You’ve probably seen the slick newspaper and TV ads. Hawaii Electric Company (HECO) has spent more than half a million dollars recently to convince us they are trying their hardest to do the right thing. The company is very good at public relations.

For example, the ads say HECO has increased geothermal energy on the Big Island by 25 percent. That sounds wonderful – but that is from a base of only 30 MW. It also says that Aina Koa Pono will only result in $1 per month difference to a typical rate payer.

The big picture is that HECO has resisted closing down its oil-fired plants for years. But now, people are saying enough is enough.

Here is another concerned community member’s testimony against Aina Koa Pono and the proposed 4.2 percent rate increase. Send yours to hawaii.puc@hawaii.gov by tomorrow.

To: ‘Hawaii.PUC@hawaii.gov’
Subject: Dockets Docket # 2012-0185 & 2012-0099

Aloha Chair Morita and commissioners:

I am strongly against the AKP biofuel supply contract and the increase in the Helco electricity rates.

I have lived here on the Big Island in Puna, close to Pahoa for the last 14 years and am the owner of a bed & breakfast operation in Leilani Estates. I have a family with two children and two acres of property. If any of the two dockets go through it will increase the cost of doing business for me and infringe on the viability of my operation. The nature of my business requires for electricity to be available to our guests and there are many times, when I cannot control the use of it, because guests staying at my B&B may not be as conscientious in preserving energy as I am: fans, lights, radios or TVs are left on even though the visitors are not in their rooms. In order to cover additional operational cost my only option would be to increase our B&B rates, however, with the current economy this will result in a decrease of bookings, as people traveling always look for bargains and are not willing to pay higher accommodation rates, if they can get a “beat-the-price” online offer for some of the hotels as package deal with much better conditions.

On the Big Island, electricity rates have been 25 percent higher than Oahu’s rate for as long as people can remember. It has contributed to the Big Island having one of the lowest median family incomes in the state and the attendant social problems that come with a struggling economy. As a family this affects our children and the way we are able to give back into the economy and our communities.

Rising electricity rates act like a regressive tax – people at the bottom of the economic ladder suffer the most. But it is worse; as electricity prices rise, folks that can afford to leave the grid will do so, leaving the folks unable to leave to assume more of the grid infrastructure cost. It is a catch 22. For me with my business depending on consistent electricity supply, it would be impossible to leave the grid and I would be directly impacted by the increased rates and future consumer decisions.

1.       Aina Koa Pono Biofuel Project – Docket 2012-0185: Rate payers will subsidize the difference between the actual oil price and the $200 that AKP will be guaranteed for 20 years. It is more than possible that actual oil prices would be substantially below $200 for the whole contract period. That will result in a heavy subsidy that rate payers must bear. The $200 per barrel rate is much too high. And the cost differential that is anticipated to be passed through to the rate payer is unconscionable. The PUC should not approve as just and reasonable that the utility should be allowed to establish a Biofuel Surcharge provision that will allow the pass through of the cost differential to the consumer as well as the actual cost pass through itself.

2.      HELCO Rate Increase – Docket 2012-0099: HELCO states in its full page newspaper advertisement that only 3% of its revenue goes to profits. In 2011 HELCO reported $138.2 million in net earnings. Most small businesses in Hawaii do not have a 3% profit margin, most net earnings are much lower and that includes my Bed & Breakfast business. Increased electricity rates would narrow this margin even more. I am entirely opposed to an increase in electricity rates. As a business owner it is HELCO’s responsibility to keep the grid in operating condition. This is not the responsibility of the end users nor should we be charged for it. It is a crucial part of the operating expenses and investments in the future, that a business has to strategically make. It is the same for my business, if I let my rooms fall into disrepair or do not invest in new mattresses every few years, people will stop coming. It is in my best interest to make these investments as I am wanting to stay in business. It is the same for a utility company. Not all investments can be directly compensated by increased rates. The market and consumers will only bare so much – and as consumers, we are saying – no more! Profits will go up and down, depending on what investments have to be made – and that is true for all businesses. But as a business owner we all know that these investments are long term and also mean decreases in the company’s corporate taxes. Also, how much do you think the HELCO advertising campaign costs? Without knowing exact figures I am sure it is in the millions. As end consumers, we are paying for that, too! What a waste of good money…

Petra Wiesenbauer

 
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