Tag Archives: Carl Bonham

Testimony to OHA Supporting Geothermal

Richard Ha writes:

OHA is contemplating investing in geothermal. I am in favor of that, for the reasons that I mention below.

I sent the following testimony to OHA:

***

Subject:  OHA testimony re: Huena Power Co/IDG

April 17, 2013

Office of Hawaiian Affairs
711 Kapiolani St.
Honolulu, HI  96813

Aloha Chair Machado and Board members of OHA:

The Geothermal working group report, which Wallace Ishibashi and I co-chaired, recommended that geothermal be the primary base power for the Big Island. OHA was represented on the working group by trustee Robert Lindsey.

I believe that OHA should participate in geothermal development because it is an income source for OHA to provide services to the Hawaiian people. And it can influence the course of our people’s history.

Geothermal-generated electricity is proven technology, affordable and environmentally benign. The Big Island is expected to be over the “hot spot” for 500,000 to a million years so its price is expected to be stable.

The Pahoa School Complex in Puna, at 89%, has the highest number of students in the State who participate in the free/reduced school lunch program. Participation is related to family income. The Big Island has had electricity rates 25% higher than O‘ahu’s for as long as anyone can remember. So a large portion of the school budget, that should go to education, goes instead to pay for electricity. Yet the best predictor of family income is education. A lower electricity rate, generated by geothermal, will have a direct effect on education. And if OHA, through its influence, emphasizes education in the community, there will be even more positive results.

Rising electricity rates act like a giant regressive tax. The folks on the lowest rungs of the economic ladder are affected disproportionately. Those who can leave the grid, leave. Those who cannot leave end up paying more for the grid. Too often those folks will be Hawaiians.

Hawaiians should be able to live in their own land. Yet there are more Hawaiians living outside of the State, because they needed to move elsewhere to find jobs to raise their families. Exporting our children is the same as losing our land. OHA is in a position to drive the agenda so Hawaiians can afford to live at home.

During the development of the Geothermal Working Group report, Rockne Freitas arranged a meeting with Carl Bonham, Executive Director of the University of Hawai‘i Economic Research Organization (UHERO), and some staff.

I asked Dr. Bonham two key questions: “Is it fair to say that if the Big Island were to rely on geothermal energy for its primary base power as oil prices rises, shouldn’t we become more competitive to the rest of the world?” He said that was fair to say.

I asked: “Then is it fair to say that our standard of living would rise?” He said: “Yes.”

I am a farmer on the Hamakua coast with family ties — Kamahele — in lower Puna. I farmed bananas at Koa‘e in the late 70s and early 80s. I have been to five Association for the Study of Peak Oil (ASPO) conferences. I went to learn and to position my business for the future. I found that the world has been using two and three times the amount of oil than it has been finding for more than 30 years and that trend continues. The price of oil has quadrupled in the last 10 years.

Until the first ASPO conference, I was just minding my own business, being a banana farmer. But what I learned became my kuleana. I did not ask for it.

Until last year, when Kamehameha Schools sent Giorgio Calderone and Jason Jeremiah and Noe Kalipi went to the conference, I was the only person from Hawai‘i to attend. The subjects were always data driven and conclusions could be duplicated.

We have the resources here to dodge the bullet. We need to drive a clear agenda for the benefit of all the people, not just a few.

One of the controversial issues in the Puna district is H2S gas. I went to Iceland and sat in the Blue Lagoon, where a geothermal plant within a quarter mile emits geothermal steam into the atmosphere. Millions of tourists visit the Blue Lagoon for health purposes.

There are small geothermal wells within the city that are used to heat the residences and businesses. If you did not know what to look for, you wouldn’t even know they were there. I walked by and touched the walls.

A long term study of the effects of H2S on people who suffer from asthma was just completed. It was done in Rotorua. They found no correlation of asthma to daily ambient H2S levels of 20,000 parts per billion over a three-year period. The study indicated that there might be a beneficial effect because it relaxes the smooth muscles. See link above.

The human nose can detect levels of H2S at incredibly low levels: 5 parts per billion. The Department of Health requires reporting when levels exceed 25 parts per billion. The Rotorua study was done for three years at average levels that were 20,000 parts per billion. OSHA allows geothermal plant workers to work in a 10,000 parts per billion environment for 8 hours per day without a mask.

Wallace Ishibashi and I went to the Philippines with the delegation that Mayor Kenoi put together. We visited a geothermal plant that sat on a volcano that last erupted 100,000 years ago. Mauna Kea last erupted 4,000 years ago. We may have more resources than we know.

The Phillipines and Hawai‘i started geothermal exploration at the same time. They now have in excess of 1,200MW, while we have 38MW. We are so far behind them, a supposedly Third World country, that it is embarrassing.

OHA is in a unique position to be able to influence the future. It is as if we are getting ready to duplicate that first voyage from the south so many years ago. It’s not whether or not we are going. It’s who should go, and what should we put in the canoes? Mai‘a maoli? Popoulu? What else?

Richard Ha
President, Mauna Kea Banana Company

I am a member of the Hawaii Clean Energy Steering Committee, Board of Agriculture and farmer for 35 years.

In Support of Lower-Cost Electricity for the Big Island (HB106)

Richard Ha writes:

Although we are testifying in strong support of HB106 HD2, SD1, we would support any bill or combination of bills that further our efforts to bring lower-cost electricity to the Big Island in a pono way.

Aloha Chair Gabbard and Vice Chair Ruderman:

The Big Island Community Coalition (BICC) is strongly in favor of HB106 HD2, SD1.

The BICC steering committee members are Dave DeLuz, Jr., President of Big Island Toyota; John E. K. Dill, Chair of the Ethics Commissions; Rockne Freitas, former Chancellor, Hawai‘i Community College; Michelle Galimba, Rancher and Board of Agriculture member; Richard Ha, farmer, Hamakua Springs; Wallace Ishibashi, Royal Order of Kamehameha; Ku‘ulei Kealoha Cooper, Trustee, Kealoha Estate;  D. Noelani Kalipi, who helped
write the Akaka Bill; Ka‘iu Kimura, Director of Imiloa Astronomy Center; Robert Lindsey, OHA; H. M. (Monty) Richards, Rancher; Marcia Sakai, Vice Chancellor, University of Hawai‘i at Hilo; Kumu Lehua Veincent, Principal, Kamehameha High School, Kea‘au; William Walter, President, Shipman Estate. All speak here in their private capacity.

Our mission is to drive down the cost of electricity on the Big Island. The cost of the Big Island’s electricity has been 25 percent higher than O‘ahu’s for as long as we can remember. Yet the Big Island has the lowest median family income in the state. Three school complexes in East Hawai‘i lead the state in free and subsidized school lunches: Pahoa at 89 percent, Ka‘u at 87 percent and Kea‘au at 86 percent.

Education is the best predictor of family income. But because the Big Island’s electricity rate is 25 percent higher than O‘ahu’s, we waste more than $250,000 annually in some of our school complexes.

The cost to generate electricity from geothermal is less than half that of oil. And because the Big Island will be over the hot spot for more than 500,000 years, that cost will be relatively stable – unlike the cost of oil, which will rise in the not-too-distant future.

I asked Carl Bonham, Executive Director of the UH Economic Research Organization, if it is fair to conclude that if geothermal were the primary base power for the Big Island, then the Big Island would become more competitive to the rest of the world as oil prices rise? He said, Yes, we would become more competitive. I concluded, and he agreed, that our standard of living would then rise. And that our working homeless could get off the streets.

We all need to work together to make things work. Get thousand reasons why no can! We only looking for the one reason why CAN!

Richard Ha
BICC Steering Committee Representative

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.

Rubbah Slippah Folks Turn Out at Kona PUC Meeting

Richard Ha writes:

The Kona PUC hearing we’ve been talking about here took place on Tuesday evening.

From West Hawaii Today:

Powerful resistance to PUC

By Erin Miller

West Hawaii Today

West Hawaii residents described to the Public Utilities Commission how they have cut back on energy usage, and questioned why Hawaiian Electric Light Co. shouldn’t have to bear the costs of upgrading its own equipment.

The questions continued as the PUC heard comments from residents Tuesday evening on a proposed contract between HELCO, Oahu’s Hawaii Electric Co. and Aina Koa Pono for a biodiesel project in Ka‘u.

Albert Prados, manager of the Fairway Villas at Waikoloa Beach Resort, was one of more than 20 people who testified against HELCO’s rate increase request, which HELCO officials would raise rates 4.2 percent, or about $8 per an average 500 kilowatt hour monthly bill. Prados described the measures he has taken in his own home, including shutting everything off except the refrigerator at night, to lower his electricity bill. Read the rest

Mayor Kenoi took a very strong stand on renewable energy. He
made clear that it is not sufficient that it be renewable; it also needs to be affordable. He is concerned about the most defenseless among us.

He said, This is the kind of project that 20 years from now, we will be asking, “How did we let that happen?” He also said that we are doing this for the benefit of HEI and HECO – but that there is no benefit for the Big Island. The Mayor is very aware that high and rising electricity costs threaten our economy and also the folks on the lowest rungs of the economic ladder.

Rep. Denny Coffman asked, “How is it we are here? This is not even proven technology.” He pointed out that the electric utility is setting the state’s energy policy, and that that should stop while we finish the Integrated Resource Planning process that’s happening right now. Rep. Coffman understands the energy situation worldwide and he knows it’s foolish to be chasing unproven technology. It is both a waste of time and money. In Hawai‘i, we do have proven technology that is affordable.

My testimony:

To answer the Consumer Advocate’s question, “Would we change our minds if all the costs were given to the Oahu rate payers?,” the answer is no! I think that giving AKP a 20-year contract will forego the opportunity of developing lower cost alternatives. And it will take up valuable time. Liquid natural gas is an option. Ocean energy might be ready within the 20-year period. Geothermal is an affordable, proven technology. For instance, there is an 11 cent difference between geothermal and oil today. We could replace liquid fuels with 80MW of geothermal electricity, and apply that savings to pay the remaining debt of the Keahole 80 MW liquid fuel burning plant.

(80 MW is equal to 80,000 kilowatts. That 11 cents/kilowatt hour savings multiplied by 80,000 kilowatt hours equals $8,800 that you save each hour. And the savings per day is $211,200. That times 365 days equals an annual savings of $77 million. That is enough to write off the plant and still give the rate payers a break.)

Jeff Ono

Consumer Advocate Jeff Ono asked: “If O‘ahu rate payers would pay the cost, would you still be against the AKP project?”

Most of the time, making electricity has to do with making steam to turn a turbine. You can burn coal to make steam, or you can burn oil to make steam. You can burn firewood to make steam, or use the steam from underground – that’s geothermal.

AKP takes the long way. They grow plants using fossil fuels,
then they use electricity to make microwaves to vaporize the plants, then take the liquid that rises and convert it to a burnable liquid, and haul it to Keahole, where they burn it to make steam.

It isn’t surprising that it is expensive.

More than a few engineer folks tell me that this process
uses more energy than it makes. And if that is the case, it will always be more expensive than oil. This is not a good bet for us.

Palm oil is the only biofuel today that can compete heads up
with petroleum oil. It produces 600 gallons of oil per acre. AKP strives to produce 16 million gallons per acre, plus another 8 million gallons – or 24 million gallons from 12,000 acres. That is 4 times as productive as palm oil, the only biofuel that competes straight up with petroleum oil. If it works, they don’t need any subsidy from us. If it works, they will all end up billionaires.

We cannot predict the price of oil. But people are hurting right now. And if oil prices reach $200 per barrel, the tourism industry will be devastated and everything connected with it will shrink. We do not have the luxury of time. We need a lower cost alternative right now.

Well-respected Council of Revenues economists Paul Brewbaker, of TZE Economics, and Carl Bonham, Executive Director of the
University of Hawaii Economic Research Organization (UHERO), agree that low-cost energy is a key component of our economic future. 

There are alternatives to $200/barrel biofuel. Geothermal is the equivalent of $57/barrel. Liquid natural gas is low cost now on the
mainland, and maybe ocean energy will be an alternative within the time period of the contract.

We need lower cost electricity, not higher, and AKP is not the answer. The AKP project is wasting valuable time, and we need to put it to bed so we can focus our attention on the next projects.

I agree with the electric utility from here forward. The next PUC hearing will be on the Hu Honua biomass plant at Pepe‘ekeo. They will use wood chips to boil water and make steam. This is proven technology and it looks to be cost effective.

After that will be a proposal for 50MW of geothermal. Geothermal does not have to burn anything. It just uses the steam underground to make electricity and it is cost effective.  

At that time, HELCO with its leverage should be able to successfully renegotiate the old contract that is tied to oil. Then we will be well on our way to protecting ourselves from the volatility of world oil prices. Those two projects will result in a total of 110 MW of stable, affordable electricity using proven technology. 

We need to strive for balance and common sense as we try to make things work for everyone. Hospitals, schools, hotels and businesses need the electric services provided by the grid. Fifty percent of our people rent and so cannot get off the grid. We need to be practical, and help to make sure the electric utility is healthy as we strive for a lower cost to the rate payer.