Tag Archives: HECO

Hawaii Island Energy Co-op ‘Better, Faster & Cheaper’

Big Island electric customers are estimated to save much more money with the Hawaii Island Energy Cooperative (HIEC) than they are promised with the proposed sale of the Hawaiian Electric companies to NextEra Energy.

Read more below, as well as in the Hawaii Tribune-Herald, Pacific Business News, and in the Hawaii Star-Advertiser (behind their paywall).

The difference in the business model of a co-op model, such as HIEC, is that it’s non-profit. At a for-profit utility, such as NextEra, revenue goes to shareholders. That’s not the case with a non-profit co-op, and that’s one reason for the significant savings.

Also, co-ops, by definition, cooperate. HIEC can call up the electrical co-op on Kaua‘i, and they will share information. Hawai‘i Island’s co-op can call up the national headquarters and they will share information. Avoiding mistakes saves money.

It’s all very practical. The co-op model is a better model to help ratepayers prepare for the future.

Hawaii Island Energy Cooperative’s Press Release:

Hawaii Island Energy Cooperative would deliver transformation better, faster and cheaper

(HILO, HAWAII, DECEMBER 9, 2015)—Conversion of the electric utility on Hawaii Island to a nonprofit cooperative is expected to deliver greater savings than those promised with the proposed sale of the Hawaiian Electric companies to NextEra Energy of Juno Beach, Florida.

Hawaii Island Energy Cooperative (HIEC) analyzed financial information filed by the Hawaiian Electric companies (HE) and NextEra Energy (NEE) with the Hawaii Public Utilities Commission (HPUC).

By lowering the cost of capital, eliminating federal income taxes and the profit margin built into Hawaii Electric Light Company’s rates, the financial analysis found that Big Island customers could save as much as $113 million on the existing HELCO rate base and up to $234 million including investments to modernize the grid over a four-year period. This compares to $60 million in savings estimated by NEE for customers on all five islands served by HE over a four-year period.

In proceedings now being held on the proposed sale by the HPUC, NEE has asserted that the primary question the Commission should ask itself is whether the customers of HE and the State of Hawaii are better off with or without the sale going through.

HIEC has argued that the Commission should also consider the merits of the cooperative ownership model for Hawaii Island.

In addition, HIEC makes the case that a cooperative has the ability to accelerate the island’s clean energy transformation faster and with more focus than a mainland-based investor-owned utility.

“For Hawaii Island, the reality is that the 190,000+ residents of the island would be better served by a cooperative. Beyond the lower cost of capital and the lower electric bills that follow, the benefits of a coop include local, democratic ownership and control of one of the most important infrastructures on the island,” said Marco Mangelsdorf, HIEC director and spokesperson.

Other advantages of the cooperative business model

■ HIEC would be able to access low-cost debt capital.

• Traditional cooperative lenders include the U.S. Department of Agriculture, Rural Utilities Service, National Rural Utilities Cooperative Finance Corporation (CFC), and Co Bank.

• The combined borrowings of electric cooperatives from these sources is over $85 billion.

■ The cooperative network of 900 utilities has equivalent, and perhaps better, buying power and economies of scale for technology, administration, pensions and insurance. Many companies that support the cooperative program, including CFC and CoBank, are owned by their electric cooperative customers.

• National Rural Electric Cooperative Association provides a multi-employer pension plan on behalf of electric cooperative employees that is fully funded.

• Through national programs the electric cooperative network has led the utility industry in the deployment of smart grid technologies.

■ Cooperatives can be more nimble and quick in integrating more and cost-effective renewable energies. Emulating the example of Kauai Island Utility Cooperative (KIUC), HIEC should be able to move faster to provide the advantages of renewable energies to Hawaii Island consumers.

• KIUC has gone from approximately 10 percent renewable in 2011 to almost 90 percent during prime sun hours today through a portfolio of utility-scale solar, biomass generation, distributed solar and legacy hydropower.

• KIUC’s smart grid initiative, which enables customer choice and is a key to the efficient integration of renewable energy, was completed nearly two years ago.

•Over the past two years, KIUC has built the two largest solar arrays in Hawaii, generating electricity cheaper than similar arrays proposed on Oahu. As well, KIUC is in the approval process for the nation’s first utility-scale solar array with dispatchable energy storage, moving solar energy to the nighttime hours and displacing millions of gallons of oil.

Noted HIEC president Richard Ha, “HIEC is able to focus on only our Hawaii Island and its unique needs, desires and resources. The single island focus and urgency created by a customer-elected board of directors to set the strategy is KIUC’s greatest strength and the reason they have been so successful in the transformation of their island’s utility system.”

About Hawaii Island Energy Cooperative:

HIEC is a non-profit cooperative association that seeks to establish a member-owned electric utility and encourage non-petroleum-based transportation for Hawaii Island. HIEC presents a unique opportunity for all electricity consumers to “Own the Power.” For more information, visit www.hiec.coop. HIEC is on Facebook and Twitter @HiEnergyCoop

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Comparing Electricity Rates for HECO & Kauai’s KIUC Customers

It’s interesting to look at this chart and compare what electric rates have looked like for Hawaii Electric Company (HECO) customers compared with prices for Kauai Island Utility Cooperative (KIUC) customers over the same period.

KIUC’s electric rates have been all but flat from 2008 to 2014, while rates for the HECO companies have gone up from 4.4 percent to a whopping 28.3 percent.

ELECTRIC RATES 2008-2014 Jun-08 Jun-14 % Chg
   KIUC  $                       439.39  $                          440.00 0.1%
   HECO-Oahu  $                       280.53  $                          359.90 28.3%
   HELCO-Hawaii  $                       395.09  $                          425.80 7.8%
   MECO-Maui  $                       374.35  $                          391.00 4.4%
   MECO-Lanai  $                       426.87  $                          470.00 10.1%
   MECO-Molokai  $                       416.32  $                          480.00 15.3%
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More on the Hawaii Island Energy Cooperative

The Hawaii Island Energy Cooperative formed after the NextEra/HEI merger was announced. Several community grassroots organizations got together and asked the Kauai Island Utility Cooperative (KIUC) folks to come to Hilo and do a briefing on how they got started.

After that meeting back in December 2014, a steering committee of Big Island community members looked into the feasibility of the Big Island forming a utility co-op. Although HELCO was not for sale, the group decided to prepare just in case an opportunity came up to purchase it.

This post talks about that KIUC briefing and how we formed the co-op steering committee.

Henry Curtis wrote about the Hawaii Island Energy Cooperative today at Ililani Media:

Big Island Energy Cooperative on the Move

The Hawaii Island Energy Cooperative (HIEC) was founded in January 2015. HIEC proceeded to file a motion to intervene in Hawaii Public Utilities Commission Docket 2015-0022 and was granted party status by the Commission.
 
That regulatory proceeding is examining the proposed sale of Hawaiian Electric Company (HECO) and its subsidiaries Maui Electric Company (MECO) and Hawaii Electric Light Company (HELCO) to NextEra Energy (NEE). 
 
Attorneys David J. Minkin, Brian T. Hirai and Peter J. Hamasaki from the law firm McCorriston Miller Mukai MacKinnon LLP, represent both HIEC and the Kauai Island Utility Cooperative (KIUC) in the merger proceedings.
HIEC was formed not only to explore the possibility of a Big Island community-based electric utility cooperative but also to examine other energy issues such as sustainable transportation policies.
 
HIEC has staked out a clear position. It is no for or against the merger and it is not promoting an alternative to HELCO or NextEra. Rather “HIEC seeks to bring to the proceedings its specific focus on the energy needs of Hawaii Island and its unique perspective on potential cooperative ownership structures.” 
 
HIEC Spokesperson Marco Mangelsdorf asserted that “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.”

 

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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.

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Climbing the Bamboo Pole: Why We Formed a Co-Op Steering Committee

You know the Wayne Gretzky quote about skating to where the puck is going to be, not where it is? It refers, of course, to planning ahead.

My Pop’s story about climbing the bamboo pole taught me a lesson about planning ahead, too. He told me about fishing for aholehole with some friends at Maku‘u. They stuck a bamboo pole into the rock and hung a kerosene pole on it when, suddenly, they saw white water coming straight for them. It was going to cover the rocky point where they were fishing.

“What you going do?” my Pop asked me when he told me this story. I had no idea. He told me he climbed up the bamboo pole, hand over hand, lifted up his legs, and let the water go under him. Then he dropped back down and used the pole to fish his friends out of the water.

Before the white water arrived, he already knew what he would do. He had a plan.

NextEra is proposing to purchase the Hawaii Electric Company (HECO) grid, and this is a good time to compare alternatives. HECO has been having a tough time making necessary changes. NextEra looks like they can make the changes, but they’re not from here.

We have seen how the Kaua‘i Island Utility Cooperative (KIUC) has done over the last 12 years. Each meter has one vote. KIUC has nearly $100 million in retained earnings that would have gone off island, but has stayed in the state instead. And they are flexible and can make changes in a timely manner.

The Big Island Energy Utility Cooperative steering committee we’ve created – to look into forming a Big Island Energy Co-op here on the Big Island – is our way of skating to where the puck is going to be, or climbing the bamboo pole. We are planning ahead.

We are doing all the legwork and research and information gathering now so that if there is an opportunity, we will be in position. If we don’t do this, we won’t be in the game.

The goals and benefits of a Big Island Energy Cooperative are:

  • Local, democratic control over one of the most important infrastructures and public goods on the island. This would provide more benefits to island residents, with any profits staying at home.
  • Community over off-island, corporate shareholder prioritiesas the cooperative would work for sustainable development of the island’s communities through policies approved and accepted by its members.
  • Lower electric costs through greater efforts to develop island-based energy sources, improve energy efficiency and an accelerated adoption of smart grid technologies.
  • Greater overall energy independence and sustainability through a comprehensive and integrated approach to all energy-consuming sectors on the island.
  • Development of island-produced fuels to provide an energy source for both electricity generation and transportation.

If not here, where? If not now, when? If not all of us, who?

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Great Info Meeting on How Kaua‘i Formed its Electric Utility Co-op

Richard Ha writes:

We had an interesting presentation Friday from two executives from Kaua‘i’s electrical utility, the Kaua‘i Island Utility Cooperative (KIUC). David Bissell is CEO, and Dennis Esaki was a founding member who only recently left the KIUC board.

Meeting

It was amazing to hear what KIUC went through to purchase Kaua‘i Electric Company and form the utility cooperative. The Kaua‘i County Council and mayor were originally against the purchase, and the PUC turned down its first purchase bid as not being in the best interest of the users. But the founding group continued to rework its plan and was ultimately successful the second time it presented a bid.

In total, it was about a two-year process and the group purchased Kaua‘i Electric Company in 2002 for $215 million. And, Esaki said, referring to the county administrators, “they’re all on board now.”

This month, Kaua‘i’s electricity rates are lower than any of the islands but O‘ahu’s (mostly because of the oil price decline). Most months, its rates are a little lower than the Big Island's and a little higher than Maui.

Since 2003, ratepayers have received $30 million in refunds and patronage capital — the amount of money left after all the bills are paid, and the co-op has met its lenders’ requirements. This is money that circulates back into the community. 

Members have $80 million in equity, which is what they own of the co-op. When the utility was purchased 12 years ago, it was 100 percent debt-financed, so the equity at that time was zero.

KIUC has gone from about five percent renewable energy in 2009 to 18 percent today. It will be at about 40 percent by the end of next year.

From the KIUC 2013 Annual Report (click to enlarge):

Annual report

  Annual Report p. 9

The organization of the co-op also reflects what the people of Kaua‘i want, because its board is selected by the people. Esaki and Bissel said that at first there was almost total, and repeated, board turnover as ratepayers regularly voted out board members who weren’t doing what they wanted. Eventually, they said, the board has stabilized.

Projects are financed through national co-op financing, which results in much lower financing costs.

You can watch a video of the meeting below. Thanks to Chester Lowrey for videotaping!

There was a lot of community interest in the KIUC presentation, with a good turnout from various community groups. The presentation was sponsored by three organizations:

The Big Island Community Coalition, the steering committee of which is made up of David DeLuz, Jr., Rockne Freitas, Michelle Galimba, myself, Wallace Ishibashi, Kuulei Kealoha Cooper, Ka‘iu Kimura, D. Noelani Kalipi, Robert Lindsey, H. M. Monty Richards, Marcia Sakai, Ku‘u Lehua Veincent, and William Walter.

The board of the Hilo-Hamakua Community Development Corporation, which is President Donna Johnson, Judi Steinman, Glenn Carvalho, Eric Weinert, Jason Moniz, Gerald DeMello, Colleen Aina, and Richard Ha.

And Hawai‘i Farmers and Ranchers United, which represents more than 90 percent of the farming goods produced on the Big Island.

Ed Olson donated the use of his Wainaku Executive Center for the meeting.

We have formed a steering committee to discuss this further. The committee consists of Gerald DeMello, Michelle Galimba, Wally Ishibashi, Donna Johnson, Eric Weinert, Vincent Paul Pontieux, Marco Mangelsdorf, Russell Ruderman, and myself. I’ll keep you posted on further developments.

Edited 12/21/14 at 10:45 pm; 1/5/15; 1/30/15.

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Canada, LNG & What Our Electricity Will Cost in Hawaii

Richard Ha writes:

Hawai‘i’s utilities depend on liquefied natural gas (LNG) as a “bridge fuel,” which will allow it to lower rate payers’ costs. The cost to rate payers, though, depends on the long-term contract HECO can secure.

Canada is probably the best place for Hawaii to acquire LNG. But Canada has some important decisions ahead. Should they build LNG plants, which will require huge upfront investments in the multiple billions? They will have to make some decisions soon.

Click to read a special report on the subject from TD Bank Group (PFD):

Higher prices abroad and an increasingly promising global demand outlook for natural gas have garnered a considerable amount of attention from North American resource producers, who are interested in tapping into foreign markets, via liquefied natural gas (LNG) exports…. 

Japan is the highest priced market for LNG, but Japan has not yet made its final decision about whether it will restart its nuclear plants. And the Russia/China natural gas pipeline could take 10 percent of Asia’s demand off line.

What will Canada do? They are wrestling with this decision right now.

Hawaii rate payers will be interested to see what price contract HECO is able to secure. Whatever it is will determine the electricity rates we pay for the following twenty years.

And we don't want to see what happened in the Aina Koa Pono docket – where the price was kept secret.

The Big Island has geothermal as a low-cost base power. What we don’t want here is for expensive LNG to prohibit the development of our low-cost geothermal.

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Learning From Germany & Others’ Energy Plans: No Free Lunch

Richard Ha writes:

Germany attempted to transition to a green electricity generation more than ten years ago. Today, some of its electricity rates are the highest in Europe, and it is using coal for 45 percent of its electricity. The lesson here is that there really isn’t any “free lunch.”

From Bloomberg.com today:

Merkel’s Taste for Coal to Upset $130 Billion Green Drive

By Julia Mengewein – Sep 22, 2014

When Germany kicked off its journey toward a system harnessing energy from wind and sun back in 2000, the goal was to protect the environment and build out climate-friendly power generation.

More than a decade later, Europe’s biggest economy is on course to miss its 2020 climate targets and greenhouse-gas emissions from power plants are virtually unchanged. Germany used coal, the dirtiest fuel, to generate 45 percent of its power last year, its highest level since 2007, as Chancellor Angela Merkel is phasing out nuclear in the wake of the Fukushima atomic accident in Japan three years ago.

The transition, dubbed the Energiewende, has so far added more than 100 billion euros ($134 billion) to the power bills of households, shop owners and small factories as renewable energy met a record 25 percent of demand last year. RWE AG (RWE), the nation’s biggest power producer, last year reported its first loss since 1949 as utility margins are getting squeezed because laws give green power priority to the grids….  Read the rest

How is HECO going to both lower our electricity rates and increase intermittent power into the grid? Seems we are going to bet everything on natural gas. At $4/thousand cubic feet (mcf), it is very cheap. In Asia and Europe, it’s more than $11/mcf.

What happens when its price rises in 10 and 20 years? Where will we be then? Will we have a competitive advantage to the rest of the world? Or will we be struggling, like Germany is today?

Where will we be 10 and 20 years from now? We should be paying attention to what people like Marco Mangelsdorf, president of ProVision Solar, and others are saying about the PUC’s request for an energy action plan for the state of Hawai‘i.

HECO’s Response to the PUC’s Orders: Is the Media Right? With Marco Mangelsdorf

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HECO Needs to Match Output to Customer Needs

Richard Ha writes:

Our electric utility needs to match up its output with customer needs. Renewable sources of electricity such as wind and solar have short- and long-term problems with fluctuation. That’s why the utility needs to have electricity generation units on standby.

We are so fortunate here to have geothermal electricity, which is not only stable but is also cheaper than wind and solar, all things considered.

And we know that geothermal works in Iceland. In spite of that country’s recent economic crash caused by irresponsible bankers, Iceland is one of the highest-rated countries in the world in terms of quality of life issues.

From the Christian Science Monitor:

Hawaii confronts ‘green’ energy’s bugaboo: batteries

Hawaii and California utilities are moving to add storage on their grids to accommodate ‘green’ energy and better match production energy production and consumption. But storage is still expensive. 

By Ken Silverstein, Contributor / May 11, 2014

Hawaii Electric Co. – no stranger to solar power – has a problem with the sun.

When it shines, so much energy from utility and home-based solar panels comes surging in that it can overload some circuits in the grid and, potentially, cause a power surge that damages home and office equipment. When the sun goes into hiding, the utility has to generate power from somewhere else. That’s why the utility is casting a net to find vendors that could supply it with the technology to store electricity….

Read the rest

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Bad: Change Just for the Sake of Change

Richard Ha writes:

Things are moving fast in terms of energy, and nobody knows, right now, where we are heading. Where we end up will not only shape our own futures, but it will also determine how easy or hard our children’s and grandchildren’s lives are.

The PUC just told HECO that the utility had better change what it’s doing, and HECO responded that it will. But there are lots of moving parts to this situation, and none of us know where things are going. 

Change merely for the sake of change is not wise, and it’s worrisome. We need to conscientiously adapt to conditions with careful consideration and purpose. We must have a smart vision, and work toward that vision.

Henry Curtis wrote that Energy Futurists Need Open Minds:

“…stakeholders and regulators need open dialogue on a variety of future scenarios.

And yet, although there are at least four different ways the future can unfold, many are gambling their careers by assuming that the Smart Grid scenario is the future and therefore all other scenarios can be ignored.

Later this month the U.S. Department of Energy (DOE) would hold public meetings to discuss their Programmatic Environmental Impact Statement.

The feds want to use the 1300-page document to develop guidance on how the DOE can fund the Smart Grid future.  They too have ignored the alternatives at their own peril….”

Being “first in the world” at something is a risky proposition. It’s far better to copy the first in the world. Folks who attempt to be first in the world frequently fail, and the question here is, who is going to pay if we try something and we fail?

From my perspective, it seems clear that we want a future that leaves no one behind and makes us competitive with the rest of the world.

Take mountain bikes, for example. Nowadays they have shock absorbers, multiple gears, lightweight material and instrumentation that aids the rider. The tool kit is very light and efficient. But the heart of the system, the wheels, are still round.

Say we want to improve a bicycle to win a race. Do we make a unicycle? A bicycle with every innovation but only one wheel? 

We need to be clear about what we want. It’s better to carefully consider the heart of the bike, which is its rider and energy source. Do we want the leanest, meanest bicycle rider – i.e., the best and cheapest energy source? Or a one-wheeled bicycle? Do we want a bicycle with fenders, flaps, mirrors, titanium saddlebags and just an average or slow rider?

Mina Morita, Chair of the PUC, likened the electric grid to an ‘auwai. It’s the irrigation system that keeps a lo‘i alive.

Certainly what we are looking for as we reshape our energy future is a combination of things. We need to make careful choices that make good sense in the long run. We can’t change merely for change’s sake. It’s going to be a long race, and we want to come out ahead.

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