Tag Archives: KIUC

Look What the Kauai Island Utility Co-op Did

We went to Kaua‘i on Saturday to attend the blessing of the Kaua‘i Island Utility Cooperative (KIUC) Anahola Solar Array.  The mood was one of exhiliration and great pride. Here’s a short video clip.

Richard Ha Hamakua Springs
The 60-acre photovoltaic system, coupled with a six-megawatt lithium-ion battery system, was a collaboration between KIUC and Anahola Hawaiian Homes. It will generate clean energy on the island as well as decrease fossil fuel imports from the mainland. The system will generate 20 percent of the island’s annual energy needs during the daylight hours, and will save nearly $250,000 a month on operating costs alone.

Richard Ha Hamakua Springs

I met many of the directors and key people involved in KIUC over the years. Key members of the Hawaiian community were in attendance, as well.

Richard Ha Hamakua SpringsIt is amazing what KIUC has been able to accomplish in a short time. Its costs have risen the least of all the electricity producers in the state despite its having the least number of available options. It does not have geothermal, for instance, and cannot use wind power due to bird kills.

Richard Ha Hamakua SpringsIt goes to show what a lean and mean utility co-op can accomplish.

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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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See Mina Morita’s Blog Post on NextEra Merger

Mina Morita is former chair of the Hawaii State Public Utilities Commision. At her Energy Dynamics blog, she wrote the post Let the Consumer Advocate & PUC Do Their Jobs!

I generally agree with what she writes. Referring to a wave of politicians who want to explore a public utility option instead of the proposed NextEra/HEI merger, she writes:

During this time of transformation a well-functioning electric utility requires insightful leadership, nimble and flexible strategic planning and strong analytical capacity. 

That is exactly why a group of community leaders and business persons formed the Hawaii Island Energy Cooperative. When the proposed NextEra/HEI merger was announced late last year, we arranged for a briefing by the KIUC folks. It looked very promising, so we formed a steering committee.  At that time, though, there wasn’t a willing seller so we waited to see if there would be an opportunity down the road.

The other day I spoke as part of a League of Women Voters forum. I told the moderator, Pearl Johnson, that we decided to use the Wayne Gretsky strategy. Gretsky said to skate to where the puck is going to be, not where it is. That’s an example of insightful leadership. We decided to prepare a co-op option in case an opportunity arose. If we had waited to start when an opportunity came up, it would have been too late.

The co-op model allows for nimble and flexible strategic planning. I told Pearl Johnson that it isn’t the strongest, largest or smartest that survives, it’s the one that can adapt to change.

A board of directors directs a co-op model. In the case of Kaua‘i’s co-op, nine members sit on the board. The terms are staggered and every year three positions become vacant, which allows the co-op to quickly respond to changes. It is especially important now because declining natural resources require us to be nimble, flexible and strategic, as Mina points out.

What we should consider is which business model will give the next generations tools they need to cope in an uncertain future.

There are many qualified people the board can hire to help with technical analyses.

The HIEC is not opposing the NextEra/HEI merger. What we are doing is positioning ourselves to be a viable option.

The Big Island has a huge advantage in working to achieve 100 percent renewable energy. We already have 40 percent renewables, and HELCO itself projects 92 percent renewables by 2030. It appears that we could probably avoid LNG entirely.

When I visited Iceland several years ago, they showed us an oil-fired plant that had been on standby since the 1970s. We could do that, too. I don’t see many opportunity costs foregone. If we change nothing at all, the co-op model would still have the advantage of some tax savings.

If we are successful in acquiring HELCO, we will need legislators to work with us to make legislation that will encourage the usage of “curtailed” (thrown away) power.

As we move toward the future of 100 percent renewable energy, we must remember that this is about all of us, not just a few of us. The co-op has an incentive to lower costs.

So yes, we do agree with Mina. We’re waiting.

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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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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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Kauai Island Utility Co-op Execs To Brief On How They Formed Their Co-Op

Richard Ha writes:

We have invited Dennis Esaki, a founder of Kauai Island Utility Cooperative (KIUC), and David Bissell, CEO of KIUC, to speak to us about how one forms a community-based utility. Having such a utility cooperative here on the Big Island would give us more control over our destiny.

It will be held this Friday, December 19, 11:30 a.m., at the former C. Brewer Executive Center in Wainaku. The event is sponsored by the Big Island Community Coalition, the Hilo Hamakua Coast Development Corporation, and the Hawaii Farmers and Ranchers United. The Ed Olson Trust is providing the Wainaku Executive Center facilities. Please R.S.V.P.

The Kauai Island Utility Cooperative was formed in 2002 when Citizens Communications’ Kauai Electric announced that it was selling the Kaua‘i utility. We have a similar situation right now in that Hawaiian Electric Industries (HEI) recently announced it is selling to NextEra.

NextEra plans to use utility-scale solar, backed up by liquid natural gas (LNG) as a bridge fuel. The average shale oil and gas well lasts only five years, so that model is a concern for Big Island rate payers. (This link is an even more in-depth explanation of how shale oil is massively over-hyped, and analyzes the best data available.) Fortunately, we have geothermal we can use in place of LNG on the Big Island. We have options.

This is not an endorsement of converting to a co-op so much as it is an informational briefing.

Please R.S.V.P. to richard@hamakuasprings.com.

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