BY JASON ARMSTRONG
HILO — Cheap, clean energy — more than enough to supply all Hawaii Island's electricity needs — lies under our feet.
No, Jed Clampett hasn't found oil in paradise.
Even better, America's most oil-dependent state has a more reliable, less polluting and renewable energy source, according to a volunteer group that has spent nearly two years analyzing the potential for geothermal energy to become the island's main source of electricity.
"It's about costs," businessman Richard Ha, co-chairman of the Geothermal Working Group, said Wednesday in announcing the panel's findings." So at some point you're not going to be able to afford to get the oil."
While oil prices are rising as fossil fuel becomes more scarce, the cost of tapping molten rock to produce steam and make electricity is fixed, Ha said.
Most of Hawaii Island's electricity continues to come from oil. It costs 20 cents per kilowatt-hour to produce electricity from oil selling for $100 a barrel, which is double the price of geothermal power, Ha said.
"This is the biggest issue in Hawaii's history," he said.
But after making his comments, Ha agreed that his own electricity costs and ability to compete with other farmers — two benefits he said will come from expanded geothermal development —haven't improved in the 19 years since Puna Geothermal Venture started producing power at its Pohoiki plant.
Asked if Hawaii Electric Light Co., PGV's only customer, is an impediment to geothermal expansion, Ha declined to comment.
Present at Wednesday's press conference was HELCO President Jay Ignacio, who served as a member of the working group that the state Legislature asked Hawaii County to convene in 2010.
While Ignacio didn't offer any public comment, his employer recently agreed to buy 38 megawatts of electricity from PGV, which had been under contract to supply up to 30 megawatts or roughly 20 percent of the island's total demand.
According to HELCO, a single megawatt is enough electricity to power about 650 homes. Based on that ratio, a 38-megawatt plan can run nearly 25,000 households or roughly all of Hilo.
The Big Island, which currently uses up to 185 megawatts of electricity, has the resources to produce between 500 and 700 megawatts of geothermal energy, according to the group's final report, which is available on the county's website at: www.hawaiicounty.gov/research-and-development.
HELCO for years has used an "avoided-cost" method in determining how much money to pay PGV for its power. That allowed PGV to receive what it would have cost HELCO to generate the same amount of power by burning oil.
That arrangement meant HELCO's customers didn't receive a lowered rate despite the cheaper cost of geothermal energy production. But a new agreement the state Public Utilities Commission approved Dec. 30 allows HELCO to pay the traditional avoided-cost rate for the first 25 megawatts and a lower rate for an additional power.
As a result, HELCO's residential customers will save about 70 cents a month, reaching a projected $1.89 a month by 2020 due to the expected growing price gap between geothermal and oil, according to the agreement.
HELCO's customers paid Hawaii's highest electricity rates in December, 40.6 cents a kilowatt-hour, according to one newspaper report.
Mayor Billy Kenoi said he wants Hawaii County to become 100 percent energy self-sufficient, up from the current 32 percent, by 2015.
"It's not something we should do," he said. "It's something we must do."
The way to achieve that goal is to maximize the island's potential for geothermal development, Kenoi said.
"Federal, state, county and community, we're all together on this," Kenoi said as two state lawmakers and an aide to U.S. Sen. Daniel Inouye listened.
"We all know what we need to do," said state Sen. Gil Kahele, D-Hilo, Puna, Ka'u. "We just need to go out and make it happen."
Most residents now support geothermal development, unlike 20 years ago when Native Hawaiians clashed with supporters, said Geothermal Working Group Co-Chairman Wally Ishibashi.
Expanded geothermal energy will allow Hawaii Island to save some of the $1 billion now spent yearly for oil, he said.
"That money can stay right here to build a better community," Ishibashi said.
As Hawaii's only geothermal operator, PGV pays roughly $1 million annually — the number varies based on fluctuating operating revenues — to the state for permission to mine lava-heated steam, considered a state-owned mineral. The state Department of Land and Natural Resources keeps half of the money, Hawaii County 30 percent and the state Office of Hawaiian Affairs the remaining 20 percent.
Hawaii County's share has ranged from a low of $24,689 in 2003 to a high of $941,246 in 2009, according to the group's report.
The group is recommending the Legislature make the payment process more transparent to show how the money benefits Hawaii County and to create a community advisory board to suggest how to spend future revenues.
Among its other recommendations, the group wants some of the geothermal royalties used to identify sites for new geothermal development and for government to streamline the regulatory process.
"The people of Hawaii deserve nothing less than the best," Ishibashi said.