Kenoi: Biodiesel deal of no benefit to residents, county


Aina Koa Pono’s biodiesel proposal isn’t a good deal for Hawaii County residents, Mayor Billy Kenoi said Monday, hours before the Public Utilities Commission was set to begin its first Big Island hearing on the subject.

“This to me looks like one of those deals, after 10, 20 years, we ask how did we let that happen?” Kenoi said. “Ultimately, there is no benefit to the people of the Island of Hawaii.”

Aina Koa Pono and Hawaiian Electric Light Co., as well as HELCO’s sister company, Hawaiian Electric Co. on Oahu, negotiated a contract to provide 16 million gallons of locally produced biodiesel annually. HELCO and HEI took the proposed contract to the Public Utilities Commission in August for approval. The PUC planned a hearing for Monday evening in Hilo, and for 6 p.m. tonight at Kealakehe High School.

The exact figures to which HELCO and Aina Koa Pono agreed, for the cost of the biodiesel and the cost which would be passed along to HELCO ratepayers, have been redacted from the application. Kenoi said the proposal reportedly fixed the price of the biodiesel at roughly $200 per barrel, more than double the current, going rate for crude oil. The reasoning, Kenoi said, is based on projections that oil costs will skyrocket.

But on an island that now has, according to HELCO’s own figures, 49 percent of its energy coming from renewable sources anyway, Kenoi said the county can no longer afford to pursue energy technologies that won’t drop electricity rates. The Aina Koa Pono and HELCO contract would hit some county residents with three rate increases — directly, on their own electric bills and when the Department of Water Supply passes along electricity costs for generating water and indirectly, as Hawaii County sought the tax revenue needed to pay its own rising electricity bills.

Without additional financial disclosures, it is difficult to say just how much the county’s or Department of Water Supply’s energy costs would increase, he said.

It’s HECO, HEI using us, HELCO, for their benefit,” Kenoi said, adding Hawaiian Electric Industries, HECO and HELCO’s parent company, and HECO are “receiving the benefit of HELCO’s high renewable energy penetration without the benefit” to Hawaii County’s ratepayers.

Adding more renewable energy to the state’s energy portfolio is the only reason to support the project, Kenoi said, but the desire to use renewable energy shouldn’t drive up energy costs, especially when cheaper options exist.

Hawaii County’s residents already pay the highest electricity prices in the nation, Kenoi said, adding he can’t say whether a recent addition of 8 megawatts of geothermal power — for which HELCO is not paying a rate tied to the price of oil — prevented costs from going up higher. Certainly the costs haven’t dropped, he said. What happens, he added, if costs go up to 44 or 50 cents per kilowatt hour, from the 42 cents per kilowatt hour residents now pay?

“At what point does it become an unsustainable system to us?” he asked. “Clearly, we’re not against new technology, against innovation. With this proposal, there’s very little in it to encourage the County of Hawaii, the residents to support it.”

The possibility of adding jobs in Ka‘u doesn’t outweigh the many potential drawbacks the proposal has, he added.

Kenoi said he instructed the county’s Energy Coordinator Will Ralston to petition the PUC to allow the county to be an intervenor in the proceedings. The PUC granted the request, which gives the county access to otherwise confidential or proprietary information.

He questioned using Ka‘u as a test site for microwave catalytic depolymerization technology, which Aina Koa Pono proposes using, noting the technology has never been used in production scale operations. Other concerns include displacing cattle operations from about 10,000 acres in Ka‘u to grow the biomass crop to be turned into biodiesel and that Aina Koa Pono has not yet specified which crop it will use for the project.

The PUC rejected last year a similar proposal from HELCO and Aina Koa Pono, which would have added a surcharge to all HELCO and HECO customers. The newer contract still includes a surcharge, although HELCO and Aina Koa Pono officials claimed it would be less than the 2011 proposal. Officials also claimed the more recent contract would save HELCO and HECO customers about $125 million, compared to the earlier contract.

Kenton Eldridge co-founded Aina Koa Pono. Sennet Capital, which Eldridge also co-founded, has a direct financial involvement in Aina Koa Pono, according to Sennet Capital’s website. Eldridge’s co-founder for Sennet Capital is Richard Lim, who is the director of the state Department of Business and Economic Development.

Aina Koa Pono partner Chris Eldridge contributed $1,000 to Kenoi in September 2011. He is also the founder and president of America’s Mattress Hawaii.