Public shocked by proposed rate hikes
HILO — The prospect of paying higher electricity rates next year has prompted public opposition to a pair of increase requests from Hawaii Electric Light Co. slated to go before the state Public Utilities Commission.
The PUC is seeking citizen testimony on the requests on Monday and Tuesday in Hilo and Kona, respectively.
At issue are two separate requests from HELCO.
One seeks approval by the PUC of a biodiesel supply contract with Aina Koa Pono-Ka‘u, LLC and a related biofuel surcharge to customers to offset the costs of the contract. An Aina Koa refinery in Ka‘u, which has yet to be built, would supply HELCO with approximately 16 million gallons of biodiesel each year for 20 years to fuel its Keahole power plant.
The costs associated with such an agreement, including production, transportation and storage, would be passed along to consumers in the form of a surcharge, adding between 84 cents and $1 per month to a typical residential customer’s bill.
A similar supply contract was rejected by the PUC in September 2011 due to what regulators called the “excessive” cost of the fuel.
The second request of the PUC is to approve a 4.2 percent rate increase to fund maintenance of HELCO’s electric grid and system upgrades, as well as the inclusion of more renewable energy technologies. The increase would generate an additional $19.8 million in revenue for HELCO. If the entire amount is approved, it would add $8.32 to a typical, 500-kilowatt-hour monthly electric bill.
HELCO describes the rate increases as necessary to fund increased investment in the safety and reliability of its network, as well as to boost its ability to handle renewable energy sources.
“Nearly 60 percent of our customers’ electric bills go to pay the cost of fuel and purchased power. So it makes sense for HELCO to aggressively pursue renewable energy technologies that are not dependent upon oil, and that will reduce the cost of electric service in the long run,” said President Jay Ignacio in a recent HELCO newsletter.
Among the upgrades HELCO proposes to fund through the 4.2 percent rate increase would be advanced wind forecasting systems, computerized models and tools to analyze integration of customer-supplied solar energy, and enhanced sensors and tools to help system operators manage additional clean energy sources.
But critics say that rate hikes only hurt consumers, and they argue that HELCO could continue to invest in renewable energy while offering lower rates. Among those critics is a group of prominent citizens who make up the Big Island Community Coalition. Steering committee members include former Hawaii Community College Chancellor and current University of Hawaii Vice President for Student Affairs Rockne Freitas, farmer Richard Ha, Imiloa Executive Director Kaiu Kimura, Kamehameha Schools-Hawaii High School Principal Lehua Veincent and rancher H.M. “Monty” Richards.
Through its website,bigislandcommunitycoalition.com, and email newsletters the group has worked to build public opposition to the requests.
“Tell the PUC how rising electricity rates are affecting you and your family. We do not have to accept these rate hikes,” reads a recent email sent to members. “Rising electricity rates act like a giant tax that hurts the most defenseless among us. Seniors on fixed income, single moms, renters, working homeless and businesses are all hurt by rising electricity rates. Just last month, it was reported that two houses burned down from using candles. One household was using candles for light because they could not afford the electricity bill.”
Coalition members argue that Big Island consumers have borne electricity rates that are 25 percent higher than those paid by Oahu power customers “for as long as anyone can remember,” the mailing states.
“If we were successful in getting the Big Island electricity rate lowest in the state …. there would be more jobs here on the Big Island. Instead of leaving for the mainland to find jobs, our children would be able to stay here and work.”
In a phone interview Tuesday, Ha said members are encouraging citizens interested in attending the PUC hearings to make a show of solidarity in their opposition to higher electric rates by showing up “in their ‘rubbah slippahs,’ because that’s the kind of crowd we’re talking about here,” he said.
“Our coalition has been trying to lower electric rates for about two months now,” he said, “and you know something? We haven’t run into one person yet who says, ‘Yeah, I’d like to pay higher rates.’”
Ha argues that by locking itself into a 20-year agreement with Aina Koa Pono at what he estimates to be a cost of $200 per barrel of biodiesel, HELCO is effectively cutting out the possibility of turning to cheaper, better alternatives down the road. The actual cost per barrel as negotiated between Aina Koa Pono and HELCO has not been released to the public.
“Geothermal is an alternative at $57 a barrel. And things like ocean thermal is coming, and who knows what else we’ll come up with in the future,” he said.
On Thursday, state Sen. Malama Solomon, D-Waimea, Hamakua, Hilo, chimed in on the proposed HELCO rate increase, pointing to a petition signed by more than 1,000 of her constituents.
In a press release, she said the signatures represented a “clear mandate from her district” to demand that the governor and the PUC deny HELCO’s proposed rate increase, “especially given recent significant profits reported by both HELCO and its parent company.”
She also said she would urge the governor to rescind executive agreements between the state, the U.S. Dept. of Energy and HECO put in place in 2008 by Gov. Linda Lingle.
“These agreements effectively relinquished the State of Hawaii’s control of its energy policy to HECO, and thereby enabled HECO to function as an unregulated monopoly focused on profits for its stockholders rather than stable, lowest-possible-cost electricity for families and businesses of Hawaii,” the release stated.
Meanwhile, Aina Koa Pono is working to provide more information to the public concerning its plans, and to distance itself from HELCO’s planned 4.2 percent rate increase.
In a release issued Tuesday, Aina Koa Pono managing partner Chris Eldridge said the 4.2 percent HELCO rate increase “has nothing to do with our project and it is unfortunate for us that the issue is being heard at the same time as ours.”
Eldridge explained that the cost of the biodiesel will be higher “at the outset” than what HELCO pays for imported fossil fuel, but added that world oil prices are expected to climb “well past our cost” in the coming years.
“HELCO estimates that over the life of the contract, its customers will save a half billion dollars by using locally produced fuel,” he wrote. “That is an average of about $1,300 per electric customer.”
Eldridge pointed to additional benefits, such as nearly $200 million in general excise and payroll taxes over the contract life, and a boost to the job market.
“AKP’s Ka‘u operation will require 400 construction workers … and 200 permanent jobs,” he wrote.
IF YOU GO:
Public Utilities Commission hearings concerning requests by Hawaii Electric Light Company Inc. and Hawaiian Electric Company Inc.
• Monday, 6 p.m.
Hilo High School cafeteria
556 Waianuenue Ave.
• Tuesday, 6 p.m.
Kealakehe High School cafeteria
74-5000 Puohulihuli St.