Friday | July 01, 2016
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HELCO PUC hearing meaningless without more fiscal disclosure

There is a fundamental problem with the Public Utilities Commission meetings scheduled on this island next week to discuss an application establishing a biofuel surcharge in HELCO’s energy cost for customers: How can the public comment upon unknown information?

HELCO and sister company HECO are seeking approval to enter into a 20-year contract to purchase biodiesel fuel from Aina Koa Pono, a company that has yet to build its proposed plant in Ka‘u, and pass on to us, the ratepayers, any costs that incurred if the biodiesel costs more than fossil fuel on the open market — over the 20-year term of the contract.

HELCO argues the biodiesel proposal is good because it is a source of diesel separate from fossil fuel, is a renewable form of energy that moves us toward a state goal of 30 percent renewable energy use (Is this an attempt to help HECO meet its goal on the backs of Big Island ratepayers?). It is, the utility argues, better than wind and solar alternative energy and can fire the existing HELCO turbines. Geothermal energy somehow was not significantly addressed in the proposal, though it mentions an additional 8 megawatts that will be purchased from Puna Geothermal Venture.

The HELCO proposal ultimately is all about numbers, the most pivotal of which is the cost of the 16 million gallons of biodiesel to be purchased annually. How much will it cost? How much is it expected to cost? How much more — or less — will it cost in 20 years than the projected cost of oil on the open market?

Good questions. Good luck trying to find out. The application before the PUC is redacted — a fancy term for “blacked out” — anywhere that real numbers are needed to inform anyone seeking to reach a viable and sound opinion on the project.

There is a nonbinding sweetener for the public, that “fuel prices estimates for 2015, and sales estimates for the year 2015, it is estimated that the Biofuel Surcharge Provision would be in the range of 0.17 cents/kWh, or a range of $0.84 to $1.00 per month for the typical residential customers of Hawaiian Electric and HELCO. The actual bill impact could (emphasis added) be higher or lower… .”

Keep in mind, a lurking additional surcharge in your water bill, as the county water department is HELCO’s largest customer —those price hikes will be on your water bill also.

But what those costs may be remains hidden behind a protective order allowing the documents to be redacted, citing “certain information that could disadvantage the applicants in their future negotiations for biofuel contracts; (3) certain “critical infrastructure information” that should not be disclosed publicly under the Homeland Security Act of 2002; and/or (4) certain information relating to the security of the applicants’ facilities, that if disclosed publicly, could increase risk to applicants’ facilities, and jeopardize their emergency and disaster preparedness plans … .” That is a very broad-brush stroke enabling everything that is critical to the public’s right to know to be kept secret.

However, the public could be and should be provided a range of possible costs, short term and over the 20-year term of the contract. Such a financial disclosure would not compromise those proprietary and so-called security concerns and would allow the public to understand the best and worst possible scenarios attached to this scheme.

Without that knowledge, how is there to be meaningful public comment? How can anyone address costs when no costs are disclosed — to anyone other than the parties making the deal and the state consumer advocate? And consumer advocacy in Hawaii is in extremely short supply, despite the existence of this so-called government “advocate.”

The PUC already rejected this boondoggle once, citing excessive costs. In September 2011, the PUC, in a 71-page ruling, rejected a power purchase agreement between Aina Koa Pono and the three Hawaiian Electric Co. Inc. subsidiaries: Big Island-based HELCO., HECO and Maui Electric Co. Ltd. The agreement would have created a surcharge, adding several dollars to electric bills on Hawaii Island and Oahu.

The PUC rejected the agreement on the grounds the HECO companies were paying too much for the biofuel. The contract price, said the PUC in its ruling, which the HECO companies filed under confidential seal, is “excessive, not cost-effective, and thus, is unreasonable and inconsistent with the public interest.”

This revised application still hides a potentially scary estimate. Among the redactions is the estimated cost to Big Island residents of underwriting this unknown cost differential should Oahu not share the burden:

“To illustrate the consequence of placing the biofuel development cost solely upon HELCO’s customers through ECAC for this Biodiesel Supply Contract based on HELCO’s 2015 petroleum diesel price forecast (the year in which AKP is projected to reach its full supply of sixteen (16) million gallons per year), HELCO’s cents/kWh rate and typical residential bill would increase by approximately ^ ^ ^ H H H ^ I > ^^ about l ^ ^ ^ ^ ^ ^ ^ f l for a residential bill of 500 kWh. As a point of reference, ^ ^ | represents approximately ^ | of HELCO’s ^ ^ typical residential bill effective July 1, 2012.”

We already suffer unduly high electric rates owing to the cost of oil, transmission lines and existing purchase of power agreements tying cheaper nonfossil fuel energy to the cost of oil (it’s called avoided cost), allowing businesses to prosper yet offering absolutely no relief to consumers. And now, enter HELCO/HECO with yet another agreement that not only purchases more (bio)oil, but does so with the knowledge up front that it will at least initially cost consumers more than traditional fossil fuel, guaranteeing rates will increase.

Missing from this horribly misguided proposal, along with disclosure costs, is the benefit to consumers. Hawaii is the most isolated island chain in the world. It is also likely the world’s most isolated region in regards to consumerism. Unfortunately, consumer interests are the last consideration, if they at all enter into the equation.

Despite geothermal’s ideal solution to our electrical energy questions, Aina Koa Pono and HELCO/HECO appear determined to embrace and reinvent an antiquated and inefficient fossil-fuel technology — and shackle us to it for at least two more decades. It makes little sense or value to potentially underwriting consumers, despite its guaranteed profitability to Aina Kona Pono and HELCO.