Avoided cost
Avoided cost
A different perspective on electricity costs
As per your article of Oct. 24 on the negotiations between HELCO and the independent power producers, you quote Mr. Curtis Beck of HELCO as saying, “Beck said energy prices had been tied to oil because of a federal law from the 1970s that required utilities to pay avoided costs.”
Well that is one of the many smoke and mirrors that HELCO uses to distort the truth.
What the energy prices are tied to are the policy that HELCO has followed up to the present day to generate power.
If I may be so bold to clear some of the smoke, Mr. Beck, to his credit, clearly tells you in that sentence that energy prices are tied to oil.
Not exactly, Mr.Beck.
He fails to mention the obvious — that because HELCO has decided to generate energy almost exclusively using oil, to the tune of 95 percent of generated power, HELCO’s costs are based primarily on oil (95 percent oil and the other 5 percent hydroelectric).
HELCO’s avoided costs are primarily but not totally tied to oil prices. They are tied 100 percent to HELCO’s business decisions.
Had HELCO pursued any other means of production — let’s say HELCO generated 100 percent of its power by hydroelectric, we would be talking about its avoided costs being tied to hydroelectric and not oil.
HELCO shifts the blame to oil and federal law for its decision to pursue power generation using oil almost exclusively.
And the article begs the following question: Why is it that HELCO only generates 5 percent of its power by green means, while the independent power producers generate 29 percent?
HELCO has shifted all the risk, all the cost, all the pilikia that comes with starting a new business and investing in new energy fields to everyone else and now it shifts the blame for its environmentally reckless, but highly profitable, business decision of investing almost totally on oil-powered energy production.
So let’s reward HELCO with rock-bottom prices paid to the independent producers and punish the independent producers because they did not follow HELCO’s business model —and they have dared to put their money in new, green and risky business.
J.Henri De Mendonca
Pahoa