Isle’s energy at center of debate

By PETER SUR

By PETER SUR

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Tribune-Herald staff writer

The Public Utilities Commission’s public hearing on Hawaii Electric Light Co.’s rate increase and biofuel surcharge proposals is a month away, and all sides are digging in for what could be an explosive meeting.

The PUC has scheduled public hearings to gather community input on Oct. 29 at the Hilo High cafeteria and Oct. 30 at the Kealakehe High cafeteria. Both meetings start at 6 p.m.

At issue are two proposals by HELCO. One is for a $19.8 million increase in revenue, or 4.2 percent in the coming year. The other, which is being jointly proposed by Hawaiian Electric Co., is the establishment of a biofuel surcharge provision of between 84 cents to $1 per month to support a Ka‘u biodiesel refinery to be built by Aina Koa Pono.

HELCO said in its filing for a proposed rate increase that the additional hike is necessary to keep up with higher costs to maintain its facilities, to continue the transition to renewable energy, and to maintain the company’s financial integrity.

Both proposals are opposed by the Big Island Community Coalition, formed by a group of prominent citizens who are asking people to come out and tell the PUC the effect of HELCO’s utility prices on their lives.

One of the members of the steering committee, Richard Ha, is a major advocate of geothermal energy, although he says that “we’re not choosing a particular technology. We’re actually technology-agnostic.”

“Our first priority: To make Big Island electricity rates the lowest in the state by emphasizing the use of our ample local resources,” wrote Noelani Kalipi on BICC’s behalf in an op-ed published Aug. 26 in the Tribune-Herald. “The proposed HELCO rate increase, coming at a time of record profits, does not sit right with us.”

Ha said the group has gathered “lots” of support, but he suggested its organization was minimal.

“It’s actually a people-to-people kind of thing,” Ha said. “We don’t have a budget, and we don’t plan to.”

Ha, the owner of Hamakua Springs Country Farms, identified two theories for the future price of oil as global supplies get harder to find. One theory says that as oil gets scarcer, the cost of a barrel — and with it, everything that runs on fossil fuel or is transported to Hawaii using oil — will rise, and in 20 years a dollar-a-month premium over today’s electricity bill will be a bargain.

The other school of thought says that rising oil prices will lead to a recession, which will cut demand and cause oil prices to fall, keeping it within a narrow range over time.

Aina Koa Pono is proposing to build a $450 million facility in Ka‘u that would harvest the feedstock of 12,000 acres of underused agricultural land near Pahala. The plant would process 900 tons of biomass a day into biodiesel via a patented microwave catalytic depolymerization process. Aina Koa Pono would sell 16 million gallons of fuel per year to HELCO to displace the oil-burning Keahole power plant, and an additional 8 million gallons would be sold to Mansfield Oil for distribution in Hawaii and the U.S. mainland.

HELCO’s filing with the PUC says that Aina Koa Pono’s project will “stimulate a large-scale renewable fuel industry in Hawaii that will spur future projects, as the industry develops, and will also create approximately 400 construction jobs over a two-year period, and over 200 permanent management, professional, operations, maintenance, agricultural, and administrative jobs.”

The PUC is being asked to approve HELCO’s biodiesel supply contract with Aina Koa Pono. The sticking point is that the surcharge will increase utility bills, but by a fixed amount.

“Aina Koa Pono’s plan was, upon PUC approval, was to go ahead and produce one module, one 33-ton module,” as a prototype, said Chris Eldridge, a partner in the company and son of chairman Kenton Eldridge. After that, the module would be scaled up to a 900-ton processing facility. The surcharge would not kick in until HELCO begins buying the biodiesel for its plant.

“We’ve also begun an environmental assessment process,” Eldridge said.

Eldridge said he would be fine with releasing the purchase price, but HELCO is keeping it under wraps as it negotiates agreements with other power producers. The price is lower than what the PUC rejected last year as “excessive (and) not cost-effective,” but the public does not know how much lower.

“You don’t want to hear that we’ll pay a dollar (per month), but it’ll even out in the future,” said Barbara Hastings of Hastings and Pleadwell, a public relations firm hired by Aina Koa Pono. “All of the energy experts in the world say the demand in China and India is voracious for oil.”

The next step, Eldridge said, would be a traffic study to determine the route of the fuel trucks and what impact they will have on the roads between Pahala and Kailua-Kona.

Eldridge said that biofuels and geothermal energy are not in conflict with each other. If there comes a time that the Keahole plant is no longer needed, he said, Aina Koa Pono could focus more aggressively on transportation fuels.

Ha, who was named the chairman of Ku‘oko‘a, the “not active” startup that was formed to buy out HELCO’s parent company, said he had no problem with Aina Koa Pono turning out fuel for transportation. But when it comes to electrical generation, the idea is to create steam to drive a turbine.

The steam can be made with oil, biodiesel, coal or geothermal energy, Ha said. He questioned the efficiency of a business model that produces energy by harvesting feedstock, driving it to the plant, processing the feedstock into biodiesel and driving it 80 miles to a power plant.

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“It’s such a roundabout way to get steam,” Ha said.

Email Peter Sur at psur@hawaiitribune-herald.com.

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