Category Archives: Peak Oil

Peak Oil

Economics & a Hawaiian Way of Thinking

Richard Ha writes:

It’s not whether or not the energy is green; it’s the price of
the energy that matters.

High price energy results in people having less
discretionary income. We know this to be true in our gut.

Professor Charles A. S. Hall explains how this works using
the concept of “Energy Return on Investment” (EROI). This concept takes the world of economics and ties it in with our physical world.

It’s a different way of understanding economics in that it
explains how things actually work, and it’s a way that Hawaiians can relate to
at a gut level.

Ancient Hawaiians had a gift economy that was land- and environment-based: The more one gave, the more one received. This traditional system is quite different from the modern market economy, where the more one receives, the more one receives.

Many modern-day Hawaiians can play in both worlds. But there
are many other Hawaiians that just don’t feel right. Me included.

Professor Hall will give a series of lectures at UH Hilo and
UH Manoa. At UH Hilo, he will speak on January 4, 2012 and at UH Manoa, on
January 9th and 10th.  Details to follow.

He is retiring soon, and we have asked him to be a guest lecturer here during the Winter/Spring semester. He has agreed. He will be using his new book Energy and the Wealth of Nations.

This video, titled Peak Oil, Declining EROI and the New Energy-Economic Reality with Dr. Charles A.S. Hall, is very much worth watching. It’s 1:38:18. Watch it straight through, or jump straight to specific topics as follows:

Minute:

4:54                    Importance of energy to economics

26:39                   Peak Oil is not the focus. Cessation of oil and energy production is the problem

27:54                   Energy Return on Investment (EROI)

33:35                   U.S. has lots of coal – in an emergency

34:30                   EROI is driving prices

38:55                   The trouble is, we need high EROI. How do we do that?

45:15                   Cheese slicer model. Higher energy price in, less discretionary income out

50:44                   Conclusions for the U.K. The principles are the same everywhere

1:32:40                Charles Hall talks about guest lecturing in Hawai‘i

Biofuel, Peak Oil, Renewable Energy Sources

Legend of the Horse That Was Really a Unicorn

 

Screen Shot 2012-11-18 at 7.01.54 PM

It was a hard-working
horse, they said, and it would not cost us much money.

All our problems
would be solved, they insisted, if we just had this horse.

And from the back
end, it did indeed look like a horse.

They said we couldn’t
look at the horse’s face, though, for competitive reasons.

It wouldn’t be fair
to the other horses, they said.

We searched and
searched through the scrolls,

and we realized that
all was not what it seemed.

Their “horse,”
it turned out, was actually a unicorn.

One of their friends
spoke up.

“What if we gave you
the uni….er, I mean the horse, for free?

What if we made
people from the land of O‘ahu pay for the horse?”

We said, “No. The
unicorn spends more time eating than working.”

Someone shouted, from
the back of the great hall,

“Don’t believe them!
They want to take over the kingdom!”

We replied, “No! We
just don’t want to take care of a unicorn.

A unicorn does not
help our people. It eats too much and takes up too much land.

We worry about having
enough food for the most defenseless among us.”

And that, Boys and Girls, was the start of the Rubbah Slippah
Revolution.

 

HECO and Aina Koa Pono (AKP) both issued glowing press releases
about the AKP project. But neither would say how much AKP would be paid for its
biofuels. They said it was a secret – to protect other bidders.

They said that the average ratepayer would only pay about $1
more per month, and that this would only go into effect if AKP was successful
in producing biofuel. They said it would mean several hundred new jobs, and
lots of money would be saved by not importing oil.

The project anticipated supplying HELCO’s Keahole 80MW plant
with most of its liquid fuel needs. That would be roughly 16 million gallons
annually, plus another 8 million gallons for transportation fuel.

HECO was not being fair when it would not give price
information and yet did predict that this would be very inexpensive to rate payers
– basing all this on assumptions and secret information.

The cost of the biofuel the rate payer would subsidize, it
turns out, is around $200/barrel. This is not a small amount. By assuming that
the price of oil would be close to $200, HECO could then say that this project would
not cost the ratepayers substantially more than what they would be paying
anyway.

Try wait! No amount of public relations will earn back the
credibility lost because of this unfair assumption.

Also, AKP says, the microwave technology they plan to use has
been successfully and safely used in the herbal extraction and pharmaceutical
industries for decades.

People who know tell me that this statement is like someone
with a Piper Cub pilot’s license offering to fly you to the moon sometime in
the future. But at least this one is a claim we can research.

Both the Hilo and Kona PUC hearings made clear that the
people are vehemently against the Aina Koa Pono project. At the Kona hearing,
the Consumer Advocate asked whether people would be in favor of this project if
all the costs were paid by O‘ahu rate payers. I think the logic was that O‘ahu
residents should pay for this, because it helps O‘ahu fulfill its part of the
Hawaii Clean Energy Initiative mandate for renewable energy.

Doesn’t each island’s contribution apply to the whole state?
Try wait!

AKP claims that it’s a fact that Keahole will be using
liquid fuel far into the future.

We don’t agree that we should favor AKP’s 20-year contract,
because it precludes using lower-cost alternatives; for example, natural gas
and other technologies that are being fast tracked, such as ocean energy.

Take geothermal as an example. Generating electricity at today’s
prices using geothermal costs 11 cents/kilowatt hour less than oil. Output at
the 80MW Keahole plant (which is equivalent to 80,000 kilowatts) times 11
cents/kilowatt hour is equal to saving $8,800/hour, $211,000/day and $77
million/year. That amount of savings could pay off the potential stranded asset
and also save the rate payer money.

The barrel equivalent of geothermal is $57. Why would we
want to tie ourselves to a $200/barrel and a 20-year contract?

Aina Koa Pono says it will, on its 12,000 acres, produce 24
million gallons of fuel per year. That’s roughly 2,000 gallons of biofuel per acre,
which is four times more productive than palm oil, the only biofuel that can
compete with oil. Yet they plan to do it with an undetermined species of grass.

Ka‘u Sugar Company, in the projected area of Aina Koa Pono,
grew sugar cane and was one of the least productive sugar companies in the
state. Sugar cane is a grass.

AKP is not cost-effective and it doesn’t make sense for us.
We need to concentrate on solutions that better the condition of our people.

If you agree and would like to let the PUC know, this is the time. You can write to the PUC before November 30th at Hawaii.puc@hawaii.gov, and refer to “PUC Doc 2012-0185-Application for biofuel supply contract.”

 

Biofuel, Community, Geothermal, Peak Oil, Renewable Energy Sources

Rubbah Slippah Folks Turn Out at Kona PUC Meeting

Richard Ha writes:

The Kona PUC hearing we’ve been talking about here took place on Tuesday evening.

From West Hawaii Today:

Powerful resistance to PUC

By Erin Miller

West Hawaii Today

West Hawaii residents described to the Public Utilities Commission how they have cut back on energy usage, and questioned why Hawaiian Electric Light Co. shouldn’t have to bear the costs of upgrading its own equipment.

The questions continued as the PUC heard comments from residents Tuesday evening on a proposed contract between HELCO, Oahu’s Hawaii Electric Co. and Aina Koa Pono for a biodiesel project in Ka‘u.

Albert Prados, manager of the Fairway Villas at Waikoloa Beach Resort, was one of more than 20 people who testified against HELCO’s rate increase request, which HELCO officials would raise rates 4.2 percent, or about $8 per an average 500 kilowatt hour monthly bill. Prados described the measures he has taken in his own home, including shutting everything off except the refrigerator at night, to lower his electricity bill. Read the rest

Mayor Kenoi took a very strong stand on renewable energy. He
made clear that it is not sufficient that it be renewable; it also needs to be affordable. He is concerned about the most defenseless among us.

He said, This is the kind of project that 20 years from now, we will be asking, “How did we let that happen?” He also said that we are doing this for the benefit of HEI and HECO – but that there is no benefit for the Big Island. The Mayor is very aware that high and rising electricity costs threaten our economy and also the folks on the lowest rungs of the economic ladder.

Rep. Denny Coffman asked, “How is it we are here? This is not even proven technology.” He pointed out that the electric utility is setting the state’s energy policy, and that that should stop while we finish the Integrated Resource Planning process that’s happening right now. Rep. Coffman understands the energy situation worldwide and he knows it’s foolish to be chasing unproven technology. It is both a waste of time and money. In Hawai‘i, we do have proven technology that is affordable.

My testimony:

To answer the Consumer Advocate’s question, “Would we change our minds if all the costs were given to the Oahu rate payers?,” the answer is no! I think that giving AKP a 20-year contract will forego the opportunity of developing lower cost alternatives. And it will take up valuable time. Liquid natural gas is an option. Ocean energy might be ready within the 20-year period. Geothermal is an affordable, proven technology. For instance, there is an 11 cent difference between geothermal and oil today. We could replace liquid fuels with 80MW of geothermal electricity, and apply that savings to pay the remaining debt of the Keahole 80 MW liquid fuel burning plant.

(80 MW is equal to 80,000 kilowatts. That 11 cents/kilowatt hour savings multiplied by 80,000 kilowatt hours equals $8,800 that you save each hour. And the savings per day is $211,200. That times 365 days equals an annual savings of $77 million. That is enough to write off the plant and still give the rate payers a break.)

Jeff Ono

Consumer Advocate Jeff Ono asked: “If O‘ahu rate payers would pay the cost, would you still be against the AKP project?”

Most of the time, making electricity has to do with making steam to turn a turbine. You can burn coal to make steam, or you can burn oil to make steam. You can burn firewood to make steam, or use the steam from underground – that’s geothermal.

AKP takes the long way. They grow plants using fossil fuels,
then they use electricity to make microwaves to vaporize the plants, then take the liquid that rises and convert it to a burnable liquid, and haul it to Keahole, where they burn it to make steam.

It isn’t surprising that it is expensive.

More than a few engineer folks tell me that this process
uses more energy than it makes. And if that is the case, it will always be more expensive than oil. This is not a good bet for us.

Palm oil is the only biofuel today that can compete heads up
with petroleum oil. It produces 600 gallons of oil per acre. AKP strives to produce 16 million gallons per acre, plus another 8 million gallons – or 24 million gallons from 12,000 acres. That is 4 times as productive as palm oil, the only biofuel that competes straight up with petroleum oil. If it works, they don’t need any subsidy from us. If it works, they will all end up billionaires.

We cannot predict the price of oil. But people are hurting right now. And if oil prices reach $200 per barrel, the tourism industry will be devastated and everything connected with it will shrink. We do not have the luxury of time. We need a lower cost alternative right now.

Well-respected Council of Revenues economists Paul Brewbaker, of TZE Economics, and Carl Bonham, Executive Director of the
University of Hawaii Economic Research Organization (UHERO), agree that low-cost energy is a key component of our economic future. 

There are alternatives to $200/barrel biofuel. Geothermal is the equivalent of $57/barrel. Liquid natural gas is low cost now on the
mainland, and maybe ocean energy will be an alternative within the time period of the contract.

We need lower cost electricity, not higher, and AKP is not the answer. The AKP project is wasting valuable time, and we need to put it to bed so we can focus our attention on the next projects.

I agree with the electric utility from here forward. The next PUC hearing will be on the Hu Honua biomass plant at Pepe‘ekeo. They will use wood chips to boil water and make steam. This is proven technology and it looks to be cost effective.

After that will be a proposal for 50MW of geothermal. Geothermal does not have to burn anything. It just uses the steam underground to make electricity and it is cost effective.  

At that time, HELCO with its leverage should be able to successfully renegotiate the old contract that is tied to oil. Then we will be well on our way to protecting ourselves from the volatility of world oil prices. Those two projects will result in a total of 110 MW of stable, affordable electricity using proven technology. 

We need to strive for balance and common sense as we try to make things work for everyone. Hospitals, schools, hotels and businesses need the electric services provided by the grid. Fifty percent of our people rent and so cannot get off the grid. We need to be practical, and help to make sure the electric utility is healthy as we strive for a lower cost to the rate payer.

Biofuel, Community, Peak Oil

Hilo’s PUC Meeting Successful: ‘Enough is Enough’

1 Comment

Richard Ha writes:

Monday night’s PUC hearing in Hilo went very well. The overwhelming sentiment was that enough is enough. People will not take any more electricity rate hikes.

Big Island Video News has posted a video about the PUC meeting.

VIDEO: Aina Koa Pono, HELCO rate hikes blasted at PUC hearing

October 30, 2012

Video by David Corrigan, Voice of Stephanie Salazar

HILO, Hawaii: Residents of East Hawaii packed the Hilo High School cafeteria, to tell the Public Utilities Commission what they think about a proposed electricity rate hike and and biofuel surcharge…. Watch the Big Island Video News video here.

It’s hard to remember that until the BICC dared say it, no one could imagine we could actually get lower rates. We have made good progress. People are now saying they want lower rates, and expecting it.

In its “Off the News” section this morning, the Star-Advertiser wrote:

Electricity bill too high? Wear slippers

“Not to make light of a serious situation such as rising electricity bills, or a consumer group’s desire to show solidarity.  In an era when pennies – and dollars – must be pinched to get by, solidarity over cost-of living issues is a good thing.

That said, it was interesting to see that the Big Island Community Coalition opposed to a surcharge to finance the use of biofuels to produce power, urged its members to wear rubber slippers to last night’s public hearing as a show of uniform solidarity. This being Hawaii, what other footwear would folks don for a pau hana (after work) forum?

Of course this may have been a smart strategic move. This way the PUC might have scanned the room and figured that every last person was opposed.  It also ruled out slippers as a footwear choice for commission members, too….”

It was a civilized hearing and most of the many testimonies were on point.

About 150 people were in attendance and it was a diverse audience, including: Faye Hanohano, Fred Blas, Jeff Melrose, Richard Onishi, Russell Ruderman, PGV people from Nevada, Jim Albertini, Deborah Ward, Patrick Kahawaiola‘a, Mililani Trask, John Cross, Ka‘u people, ILWU, IBEW, Carpenters, Laborers, HELCO group, the Aina Koa Pono (AKP) core group, Sierra Club and other community members.

Other than HELCO, AKP and those who needed to be cautious, most of the rest were allies of low-cost electricity.

In today’s Hawaii Tribune-Herald, Mayor Billy Kenoi made it very clear that he is against the AKP project for several reasons.

Kenoi criticizes biodiesel proposal

By ERIN MILLER Stephens Media

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….” 

Read the rest

The Hawaii Tribune-Herald also wrote about the PUC meeting itself.

Online Extra: HELCO rate hikes blasted

By COLIN M. STEWART
Tribune-Herald Staff Writer

No more increases.

That seemed to be the main message relayed to members of the state Public Utilities Commission on Monday night by more than 100 Big Isle residents who showed up at a public hearing at the Hilo High cafeteria to weigh in on two separate electricity rate hikes proposed by Hawaii Electric Light Co. Inc….

Read the rest here

Tonight is the West Hawai‘i PUC meeting (Tuesday, October 30, 2012) at 6 p.m. in the Kealakehe High School cafeteria.

And the third and final meeting will be held this Thursday, November 1, 2012 at 6 p.m. at Farrington High School.

Wear your rubbah slippahs!

Biofuel, Community, Peak Oil, Renewable Energy Sources

Hilo PUC Meeting Tonight; Read West Hawaii Today Editorial on Aina Koa Pono

1 Comment

Richard Ha writes:

Tonight is the Hilo PUC meeting and we encourage you to show up and wear your rubbah slippahs. The Rubbah Slippah Revolution is at 6 p.m. in the Hilo High School cafeteria.

The PUC will be hearing HELCO’s proposal for a 4.2 percent rate hike, as well as Aina Koa Pono’s proposed biofuel project.

http://hahaha.hamakuasprings.com/renewable_energy_sources/Mahalo to West Hawaii Today editor Reed Flickinger for a very insightful, timely and important editorial on the subject of Aina Koa Pono.

HELCO PUC hearing meaningless without more fiscal disclosure

By REED FLICKINGER

West Hawaii Today

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….

Read the rest

He’s exactly right – we have had a hard time articulating about this issue because of a lack of information.

But we figured out that the oil price Aina Koa Pono (AKP) is using is around $200/barrel. And if they were to predict a high oil price in 2015, then the amount the rate payer would pay could be predicted to be very low – like $1 per month. If the cost of oil were actually much lower than $200 per barrel, we would pay a lot more.

But getting back to the real issue: There is a lot at stake here. If AKP cannot demonstrate positive energy production – and they have not done any tests on the feedstock they will use – their product will always cost more than oil and they will run out of money. This also means that they use more oil than they make. But if AKP is successful at producing biodiesel for $200/barrel and the oil price stays below $200 for a long time, the Big Island’s path to economic survival/prosperity will have been blocked.

If oil rises to more than $200/barrel, the tourist industry and other businesses will be very hard hit. In that case, the Big Island will need the lowest cost solution that it can find. And $200/barrel cost is not it.

The rest of HECO’s plan would work, though.

Hu Honua, w/22MW of biomass-low $100/barrel oil equivalence, plus the 50MW of per-barrel oil equivalence geothermal, is lower cost. And if we can renegotiate the old 25MW geothermal avoided cost contract, that sets us on the right path.

The result would be 88 MW of stable and affordable geothermal, plus 22MW of stable affordable biomass. This would ensure that the Big Island’s electricity rates would be lowest in the state. And that is what we want.

Then if we could safely replace the 80 MW of liquid-fired generation at Keahole with geothermal, or ocean thermal or liquid natural gas – whatever makes economic sense – we could actually be looking toward prosperity for future generations.

The bottom line is that AKP is not in the interest of Big Islanders. And this is the defining battle. Everything else is inconsequential.

Please show your face at tonight’s PUC meeting, East Hawai‘i. Let’s make sure the PUC knows this is not okay with us.

Biofuel, Peak Oil

What Happened to $200 Oil?

Richard Ha writes:

Whatever happened to $200 oil?

For the last few years, supply side thinking was the most prevalent way of considering the world’s oil supply. But in this last year,
something changed. Commentators started to ask about the demand side.

Specifically, they started asking, “What happens if demand goes up and prices start to rise – eventually killing demand?” In that scenario, the rising price of oil contains the seed of its own destruction.

In May of this year, Jeff Rubin, who had been the most outspoken expert warning of $200 oil, changed his mind. He calls what is happening “the end of growth.”

Whatever Happened to $200 Oil?
by Jeff Rubin on May 23rd, 2012

Four years ago, when I was still chief economist at CIBC World Markets, I forecast that global economic growth was on pace to send oil prices to $200 a barrel by 2012. In short, the argument was based on a supply-driven analysis that weighed the sources of future oil supply against the prices that would be needed to make the extraction and processing of that oil economically viable…. Read the rest  

If Jeff and many others are right, we are not looking at a rapid climb of the price of oil to $200/barrel. It may not get to that price for 20 years.

And if that’s true, HECO’s request to pay $200 per barrel for Aina Koa Pono’s biofuel will be a tremendous mistake. All that will be
accomplished is a massive transfer of wealth.

This is why I am so pleased that Kamehameha Schools (on the
recommendation of Neil Hannah, Kamehameha’s Director of the Land Assets Division) is sending two senior level management folks to the upcoming Peak Oil conference. Things are moving quickly in the world energy field, and policy makers need to be up on current information.

That HECO is betting on the high side of the 2012 AEO cost curve shows they are not aware that thinking has changed. Had they sent people to past Peak Oil conferences, they would have seen the shift.

Including myself, there are now five people from Hawai‘i going to the ASPO conference. We have the makings of a delegation. Robert Rapier will also be going, too, but I am not counting him because he is a national/international commentator and he will be presenting.

This will be my fifth ASPO conference. I cannot be happier that there are other people from Hawai‘i going, besides myself, and educating themselves on this very important subject.

Biofuel, Peak Oil, Renewable Energy Sources

The Big ‘Aina Koa Pono’ Risk

Richard Ha writes:

Hawaiian Electric Company (HECO) and Hawaii Electric Light
Company (HELCO) are asking for PUC approval to pay Aina Koa Pono $200/barrel for biofuel, and they are asking for approval to pass the cost straight through to the rate payers (us).

Should we rate payers accept the risk and provide the
subsidy? No!

We need to attend the upcoming PUC hearings and testify against assuming the $200/barrel cost of biofuels. Please consider attending. The hearings are:

East Hawai‘i:

  • Monday, Oct. 29th, 6 p.m. at the Hilo High School cafeteria

West Hawai‘i:

  • Tuesday, Oct. 30th, 6 p.m. at the Kealakehe High School
    cafeteria

O‘ahu:

  • Thursday, Nov. 1st, 6 p.m. at Farrington High School

Should we rate payers pay for biodiesel that costs $200/barrel, starting in 2015 and lasting until 2035? There is a great risk that the price of oil will not follow the Annual Energy Outlook 2012 ‘high price forecast’, and if that’s the case, we will be paying more for electricity than we would be otherwise.

Very risky.

There is also a technology risk. Fuel has not yet ever been produced using the feedstock that Aina Koa Pono proposes to grow. So far, the feedstock being used experimentally is white pine. The Micro Dee technology Aina Koa Pono wants to use is still experimental.

Risky.

There is a risk that this process might use more energy than it generates. Generating electricity is generally about boiling water and making steam that turns a turbine. It’s cheaper to burn the product to boil water. Aina Koa Pono’s proposed process – making electricity to make microwaves to vaporize the cellulose to get the liquid and then refine it to make it burnable, and haul it down to Keahole in tanker trucks to make steam – is extremely energy intensive.

Very risky.

Mid-year last year, on the mainland, the EPA drastically decreased its 2011 estimate for cellulosic biofuel from 250 million gallons to a paltry 6 million gallons. Almost all the cellulosic biofuel companies went bankrupt.

This makes this project risky as well.

In 2010, cellulosic biofuel companies needed to buy their feedstock for $45/ton. But because farmers were making $100/ton for hay, the biofuel firms got a $45/ton subsidy. I asked how much Aina Koa Pono expected to pay for feedstock, and the AECOM Technology Corporation consultant said between $55 and $65/ton. The problem there is that Hawai‘i farmers have been earning $200/ton for hay for 10 years now.

The supply of feedstock is a risk.

There is agriculture production risk, as well. Palm oil is the only industrial-scale biofuel that can compete with petroleum oil. In the tropics, it produces 600 gallons of biodiesel per acre of production. Say Aina Koa Pono can produce 500 gallons of bodiesel, since we are located 22 degrees north of the equator. To produce 16 million gallons a year at 500 gallons per acre would require 32,000 acres of productive land. Add 10 percent more for roads and unusable land and you would need 35,200 acres. But we only have 12,000 acres to use. Is the feedstock throughput adequate to cover the capital costs? We don’t know. They have not decided on a feedstock yet.

Risky.

Imagine the 12,000 available acres could produce 16 million gallons. Then each acre would need to produce 1,333 gallons to get the required throughput.

This would be twice as productive as the best biofuel producers in the world.

It’s a risky assumption.

Ka’u Sugar relied on natural rainfall. Depending on natural rainfall makes achieving optimum production very risky, due to the very real possibility/probability of occasional drought.

According to Energy Expert Robert Hirsch, in his book The
Impending World Energy Mess, the best model is a circular one, where processing is done in the center of a field (which does not exceed a radius of 50 miles) that consists of flat land, deep fertile soil with irrigation and lots of sun energy. This situation exists in Central Maui, where Hawaiian Commericial & Sugar Company (HC&S) is located. That is exactly why HC&S is the sole surviving Hawai‘i sugar plantation.

If Aina Koa Pono is supposed to serve as an example from which to expand, then there is very limited suitable land on the Big Island
that meets the criteria. To compete heads up on the world market will require the best possible combination of production factors. These are not them.

Locking into a 20-year contract would preclude lower cost alternatives. Geothermal, for example, is the equivalent of oil at $57/barrel. Oceanthermal has the possibility of being significantly lower in price than $200 oil. Water-to-liquid fuel is a possibility, too.

The amount of risk involved is just far too great. In the investment world, the reward is generally commensurate with risk. Except for protection from $200 per barrel oil in the later years, there is little reward for all the risk we would assume.

This is a very bad deal for consumers.

Lowering Electric Rates, Peak Oil

Our Plan to Lower Electric Bills, Validated

Richard Ha writes:

If you signed up on the website with the Big Island Community Coalition, you recently received the following email from us.

Gail Tverberg received it and she emailed me this:

Thanks! Good for you!
The message about getting lower cost electricity is exactly right. It is hard to be very competitive (except maybe at tourism) with very high energy costs.

It’s hard for me to express how respected a position Gail holds in the world of energy commentary. She is very knowledgeable, highly respected and she holds the starkest possible view.

I look at what she has to say as, “Okay, that’s the worst case possible, and let’s figure out a way around it.” What she emailed me validates our “work-around.” It’s an extremely important validation.

From the Big Island Community Coalition:

Aloha Members!

The PUC is holding two hearings this month, one in Hilo on October 29th, 6:00pm at Hilo High Cafeteria, and the other on October 30th, 6:00pm at Kealakehe High School Cafeteria. They want to hear YOU. Bring your kids, bring the kupuna, and bring your friends. Tell the PUC how rising electricity rates are affecting you and your family. We do not have to accept these rate hikes.

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.

The Big Island has had electricity rates 25% higher than Oahu for as long as anyone can remember. If we were successful in getting the Big Island electricity rate lowest in the state, we would be able to grow and sell more products on Oahu. 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.

If we were successful in getting locally-produced, lower-cost electricity, our school budget would not rise by 25% every two and a half years. That saving would go toward your child’s education instead of oil from a foreign country.

Already your actions are starting to get results. Just a short time ago, no one could imagine talking about lowering electricity rates. But because of the actions of the Big Island Community Coalition, HELCO is running full page ads in the newspaper. They are now focusing on how they can lower your electricity rates. If you show up in large numbers at the PUC hearings, you can change the thinking of the state government as well.

At the last PUC hearing the participants were mostly from Ka’u. This time folks from Ka’u, Kona, Kohala, Puna, Hilo, Waimea — the whole island, will be represented. At the last PUC hearing, the Consumer Advocate was in favor of ‘Aina Koa Pono, dismissing the opposition as NIMBYism. This time when you all show up from all parts of the Big Island, the Consumer Advocate has no choice but to advocate for the consumers — all of us.

    Your beliefs become your thoughts,

    Your thoughts become your words,

    Your words become your actions

    Your actions become your habits,

    Your habits become your values,

    Your values become your destiny.

    – Mahatma Gandhi

When you show up at the PUC hearings in large numbers, your words will become your actions. Then your actions will become your habits — on the way forward, your values will become your destiny. Our values are — taking care of all of us, not just a few of us, for generations to come.

Share Your Story

How has the rising cost of electricity affected you and your family? How would an even higher electricity rate have an impact on your lifestyle? Are you neighbors with the family who spends their evenings by candlelight? We want to know. Every story matters. This issue of costly energy involves all of us. Email us your story to bigislandcc@gmail.com.

Please mark on your calendar the PUC meeting nearest you, and consider attending if you can. Every person in attendance, every story, will make a difference. 

And join us at the Big Island Community Coalition if you haven’t yet. Enter your email address here, and we will send you an occasional newsletter, like the one above, to keep you informed.

Biofuel, Geothermal, Lowering Electric Rates, Peak Oil

Try Wait – Comparing costs for Geothermal vs. Aina Koa Pono Biofuels

1 Comment

Richard Ha writes: 

It’s all about the cost.

What if we substituted geothermal electricity for Aina Koa Pono’s biofuels proposal, in order to replace the 80MW that the Keahole liquid fuel-fired plant produces?

Aina Koa Pono’s proposed plan would cost rate payers the equivalent of $200/barrel of oil.

The “barrel of oil equivalent” for geothermal-produced electricity is $57/barrel, and this price will be stable for 500,000 to a million years. (Geothermal is competitive with – though cheaper than – natural gas, which is $5.16 per million BTUs and breaks even with oil at $57/barrel; and nuclear power, which breaks even at $6.26 and $69).

At today’s oil prices, there is an 11 cent difference between oil- and geothermal-produced electricity. Geothermal is cheaper by far.

The Keahole plant’s capacity is 80MW, which is 80,000 kilowatts per hour. Using geothermal would save $8,800/hour, $211,200/day, and $6,336,000/month. In a year, the savings would be $76 million.

Why can’t we split the difference? Part of the savings goes to lowering rate payers bills, and the other half to retire debt?

The electric utility should not be punished for trying to achieve its renewable energy goals. But we have to realize there may be alternatives that better prepare us for the future. Let’s not lock ourselves out of these opportunities by signing a 20-year contract just because of an arbitrary time schedule.

In the end, with geothermal we would pay the oil equivalent of $57/barrel on our electric bills. If we go Aina Koa Pono’s route, we pay the equivalent of $200/barrel.

Am I missing something?

Biofuel, Lowering Electric Rates, Peak Oil

What if Aina Koa Pono’s Projections Are Wrong?

Richard Ha writes:

We don’t have the actual numbers, because HELCO hasn’t released them, but what if the agreement with Aina Koa Pono is that they get paid $200/barrel, and then the oil price follows the High Oil price curve of the AEO 2012 (see below)?

In that case, if oil is $175/barrel in 2015, then the rate payers would pay the remaining $25/barrel to enjoy the benefits of jobs, biochar and liquid fuel.

But what happens if Aina Koa Pono is wrong? What happens if the price of oil follows the reference line of this graph below, instead?

Chart

Say oil in 2015 costs $110. The difference between that $110 and $200/barrel is $90/barrel.

IS THAT WHAT THE RATE PAYER WOULD PAY IF THE ACTUAL COST OF OIL IS $110/BARREL? $90/BARREL?

This can’t be right.

SURELY THE CONSUMER ADVOCATE WOULD NOT LET THAT HAPPEN TO THE CONSUMERS?