Tag Archives: Consumer Advocate

Articles, Biofuel, Lowering Electric Rates

How To Guarantee Economic Disaster: AKP

Richard Ha writes:

We all admire Mark Dunkerley, President and CEO of Hawaiian Airlines, and wish Hawaiian Airlines the best.

From Pacific Business News:

Speaking to a room of movers and shakers from Hawaii’s commercial real estate industry at the NAIOP Hawaii
Real Estate Symposium Friday at the Hawaii Convention Center, Dunkerley noted that without new product, such as hotels, tourists will eventually go elsewhere for their vacations.

Dunkerely says that Hawaiian Airlines, a subsidiary of Hawaiian Holdings Inc. (Nasdaq: HA) is doing its part by investing $11 billion in a “superior fleet.”

But Dunkerley and Hawaiian Airlines cannot do everything by themselves to save Hawai‘i.

It certainly won’t help if we increase the cost of doing business in Hawai‘i.

The Consumer Advocate is suggesting that O‘ahu (electric) rate payers subsidize the $200/barrel cost of biofuel proposed to be produced by Aina Koa Pono (AKP) in Ka‘u on the Big Island.

From the PUC Docket 2012-0185:

Q. HELCO AND HECO RECOMMEND THAT THE COST DIFFERENTIAL BETWEEN THE BIODIESEL AND THE FOSSIL FUEL THE BIODIESEL REPLACES SHOULD BE
SPREAD ACROSS BOTH HELCO AND HECO RATEPAYERS. IN YOUR OPINION, IS THIS JUST AND REASONABLE?

The Consumer Advocate responds:

A. No. In my opinion, the entire cost premium differential should be borne by HECO ratepayers. I refer to it as a cost premium, because the price of biofuel is currently higher than the price of petroleum diesel.

O‘ahu hotels already pay high electricity costs. Let’s not price them out of the market. This does not help our tourism industry, Hawaiian Airlines or us.

For Big Islanders, our worst fear is that AKP is approved by the Public Utilities Commission. If that were to happen, we would be locked into a 20-year contract that would preclude our selecting lower cost alternatives for 1/3 of our base power electricity use.

An oil price of $200/barrel will be very damaging to the airline industry, as well as to our tourism industry.

We don’t need to be paying for $200/barrel biofuel now when we don’t have to.

The Energy Information Agency (EIA) projects oil will cost less than $150/barrel in their reference rate case during the 20-year period of the potential AKP contract.

Yet HECO chose to use the EIA’s highest rate scenario of $200/barrel.

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What if they are wrong?

Why are we pursuing this alternative?  It’s like we are choosing to go over the cliff now, in order to maybe prevent going over the cliff
later.

Why do we want to be first in the world to achieve cellulosic biofuel? There is a 90 percent chance of failure! It would be far smarter to copy someone else who is the first in the world. Then there would be a 90 percent chance of success.

• Are we pursuing this to stimulate economic activity? That’s just taking out of one pocket to put into another, and causing electricity rates to rise as we do it.

A rising electricity price acts like a giant regressive tax. Folks who can afford to do so leave the grid. And those who cannot leave, pay even more.

Two-thirds of our economy is made up of consumer spending. If folks had discretionary income, they would spend it, businesses would hire and people would have jobs.

The opposite is what’s happening now.

• Or are we pursuing AKP to better the lives of future generations? This proposal worsens the prospects for future generations.

We cannot let AKP pass. It would be a disaster for our economy for the next 20 years and beyond.

Biofuel, Peak Oil, Renewable Energy Sources

Legend of the Horse That Was Really a Unicorn

 

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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.”