KALAPAKI — Planning for future energy infrastructure based on indigenous, renewable sources also involves a more efficient management of currently used fossil fuels as a way of helping to control affordability. That was just one of the topics covered at
KALAPAKI — Planning for future energy infrastructure based on indigenous, renewable sources also involves a more efficient management of currently used fossil fuels as a way of helping to control affordability.
That was just one of the topics covered at the Lihu‘e Business Association monthly breakfast series Thursday at Duke’s Canoe Club at Kalapaki Beach.
Speakers included state Public Utilities Commission Chairwoman Mina Morita, along with Division of Consumer Advocacy Executive Director Jeffrey Ono. The two updated a group of interested community, business and civic leaders on energy and policy issues.
“This was one of the most informative and educational sessions we’ve had at an LBA event,” Kaua‘i County Council Vice Chair JoAnn Yukimura said.
Morita was selected by Gov. Neil Abercrombie to chair the PUC in 2011. The former state Representative said her goal was to take a system in change and make it more understandable to citizens.
Morita was a state legislator for 15 years, including 13 years as chair of the Environmental Protection Committee. She said PUC is a misunderstood agency when its regulation reverberates through all sectors of the economy.
The PUC is operating with 50 percent staff, as half its budget went to the state General Fund in 2010, she said. This happened despite a legislature audit that reorganized the office to ensure adequate funding.
“We are back on track now but unfortunately there are only 34 people and three commissioners,” Morita said. “We are authorized a staff of 65.”
The staff is challenged with building capacity in a regulatory environment, and while facing changing technology, differing consumer desires and affordably issues, she said. It regulates companies to provide just and reasonable rates and service, while affording them with an opportunity to a fair return.
“Utilities are not guaranteed rate of return, only an opportunity to gain a fair rate of return,” Morita said.
These companies include island utilities and pipelines, landline and wireless telecommunications outfits, private water and sewer companies, and motor-passenger and property carriers.
There are 38 private water and sewer companies in Hawai‘i, Morita said. All but five of them operate at a loss. Another rise in energy costs and they might be wiped out all together, she said.
“Most are at a break-even point, and the ramifications are that by time it reaches the PUC it may be too late to deal with it,” she said. “We have to look at either increasing rates to allow them some time to recover costs and make the reinvestment.”
As for electric energy generation and transmission, Morita said the there is a shift from individual projects to a systems approach. A more affordable infrastructure would lower costs and maintain efficiency and reliability in the transition to green energy.
“We also can’t just put our blinders on and walk forward without considering the cost impact to consumers,” Morita said.
The business model is changing and liquified natural gas could be a game-changer, but not without an infrastructure investment, she said. The 50-year-old refinery model is struggling with cost and efficiency problems, and most are for sale, she added.
Morita and Ono see potential with LNG as a real solution to lower prices.
A question regarding photovoltaic as an emerging model expressed concern that a low-income or rental property homeowners are not keeping pace because they can’t get financing.
Ono said he is reviewing ideas for a restructured financing arrangement based on electric bill payments rather than a standard income and asset-based loan. He said there should also be more oversight of PV startups when there is no track record.
Incentives for early adoption have passed and the state needs to move into the affordability issue, Ono said.
Consumer Advocate
The Consumer Advocate is often scorned by both industry and the public. The recommendations have far-reaching effect on the economy regarding transportation and utilities.
Ono said his job is to represent the public in PUC matters, with an emphasis on safe, reliable and reasonably priced service to the consumer.
KIUC is unique as a consumer-owned utility on an island without an economy of scale to share the increasing costs of energy and infrastructure improvements, he said. Electric rates on Kaua‘i are around 40 cents per kilowatt, and this is difficult to offset with a small population of rate payers.
“The first issue is, who are consumers?” Ono said. “The second is, what is affordability and what does it mean to have affordable rates?”
The issue is not cut and dry, he said, and it is about weighing the immediate needs with future goals of reducing dependence on foreign oil. When there is $70 million leaving Kaua‘i each year to purchase oil there is a need to get off that dependency, he said.
Ono said resistance to geothermal energy on the Big Island, and to wind and six hydroelectric power plants on Kaua‘i was surprising.
“Who does Consumer Advocate represent when that is the case?” he asked.
It would be easy for the Consumer Advocate to say, “Here are the benefits and here is the opposition,” but that is not his role, Ono said.
“I feel I need to take a position on all these controversial dockets, regardless of community opposition,” he said.
In the end, Ono said his office might approve projects that are more costly than oil is today, which might force a premium to protect the ratepayers of tomorrow.
“I would like to see great community activism and participation to point where we can change the landscape on energy policies and of how policymakers view our energy future,” Ono said. “Get the Consumer Advocate out in the community to see what people want and how to get there.”
Smart meters
After reviewing the smart meter issue, Ono said the opposition could not replicate the research to show there was a real threat.
He said KIUC is keeping the analog meters in place for the transition to record any differences in readings. This is in response to claims that the prices will rise despite the more efficient meters.
The potential for theft or give-away of smart meter data is a valid concern, Ono said. However, the answer is for tighter security and policy to ensure data are protected rather than banning the meters, he said.
Ono said smart meters are and essential technology to encompass the combination of fossil and renewable-based energy in the smart grid of tomorrow. He said it measure usage remotely and in real time for KIUC and the consumer.
He said KIUC garnered federal funding to offset expensive purchase and installation costs to the consumer in the transition.
Yukimura wanted to know how to make the complex choices of trying to make an efficient fossil fuel portfolio and at the same time move into renewable energy.
Morita said Act 99 was specifically written not to subvert resources but to plan for increasing instability in fossil fuel pricing. She said that, through technological breakthroughs, the hope is to reduce fossil fuel use to 60 percent by 2030 — with an eventual goal of 100 percent renewable.
Right now, the price of renewables is high compared to oil, she said. The investment may result in an increase to consumers but it is a way to reduce the dependency on the premium pricing of low sulfur fuel oil and sweet crude.
“This is a huge challenge and we knew that in moving forward the renewables were not going to be cheap,” she said.
Contact Pat Griffin at 639-1019 or patgriffin@hawaiiantel.net for more information on the Oct. 25 LBA breakfast meeting.
• Tom LaVenture, staff writer, can be reached at 245-3681 (ext. 224) or by emailing tlaventure@thegardenisland.com.
