Hawaii rate-payers testify on biofuel surcharge provision

Travis Quezon

HONOLULU—Plans by the state’s electric companies to invest in biodiesel, and pass the investment costs onto its rate payers, lie in the hands of the Public Utilities Commission (PUC) and the testimonies of Hawaii residents.

The electric companies are asking the PUC to approve a biofuel surcharge that would would
add about one-third of a cent per kilowatthour, or about $1.75 to $2.10 per month, to a typical Oahu and Hawaii Island resident’s bill (500 and 600 kilowatthours a month for Hawaii Island and Oahu customers).

Residents throughout the state have raised concerns about the necessity for the surcharge and whether land used for biodiesel should take precedence over agricultural land intended for food.

Companies on the move

Hawaii’s electric companies are hedging their bets on biodiesel as a big part of our islands’ energy future.

This week, Hawaiian Electric Company (HECO) and Pacific Biodiesel, Inc. agreed to a contract that would incorporate 250,000 gallons of locally produced biofiesel into Oahu’s grid. The biodiesel produced by Pacific Biodiesel would head to the new 8-megawatt (MW) Honolulu International Airport Emergency Power Facility that will be operated by Hawaiian Electric.

The three-year contract calls for Pacific Biodiesel to supply biodiesel from locally recycled cooking oil collected and processed at either their Oahu plant or the Big Island Biodiesel refinery in Keaau currently under construction. The biodiesel supply will begin when the airport facility is ready for operations, now targeted for October 2012.

The Honolulu International Airport Emergency Facility is tasked with using four biodiesel-fueled generators to provide 8 MW to Oahu’s grid. The units will be able to contribute power to the grid during normal operations but be isolated to supply power exclusively to the airport during an emergency.

The Pacific Biodiesel contract is one step in a larger objective by HECO, Hawaii Electric Light Company (HELCO), and Maui Electric (MECO) to seek approval from the Public Utilities Commission (PUC) for a biodiesel supply contract with Aina Koa Pono Kau LLC (AKP) for approximately 16 million gallons annually of locally-produced biodiesel over 20 years. The companies hope to cover the costs through the establishment of a Biofuel Surcharge Provision that will apply to customers of HELCO and HECO.

A plea to the PUC

The Commission heard testimony on Docket 2011-0005 on Maui, Hawaii Island, and Oahu this week. The docket is a request by HECO, HELCO, and MECO to create the new biofuel surcharge. The request is being reviewed for approval by the PUC with input from the Consumer Advocate.

To see testimony and all documents pertaining to Docket 2011-0005, click here and enter the docket number into the “Docket Quick Link” box

The Consumer Advocate’s role is to represent the interests of all Hawaii consumers of public utility services by advocating for reliable utility services at reasonable customer costs. The Consumer Advocate is still listening to testimony and analyzing the project and does not yet have an opinion on the biofuel surcharge.

Rate-payers, however, did voice their concerns. In testimony, Kailua-Kona resident Ulrich Bonne said that the biofuel surcharge may not be necessary. Bonne questioned whether or not costs attributed to AKP’s process actually required a rate-payer subsidy.

“Hawaii Island is blessed with sustainable and renewable energy resources: Biomass, wind, solar-PV, and geothermal,” Bonne said. “However, engaging in a substantial effort and energy loss of 30 to 60 percent to make fuel to then convert it to electricity with another 60 to 70 percent loss is a losing proposition when direct and much more efficient ‘biomass-to-electricity’ or ‘geothermal-to-electricity’ conversions are available for stationary power plants.”

Mililani resident Ed Wagner also testified that HECO should not place bets on biodiesel, with rate-payers covering the risks.

“Sometimes stockholders win and sometimes they lose,” Wagner said. “It is time for [HECO] to lose this time and invest their money elsewhere. HECO will not admit that it made some very bad decisions in the past, and the future of a sustainable Hawaii should not be held hostage by HECO or its shareholders.”

Wagner also referred to HECO, through the PUC, creating barriers, eliminating transparency, and being allowed to historically pass unnecessary costs onto the rate-payers.

To read more testimony from Mililani resident Ed Wagner addressed to the Public Utilities Commission, click here

Other concerns raised about the AKP contract revolved around the use of microwaves at the Kau site and the impact of earthquakes on Hawaii Island.

In response to the concerns, AKP engineer Alexander Causey said in testimony: “All the necessary safe guards are scheduled in place to allow personnel to safely work in the vicinity of the equipment, and to reduce any microwave migration to a non-detectable level. I am also aware of the earthquake issues in Kau which apparently has caused concern among the community—the tank foundations will be designed and installed in accordance with the strictest U.S. design standards ...”

Other testifiers suggested efforts be made to recognize potential impacts by the biodiesel facilities through an Environmental Impact Statement and a Cultural Impact Statement.

The commissioners have yet to decide whether or not Hawaii’s rate-payers are responsible for handling another increase in their electric bills.

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