Community benefit packages have been discussed in numerous Hawai`i Public Utilities Commission dockets since 2005. Community benefits packages have been created and implemented by the Public Utilities Commission (PUC), Hawaiian Electric Company (HECO), Hawai`i Electric Light Company (HELCO), Maui Electric Company (MECO), and Kauai Island Utility Cooperative (KIUC), but not by the Gas Company.

This article highlights community benefit packages in eleven PUC proceedings: Campbell Industrial Generation Station, Big Wind, Aina Koa Pono, Green Energy Team, Na Pua Makani, Moloka’i New Energy Partners, Puna Geothermal Venture, Kahana Solar, AES West Kauai Energy Project, PUC Equity Proceeding, and HECO`s ongoing Request for Proposals.

 

Background

Electric utilities buy electricity via Power Purchase Agreements (PPAs)  and buy fuel via Fuel Supply Contracts. To guarantee that ratepayers pay for the purchase, public utilities must have the contract pre-approved by the PUC. To approve the contract, the PUC must determine that the contract is reasonable and in the public interest.

Commercial developers like large flat areas without existing buildings to build their energy projects. These areas tend to be in environmental justice communities, rural areas, and/or agriculturally zoned land. The use of these lands will escalate as Hawai`i rapidly increases it use of renewable energy.

Life of the Land asserts that concentrating new large-scale renewable energy projects in rural areas and offering jobs and money as offsets is highly controversial. The process has undergone great revision in recent years and needs to undergo further revisions in the near future.

Life of the Land further asserts that the community benefits approach has improved over the years, but without upfront transparency, there will be back-end delays as community groups will need to increasingly intervene in PUC proceedings to protect their interests, including their right to say yes, no, or yes with conditions. This is especially true for communities that have traditionally been burdened with undesirable projects.

 

Transformation & Restructuring

Hawaii is undergoing a vast transformation, from a fossil fuel past to a low greenhouse gas emission renewable energy future. This transformation involves the creation of a net-negative greenhouse gas economy, building centralized and distributed renewable energy and energy storage facilities, promoting energy efficiency, electrification of transportation, electrification of buildings, urban retreat from the shorelines, and building structures that can withstand climate change induced extreme weather events.

Incremental change is not acceptable. Hawai`i Revised Statutes (HRS) §225P-5(a) requires that we reduce our in-state greenhouse gas emissions “as quickly as practicable.”

This transformation will fundamentally alter the landscape. How will the new energy infrastructure mesh with other land uses, including but not limited to, affordable housing, agriculture, recreation, tourism, conservation, and open space? Should urban populated centers of influence impose renewable energy infrastructure onto rural communities for the betterment of everyone, or should we all equitably share the costs, benefits, and impacts during this transition?

Obviously, pitting one community against another, leaving some communities behind in the transition, in a lose-lose approach. Instead, we must all move towards the desired clean energy futurey together.

Moving forward in an equitable manner means we must repair previous efforts to concentrate undesirable projects in economically challenged neighborhoods.

Most energy projects are approved and built without serious opposition. But more than a dozen projects have run into community resistance. The number of conflicts is anticipated to increase, based on what has occurred in reaching 40% renewable, and what needs to occur to reach the 100% goal, mindful that the 100% renewable energy future includes electrification of transportation and electrification of buildings.

 

Campbell Industrial Generation Station (2005-07)

The first Community Benefits Package for a Hawai`i energy project was proposed by HECO in 2005.

HECO proposed a new power plant in Campbell Industrial Park on O`ahu. Initially, HECO proposed powering the new generator with ethanol and then decided to use biodiesel instead. Life of the Land intervened in the Public Utilities Commission proceeding; the first of more than ten LOL interventions in bioenergy power purchase agreements and fuel contracts.

Life of the Land submitted testimony on environmental justice. “Environmental justice is the social and legal movement devoted to creating fairness and equality for low-income and majority-minority communities that have been disproportionately impacted by the presence of locally unwanted land uses.”

The Hawai`i Constitution, Article XI, Section 9, states that “each person has the right to a clean and healthful environment, as defined by laws.” Hawai’i has no “environmental justice” statute. Therefore, Hawai’i residents have no statutory right to a healthy environment and no party or entity is required by state law to  consider “environmental justice” issues when making land use decisions.

Eleven of eighteen O`ahu sewage treatment plants, active landfills, and power plants are on the Leeward Coast. There is a suspicious correlation between the over-representation of low-income ethnic groups and locally unwanted land uses.

Concurrent to seeking approval to build a power plant, HECO held community meetings and then filed a second application with the PUC for a Community Benefits Package for the impacted community.

HECO proposed several “give-backs” including a rate reduction for the immediately impacted residential area, construction of a reverse osmosis system to use wastewater instead of fresh water at the power plant, the addition of three air monitoring stations, resumption of HECO’s fish monitoring studies, a longterm financial commitment by HECO to support conservation education to be spearheaded by leaders in the community, a report card, and reaffirmation of HECO’s corporate commitment to provide strong support for the charitable activities in these communities.

The Consumer Advocate provided nine reasons why the rate reduction should be denied.  “There are no residential customers immediately proximate to the new facilities because there are no residences located within Campbell Industrial Park, which is an area that is zoned for intensive industrial uses.”

“The proposed discounts are targeted to only a few communities. This is the only element of the [Community Benefits Package] that is not broadly beneficial to all West Oahu communities. By restricting the discounts to only residential customers in zip code 96707, the residents of the Waianae coast west of Kahe Point do not participate in this element of the [Community Benefits Package] even though they may perceive themselves to also be impacted by the new plant.”

The PUC approved the environmental give-backs but rejected the rate reduction concept. “The commission commends HECO for its innovative, cooperative approach in engaging the local communities in West Oahu and attempting to amicably resolve their concerns related to the CIP Generating Station Project.”

“There is insufficient evidence in the record to show that the ratepayer-funded discounts contemplated by the Residential Rate Reduction Program, would be reasonable, necessary, responsive to the stated concerns of the Community Group, or would result in just and reasonable rates. In this regard, the commission agrees with the Consumer Advocate’s numerous arguments against the program. In particular, the commission finds that the amount, duration, and geographic boundary of the discount, are arbitrary.”

 

Big Wind (2011)

Developers proposed building massive wind farms on Moloka`i and Lana`i to power O`ahu via an undersea transmission cable. Life of the Land joined other groups in actively opposing the project. The proposed Big Wind project lasted from 2007-17.

Maui County submitted comments in 2011 regarding the Big Wind proposal. The county suggested that community benefits could be discussed either in the PUC`s Big Wind proceeding or in MECO`s Integrated Resource Planning proceeding.

“Our Mayor has repeatedly stated that the proposed community benefits of the Big Wind project are too low. One of the problems seems to be the lack of a forum to discuss community benefits before a PPA is signed. Too often, the County now sees PPAs being used by developers to say that although they would like to do more for the affected communities, there is no money to do so because the PPA did not `price in` community benefits. It is all the more frustrating when the PPA terms are being kept secret from the community itself.”

 

Aina Koa Pono (2011-13)

HECO proposed a multi-island Community Benefits Package. A Big Island project would be paid for by both HECO and HELCO ratepayers since HELCO would get the electricity generated to be sold to ratepayers, but HECO would get the renewable energy credit needed to meet its Renewable Portfolio Standard (RPS) requirements.

Aina Koa Pono proposed harvesting more than 300,000 tons of biomass each year to produce up to 24 million gallons of biodiesel and 8 million gallons of bio-gasoline per year to support the sale of 16 million gallons of biodiesel to HELCO. The creation of biofuel from biomass would rely on a novel microwave process. The biomass would be grown in Ka`u on Hawaii Island. No community benefits would flow to the host community in Ka`u.

Life of the Land (LOL) filed a Motion to Intervene that was denied. “LOL has not adequately explained how it will assist the commission in developing a sound record on the issues in the Application.”

Nonetheless, Life of the Land filed comments in the proceeding. “HECO alleges that the PPA is reasonable because O’ahu can’t produce sufficient renewable energy to meet its requirement under the state Renewable Portfolio Standards (`RPS`) provision. According to HECO, the three HEI utilities (HECO, MECO, and HELCO) together can meet the requirement. Since HELCO will exceed the RPS standard and thus together with HECO can meet the state standard, HECO ratepayers should pay HELCO ratepayers for that service.”

The PUC rejected the HELCO-AKP Power Purchase Agreement, citing LOL`s filing. “At least two members of the public have attempted to estimate the total amount of the proposed biofuel subsidy based on electricity sales for the calendar year 2010. See electronic mail comment from Mr. Henry Curtis, Executive Director, Life of the Land… the total amount of the subsidy would be $26.553 million per year); and electronic mail comment from Mr. Roger Dunn…the proposed biofuels tax would raise $26 million per year to subsidize sixteen million gallons of biodiesel).”

 

Green Energy Team (2013)

Kauai Island Utility Cooperative (KIUC) agreed to buy Albizia-based electricity from Green Energy Team (GET) in 2007.  GET and the Hawai`i Department of Hawaiian Home Lands (DHHL) agreed on a Community Benefits Package in 2013. 

Green Energy will lease the land from DHHL for $50,000 per year. The rent includes in-kind improvements to the land, clearing albizia trees and stumps, and maintaining and improving 11 miles of roads, and 8 miles of ditches.

A Community Benefits Package was agreed upon between GET and DHHL. GET will set dedicate 2 percent of the thermal value of the harvested wood to the Project Fund. The Project Fund will be dedicated to support the development of the 267-acre Subsistence Agricultural area, and to prepare potential homesteaders for the opportunity to access those lands, and return the lands to the Department within 5 years. GET will train and employ beneficiaries and native Hawaiians in all aspects of tree plantation and commercial energy production. GET will facilitate mauka access for cultural and recreational purposes, including gaming/hunting.

DHHL released Community Benefits Lessons Learned in 2020. What are “community benefits?” Cash, Jobs, Community services and facilities, Business opportunities, Pre-development, Environmental, and Aesthetics. Benefits are only community benefits if the community has a voice in determining the benefits to be received. There is a need for a clear process for community outreach. There is no standard for reporting, monitoring, and enforcement.

The 6.7 MW GET generator went online in 2015. HEI`s unregulated  subsidiary Pacific Current bought the GET facility in 2021 and renamed it Mahipapa, LLC.

 

Na Pua Makani (2007-23)

HECO issued a request for proposals for new renewable energy projects. First Wind and West Wind Works proposed Kahuku wind generation projects.

HECO accepted the First Wind proposal but rejected the West Wind Works proposal. West Wind Works filed a complaint against HECO at the Public Utilities Commission. In the end, HECO agreed to the project.

West Wind Works proposed a community benefit of $10,000 per turbine per year payable annually over the life of the project, while threatening that community opposition would lead the developer to build additional land and water based wind farms to surround Kahuku.

Champlin Hawaii Wind Holdings acquired the project, completed the regulatory process, and committed $80,000 annually to North O‘ahu Hometown Opportunities Inc. and $20,000 annually to the Lāʻie Community Association.

AES then acquired the project. To save a few bucks, the developer met privately with the city and received permission to move the location of some of the towers right up against Kahuku. AES built eight 568-foot-tall turbines – each taller than the 429-foot First Hawaiian Center, Hawai‘i’s tallest building. It went unchallenged that the wind turbines were the largest in the world and the closest to a residential community.

As an offset, AES pledged $2.5 million in community benefits, plus up to $1.5 million in additional matching funds toward a long-standing community need.

Concern Kahuku residents formed Ku Kia’i Kahuku modelled after the Mauna Kea kia`i (guardians or protectors). Residents primarily from Kahuku peacefully protested the arrival of turbine components from October 13 through November 21, 2019. About 200 people were arrested. Kahuku served as a wake-up call.

Some Kahuku residents have questioned how a group can oppose a project while negotiating benefits in case the project is approved. Furthermore, why La`ie should receive money for a Kahuku project.

 

Moloka’i New Energy Partners (2018)

Sust`ainable Moloka`i raised issues in 2018 regarding a proposed energy project proposed for Moloka`i. “All PPA’s, by their nature, are context and project specific and we welcome a community engagement process to negotiate the specific text for this and any future PPAs for renewable energy on the island. It is our recommendation that given the scale of this project and the potential for it to have significant long-term impacts, the community clauses should be well vetted prior to any PPA being negotiated. There are good examples of how other countries are ensuring that community engagement and benefit sharing are a key component of energy procurement.”

 

Puna Geothermal Venture (2019-21)

HELCO filed an application with the PUC to increase the PGV output from 38 MW to 46 MW in 2019. The following year, PGV described their community benefits package. PGV gave $250,000 to Hawaii organizations over a period of 30 years. PGV awarded college scholarships of $500 up to $1,000 to high school graduates for the past 20 years. PGV has paid more than $15 million in royalties since the geothermal plant went online in 1993: the State gets 50%, the County gets 20%, and OHA gets 20%. The county has received $4M: $1M for relocations and $3M for community projects including two Hele On buses, improving the Pahoa Transfer Station, and repaving roads.

 

Kahana Solar (2020-)

Innergex proposed the Kahana Solar Project located on Maui Land & Pine owned land in the Napili-Honokōwai region of West Maui. The Project will consist of a 20-megawatt ground mounted solar photovoltaic system coupled with a battery energy storage system.

The PUC proceeding started in 2020. The four parties were: MECO, the Consumer Advocate, Kahana Solar, and West Maui Preservation Association. The PUC suggested mediation. After extensive negotiations, a settlement agreement was signed.  Most of the jobs would go to locals paid prevailing wages.

Kahana Solar would donate $40,000 annually to West Maui schools, cultural foundations, and/or preservation groups. The allocation will be at the discretion of Kahana Solar consistent with its corporate vision, values, policies, and sustainability requirements.

Kahana Solar would also donate $15,000 annually to the Hawaii Community Foundation (HCF). HCF will establish and administer a West Maui grantmaking program. HCF would distribute these funds at its sole discretion.

 

AES West Kauai Energy Project (2020-)

KIUC asserted in September 2021 that the AES West Kauai Energy Project (WKEP) would provide island-wide and state-wide benefits including significant reduction in fossil fuel use, reduction in GHG emissions and other air pollutants, and it would increase reliability. “There are numerous benefits that the West Kauai community would be the direct or primary beneficiary,” including increased reliability, decreased outages, rehabilitation of the existing reservoirs and ditch infrastructure to support agricultural growth, increased water supply for firefighting capabilities, assist in mitigating flood, enhanced fishing opportunities, and the project would provide employment opportunities.

 

PUC Equity Proceeding (2022-)

Energy equity refers to the goal of achieving equity in both the social and economic participation in the energy system, while also remediating social, economic, and health burdens on those historically harmed by the energy system.

The PUC opened a proceeding to “better integrate equity and justice considerations across Commission proceedings and the Commission’s work more broadly, including in its role overseeing and regulating the functions of public utilities.”

“The Hawaii Public Utilities Commission strives… to ensure that existing energy inequity is not exacerbated or overlooked during the renewable energy transition.”

Life of the Land asserts that addressing equity issues is critical during the renewable energy transition. Financial equity focuses on the ability of economically challenged communities to be able to afford electricity. Non-financial equity issues involve externalities and community impacts.

 

HECO`s Request For Proposals (2023-)

HECO is issuing a Request for Proposals for new energy projects. Submissions must include a Community Benefit Package (CBP). HECO proposed an annual minimum commitment of $3,000 per MW, with this minimum capped at $200,000 per year. Proposers would receive additional points if they committed to larger community benefits packages and/or offered other community benefits, such as provision for using local labor and paying prevailing wages, creating jobs, or improving infrastructure.

The PUC issued orders last year that rejected the cap since it could provide an advantage for larger projects. The PUC believes that consultation with the host community is central in designing a community benefits package that aptly addresses the needs specific to host communities. Further, the Commission finds that the appropriate scale of the CBP is dependent on expected community impacts. The PUC also noted the potential challenges with directing community benefits strictly based on census tracts since the impacts of projects are likely to stretch beyond census tract boundaries in certain circumstances.

HECO will determine project winners and losers based on an algorithm. The price-related criteria will account for 60% of the total score and non-price-related criteria will account for the other 40%. The non-price criteria contain eleven sub-criteria, including community outreach, environmental compliance, carbon emissions, cultural resource impacts, and land use.  each winning solution will result in a power purchase agreement being filed with the PUC. Concerned entities can intervene in power purchase agreement proceedings.

According to the HECO RFPs, the Community Outreach Plan shall include the project description, maps, identification of stakeholders, community issues and concerns, community sentiment, project benefits, required government approvals, future public hearings and public comment periods, the  development process, and a community benefits package.

The community benefits package shall documentation of input collection process to define Host Community needs, the proposed distribution of funds, intended beneficiaries of the funds, recipients,  areas in which the funds will be directed, actions and programs to address community needs, creating local jobs, improving community infrastructure, eligible non-profit organization to serve as the administrator for the duration of the contract term, a communications plan, and a schedule for monthly Project status updates.

The utility will determine project winners and losers by scoring each submittal using a proprietary (black box) model. HECO will not share how its algorithms determine the selection of winners and losers.

The ability to examine scores between different projects in different proceedings may or may not be possible after a power purchase application has been filed with the PUC and intervenors have been allowed in by the PUC, whereas assessing why some proposed projects were accepted while others were rejected will not be possible.

Only HECO and the PUC will know whether the scores given for Community Outreach altered the selection of winners and losers.

 

Needed Adjustments

Life of the Land reaffirms that we must rapidly move to a low greenhouse gas emission renewable energy future that promotes community values. The RFP process for determining project winners and losers, and for creating and evaluating community benefits packages, needs to be transparent, accessible, and inclusive. Resolving the issues upfront will save time and money.