Life of the Land filed
its Statement of Position with the Public Utilities Commission on July 10, 2017. This is a web-based version,
excluding many footnotes, and formatting it in a web-friendly version.
its Statement of Position with the Public Utilities Commission on July 10, 2017. This is a web-based version,
excluding many footnotes, and formatting it in a web-friendly version.
This proceeding involves a Hawai’i
Electric Light Company (HELCO) proposed Power Purchase Agreement (PPA) with Hu
Honua Bioenergy LLC which was filed with the Hawai’i Public Utilities
Commission. After reviewing the filings in this proceeding. Life of the Land
(LOL) believes this project is not in the public interest and should be
rejected
Electric Light Company (HELCO) proposed Power Purchase Agreement (PPA) with Hu
Honua Bioenergy LLC which was filed with the Hawai’i Public Utilities
Commission. After reviewing the filings in this proceeding. Life of the Land
(LOL) believes this project is not in the public interest and should be
rejected
I. Hu Honua’s Proposal Fails to Fully
Address Issues of Climate Change and the Environmental Impact of their
Proposed Operations.
Address Issues of Climate Change and the Environmental Impact of their
Proposed Operations.
The first two sentences of SB559 SD1
HD2 CD1, which Governor Ige signed into law as Act 32, read: “The
legislature finds that not only is climate change real, but it is the
overriding challenge of the 21st century and one of the priority issues of the
senate. Climate change poses immediate and long-term threats to the State’s
economy, sustainability, security, and way of life.”
HD2 CD1, which Governor Ige signed into law as Act 32, read: “The
legislature finds that not only is climate change real, but it is the
overriding challenge of the 21st century and one of the priority issues of the
senate. Climate change poses immediate and long-term threats to the State’s
economy, sustainability, security, and way of life.”
Notwithstanding this clear statement
of State policy, Hu Honua 1) declined to discuss the environmental impact of its
operations, 2) made unsupported “carbon” claims, or 3) simply refused to answer
Information Requests on the subject.
of State policy, Hu Honua 1) declined to discuss the environmental impact of its
operations, 2) made unsupported “carbon” claims, or 3) simply refused to answer
Information Requests on the subject.
Hawaiian Electric Industries CEO
Constance Lau spoke at the
VERGE Hawai’i 2017 conference. (Lau`s comment started at about 41 minutes 57 seconds).
Constance Lau spoke at the
VERGE Hawai’i 2017 conference. (Lau`s comment started at about 41 minutes 57 seconds).
“Everybody is still moving in the same
directions, that they were moving in, and particularly for the electric utility
industry, that’s been towards much more renewables, and it all started with
climate change, and it’s still is about climate change, but frankly, there are
so many forces that are actually making it economically right, to have
renewables.”
directions, that they were moving in, and particularly for the electric utility
industry, that’s been towards much more renewables, and it all started with
climate change, and it’s still is about climate change, but frankly, there are
so many forces that are actually making it economically right, to have
renewables.”
When community members asked the Hu
Honua team about their statements on climate change at a community meeting in
Kukuihaele Village, on June 19, 2017, one member, Rob Robinson told the
community, “We are carbon-neutral.” Another team member, Kevin “KJ” Johnson
qualified this to, “In our case…it ends up being carbon neutral.” No details
were offered aside from an assertion that they would plant trees that would be
harvested and replanted every seven (7) years. No discussion of the carbon
costs of transportation or the harvesting operation itself was discussed.
Honua team about their statements on climate change at a community meeting in
Kukuihaele Village, on June 19, 2017, one member, Rob Robinson told the
community, “We are carbon-neutral.” Another team member, Kevin “KJ” Johnson
qualified this to, “In our case…it ends up being carbon neutral.” No details
were offered aside from an assertion that they would plant trees that would be
harvested and replanted every seven (7) years. No discussion of the carbon
costs of transportation or the harvesting operation itself was discussed.
When LOL subsequently submitted Information Requests on June 29,
2017, including whether, “In Hu Honua’s view, is Climate Change a public
interest issue?” and “In Hu Honua’s view, is avoiding greenhouse gas emissions
a public interest issue?”, Hu Honua responded on July 7, 2017 that it objected
to each request: “It is not relevant or material to Issues Nos. 2.a.i or
2.b, which are the only issues for which the Commission authorized LOL’s
participation.”
2017, including whether, “In Hu Honua’s view, is Climate Change a public
interest issue?” and “In Hu Honua’s view, is avoiding greenhouse gas emissions
a public interest issue?”, Hu Honua responded on July 7, 2017 that it objected
to each request: “It is not relevant or material to Issues Nos. 2.a.i or
2.b, which are the only issues for which the Commission authorized LOL’s
participation.”
In reality, the issue of climate
change is embedded in both issues the Commission assigned to LOL to consider:
change is embedded in both issues the Commission assigned to LOL to consider:
Issue
2(a)(1): ”Whether the energy price components in the Amended and Restated
PPA properly reflect the cost of biomass fuel supply.” According to HECO’s
Project Economic and Bill Impact Analysis, the benefits of the project include
reductions in emissions and increases in energy security, but “the benefits
from these other factors have not been explicitly quantified or monetized in
the calculation of the Project’s benefit-to-cost (B/C) ratios but nonetheless
are important considerations in the determination of the overall viability of the
project.” The cost of biofuel includes both financial and non-financial
components, which Hu Honua has failed to adequately address.
2(a)(1): ”Whether the energy price components in the Amended and Restated
PPA properly reflect the cost of biomass fuel supply.” According to HECO’s
Project Economic and Bill Impact Analysis, the benefits of the project include
reductions in emissions and increases in energy security, but “the benefits
from these other factors have not been explicitly quantified or monetized in
the calculation of the Project’s benefit-to-cost (B/C) ratios but nonetheless
are important considerations in the determination of the overall viability of the
project.” The cost of biofuel includes both financial and non-financial
components, which Hu Honua has failed to adequately address.
Issue 2(b): “Whether HELCO’s purchase
power arrangements under the Amended and Restated PPA are prudent and in the
public interest.” The issue of climate change is of major public interest to the
State and to the world, except, apparently, to Hu Honua.
power arrangements under the Amended and Restated PPA are prudent and in the
public interest.” The issue of climate change is of major public interest to the
State and to the world, except, apparently, to Hu Honua.
Contrary to Hu Honua’s contentions, it
is beyond doubt that LOL can, and has, raised climate change issues and
greenhouse gas emission issues in previous Commission proceedings. In fact,
this proceeding before the Commission is the ninth regulatory action dealing with Hawaiian Electric
Companies bioenergy applications in which LOL is the only party or participant
that represents environmental and community interests.
is beyond doubt that LOL can, and has, raised climate change issues and
greenhouse gas emission issues in previous Commission proceedings. In fact,
this proceeding before the Commission is the ninth regulatory action dealing with Hawaiian Electric
Companies bioenergy applications in which LOL is the only party or participant
that represents environmental and community interests.
When HECO filed an application for the
Campbell Industrial Park Combustion Turbine 1 with the Commission, Docket No.
2005-0145, LOL was a party, and was permitted to cross-examine a number of HECO
witnesses on climate change. Several HECO witnesses testified to the effect
that “Aren’t there two sides to this question?” and “It’s not my kuleana,” and
“I`m not really up on this issue.” However, one of HECO’s witnesses,
Senior Vice President for Public Affairs for Hawaiian Electric Company, Robbie
Aim, conceded as follows:
Campbell Industrial Park Combustion Turbine 1 with the Commission, Docket No.
2005-0145, LOL was a party, and was permitted to cross-examine a number of HECO
witnesses on climate change. Several HECO witnesses testified to the effect
that “Aren’t there two sides to this question?” and “It’s not my kuleana,” and
“I`m not really up on this issue.” However, one of HECO’s witnesses,
Senior Vice President for Public Affairs for Hawaiian Electric Company, Robbie
Aim, conceded as follows:
“You know, Hawaiian Electric does not
have the resources to conduct independent science, scientific research on the
issues related to global warming. But like you, we’ve seen the growing body
of scientific evidence which tells us the following: That human activity has
caused an increase in global warming, that the human activity which has the
strongest impact on this increase is the burning of fossil fuel, and that
global warming has associated climate change impacts. We accept — you know,
even though we cannot independently, scientifically verify that, we accept this
as an operating premise for our actions and we accept our need to be part of the
solution.”
have the resources to conduct independent science, scientific research on the
issues related to global warming. But like you, we’ve seen the growing body
of scientific evidence which tells us the following: That human activity has
caused an increase in global warming, that the human activity which has the
strongest impact on this increase is the burning of fossil fuel, and that
global warming has associated climate change impacts. We accept — you know,
even though we cannot independently, scientifically verify that, we accept this
as an operating premise for our actions and we accept our need to be part of the
solution.”
Also in that Docket, LOL sponsored one
of the world’s pre-eminent scientists questioning the role of biofuels. Dr. Tad Patzek’’ has been a consultant and expert witness for the
California Energy Commission, General Electric, Inc., and has testified before
Congress. In testimony before the Commission, Dr. Patzek had this to say:
of the world’s pre-eminent scientists questioning the role of biofuels. Dr. Tad Patzek’’ has been a consultant and expert witness for the
California Energy Commission, General Electric, Inc., and has testified before
Congress. In testimony before the Commission, Dr. Patzek had this to say:
“People, especially the so-called
pure environmentalists, are loath to accept the fact that what they think
religiously — that is, green is good — is not necessarily so. And they really
have a hard time believing or accepting or- thinking that not everything that
is green is in fact good.”
pure environmentalists, are loath to accept the fact that what they think
religiously — that is, green is good — is not necessarily so. And they really
have a hard time believing or accepting or- thinking that not everything that
is green is in fact good.”
“One must calculate the C02 emissions
over the life cycle of the Corn-Ethanol System. Emissions of other gases,
mostly nitrous oxide N20, ammonia NH3, and methane CH4, must be converted to
equivalent C02 emissions using their relative potencies in creating the
greenhouse effect. The methodology for determining equivalent C02 emissions
must include all emission sources.”
over the life cycle of the Corn-Ethanol System. Emissions of other gases,
mostly nitrous oxide N20, ammonia NH3, and methane CH4, must be converted to
equivalent C02 emissions using their relative potencies in creating the
greenhouse effect. The methodology for determining equivalent C02 emissions
must include all emission sources.”
For ethanol production, Patzek listed
in descending order, the equivalent C02 emissions from 18 different aspects
of production, use, and disposal. The top three were (1) use in a power plant,
(2) Humus Oxidation of the soil, and (3) Nitrogen as Ammonia Fertilizer. The
fifth element to be considered was transportation, which Hu Honua ignores.
in descending order, the equivalent C02 emissions from 18 different aspects
of production, use, and disposal. The top three were (1) use in a power plant,
(2) Humus Oxidation of the soil, and (3) Nitrogen as Ammonia Fertilizer. The
fifth element to be considered was transportation, which Hu Honua ignores.
Cognizant of the fact that the
number of bat takings is a central issue in the pending Habitat Conservation
Plan (HCP) for the Na Pua Makani wind generation facility in Kahuku, LOT also
asked Hu Honua questions about potential impacts to endangered and threatened
species. Despite Hawaiian Electric Industries CEO Constance Lau’s comments to
the VERGE Hawai’i 2017 conference, that the community must have a voice to
express concerns such as bird kills, “They are all really important issues that must be on the
table.” Hu Honua refused to respond to LOL’s questions regarding whether bats
or other endangered species would be impacted by proposed logging operations,
stating it is beyond the scope of LOL’s participation in this docket.
number of bat takings is a central issue in the pending Habitat Conservation
Plan (HCP) for the Na Pua Makani wind generation facility in Kahuku, LOT also
asked Hu Honua questions about potential impacts to endangered and threatened
species. Despite Hawaiian Electric Industries CEO Constance Lau’s comments to
the VERGE Hawai’i 2017 conference, that the community must have a voice to
express concerns such as bird kills, “They are all really important issues that must be on the
table.” Hu Honua refused to respond to LOL’s questions regarding whether bats
or other endangered species would be impacted by proposed logging operations,
stating it is beyond the scope of LOL’s participation in this docket.
To summarize: Hu Honua plans to chop
down existing trees for seven years, and then to rely on a rotational system of
growing new trees and then chopping them down. Omitting any discussion of the
fossil fuels used in the mechanization of growing, chopping, chipping, and
transport, Hu Honua alleges that this operation is carbon neutral. In the
absence of hard facts, however, the only thing supporting Hu Honua’s analysis is
an audacious statement that amounts to, “Trust us, we’re green.”
down existing trees for seven years, and then to rely on a rotational system of
growing new trees and then chopping them down. Omitting any discussion of the
fossil fuels used in the mechanization of growing, chopping, chipping, and
transport, Hu Honua alleges that this operation is carbon neutral. In the
absence of hard facts, however, the only thing supporting Hu Honua’s analysis is
an audacious statement that amounts to, “Trust us, we’re green.”
Hu Honua also plans to supplement tree
harvesting with other not clearly identified biomass supplies. Again, these are
assertions of carbon neutrality without supporting facts or analysis. Hu
Honua’s attempts to avoid meaningfully addressing climate change and the
environmental impacts of their proposed operations with absurd statements such
as “the Commission will not allow LOL to ask questions relevant to these
issues”, speaks volumes.
harvesting with other not clearly identified biomass supplies. Again, these are
assertions of carbon neutrality without supporting facts or analysis. Hu
Honua’s attempts to avoid meaningfully addressing climate change and the
environmental impacts of their proposed operations with absurd statements such
as “the Commission will not allow LOL to ask questions relevant to these
issues”, speaks volumes.
II, The Pricing of Hu Honua’s Proposal
is not in the Public Interest and its Economic Analysis is Incomplete.
is not in the Public Interest and its Economic Analysis is Incomplete.
In the face of dramatically falling
prices across the globe, Hu Honua has proposed a 30- year contract, running
from 2019 to 2048. Hu Honua is asking to be paid over 20 cents per
kilowatt-hour in 2018, which would then rise to over 32 cents per kilowatt-hour
in 2048. Unidentified additional costs to cover transmission, distribution, and
administration will then be tacked on by HELCO.
prices across the globe, Hu Honua has proposed a 30- year contract, running
from 2019 to 2048. Hu Honua is asking to be paid over 20 cents per
kilowatt-hour in 2018, which would then rise to over 32 cents per kilowatt-hour
in 2048. Unidentified additional costs to cover transmission, distribution, and
administration will then be tacked on by HELCO.
Compare the above with the following
examples of lower priced proposals: the Hawai’i Public Utilities Commission approved
the KIUC-AES Lawai Solar, LLC Power Purchase Agreement for solar-based
electricity, at 11.08 cents per kWh, in Docket No. 2017- 0018, and approved the
KIUC-SolarCity Corporation solar-plus-battery Power Purchase Agreement at 14.5
cents per kWh.
examples of lower priced proposals: the Hawai’i Public Utilities Commission approved
the KIUC-AES Lawai Solar, LLC Power Purchase Agreement for solar-based
electricity, at 11.08 cents per kWh, in Docket No. 2017- 0018, and approved the
KIUC-SolarCity Corporation solar-plus-battery Power Purchase Agreement at 14.5
cents per kWh.
The Commission also approved a waiver from competitive bidding
for the proposed West Loch PV Project, stating, “the Equivalent Levelized
Energy Payment for the Project, as well as the PPA equivalent energy price, is
estimated by HECO and the Consumer Advocate to be 9.56 cents per kilowatt-hour
(kWh).”
for the proposed West Loch PV Project, stating, “the Equivalent Levelized
Energy Payment for the Project, as well as the PPA equivalent energy price, is
estimated by HECO and the Consumer Advocate to be 9.56 cents per kilowatt-hour
(kWh).”
With respect to the West Lock Project, the Commission took notice
of Tucson Electric Power’s solar-plus storage project priced at 4.5 cents per
kWh.
of Tucson Electric Power’s solar-plus storage project priced at 4.5 cents per
kWh.
Moreover, Hu Honua’s cost analysis
included “Comparing HELCO Fossil Fuel Units to Hu Honua Bioenergy” whereby they
asserted Hu Honua’s operations would save Big Island ratepayers some $600,000,000.00
starting in 2040. These numbers, however, are based on the high cost of biomass
relative to the higher cost of fossil fuel, despite the fact that
HELCO has asserted it will not be selling fossil-fuel-based electricity by the
2040s. When LOL questioned Hu Honua on these issues, Hu Honua refused to
answer, stating that it was beyond the scope of what LOL was permitted to
address in this proceeding.
included “Comparing HELCO Fossil Fuel Units to Hu Honua Bioenergy” whereby they
asserted Hu Honua’s operations would save Big Island ratepayers some $600,000,000.00
starting in 2040. These numbers, however, are based on the high cost of biomass
relative to the higher cost of fossil fuel, despite the fact that
HELCO has asserted it will not be selling fossil-fuel-based electricity by the
2040s. When LOL questioned Hu Honua on these issues, Hu Honua refused to
answer, stating that it was beyond the scope of what LOL was permitted to
address in this proceeding.
The question for Big Island ratepayers
and for the Commission is: why should a 30-year contract lock in high prices in
the middle of a turbulent transformational period in which the price of firm
baseload solar plus storage is sharply decreasing, and the power and duration
of storage is rapidly increasing?
and for the Commission is: why should a 30-year contract lock in high prices in
the middle of a turbulent transformational period in which the price of firm
baseload solar plus storage is sharply decreasing, and the power and duration
of storage is rapidly increasing?
In addition to the dramatic and
continuing downward trend in the cost of electricity generated by solar and
solar-plus-battery systems, there are other advances being made which will
fundamentally alter the reality of today.
continuing downward trend in the cost of electricity generated by solar and
solar-plus-battery systems, there are other advances being made which will
fundamentally alter the reality of today.
The Commission has an open proceeding
on Demand Response, whereby utilities can rely on customer-based energy
efficiency, renewable energy, and energy storage systems, to displace the need
for centralized firm power, while saving money for all ratepayers. The “demand
response” approach is poised to change everything. Hawai’i is at the leading
edge of a vast energy-based technological revolution. What will the cost and
environmental impact trajectories look like in the second and third decade of Hu
Honua’s fixed-price, cost-escalating proposal?
on Demand Response, whereby utilities can rely on customer-based energy
efficiency, renewable energy, and energy storage systems, to displace the need
for centralized firm power, while saving money for all ratepayers. The “demand
response” approach is poised to change everything. Hawai’i is at the leading
edge of a vast energy-based technological revolution. What will the cost and
environmental impact trajectories look like in the second and third decade of Hu
Honua’s fixed-price, cost-escalating proposal?
An additional weakness in Hu Honua’s
proposal is its analysis of economic benefits. Hu Honua stated that one
economic benefit of the high-cost electricity they propose to provide would be
job-creation: “Hu Honua operations are projected to generate about 190 jobs on
the Big Island, including approximately 30 jobs at the power plant, 70 forest jobs,
20 trucking jobs, and 70 indirect jobs. … Earnings from these jobs are
expected to support 430 residents living in about 190 homes.”
proposal is its analysis of economic benefits. Hu Honua stated that one
economic benefit of the high-cost electricity they propose to provide would be
job-creation: “Hu Honua operations are projected to generate about 190 jobs on
the Big Island, including approximately 30 jobs at the power plant, 70 forest jobs,
20 trucking jobs, and 70 indirect jobs. … Earnings from these jobs are
expected to support 430 residents living in about 190 homes.”
When LOL asked a
series of questions concerning Hu Honua’s job creation claims, including an
analysis of the number of people employed in different potential energy futures,
like biomass relative to solar plus battery, Hu Honua responded that it was none
of our business and beyond the scope of what LOL was permitted to address in
this proceeding.
series of questions concerning Hu Honua’s job creation claims, including an
analysis of the number of people employed in different potential energy futures,
like biomass relative to solar plus battery, Hu Honua responded that it was none
of our business and beyond the scope of what LOL was permitted to address in
this proceeding.
Hu Honua then suggested that IF it decided to do something in
the future (but to which it was not committing, merely speculating that they
are capable of doing), then the Big Island will obtain additional benefits. “If
Hu Honua uses Albizia trees”, Hu Honua opines, this “would have a value to the
community.” This “value” was not defined by when it would potentially be
implemented nor was it quantified.
the future (but to which it was not committing, merely speculating that they
are capable of doing), then the Big Island will obtain additional benefits. “If
Hu Honua uses Albizia trees”, Hu Honua opines, this “would have a value to the
community.” This “value” was not defined by when it would potentially be
implemented nor was it quantified.
Hu Honua’s pricing is not reasonable
nor in the public interest and its economic benefit analysis is incomplete
nor in the public interest and its economic benefit analysis is incomplete
III. Conclusion
Hu Honua’s offer of pricing is
unreasonable and not in the public interest. In light of steadily-decreasing
costs for other energy sources, Hu Honua’s costs are exorbitant and escalating.
Even if the proposed pricing could be somehow deemed reasonable, Hu Honua’s
environmental-impact discussion is incomplete and its claim of
“carbon-neutrality” is unsupported. Furthermore, Hu Honua’s approach is in
violation of the Hawai’i Revised Statutes, §5-7.5, the Aloha Spirit, and
displays a disturbing disregard for community concerns. The Commission should
reject Hu Honua’s proposal.
unreasonable and not in the public interest. In light of steadily-decreasing
costs for other energy sources, Hu Honua’s costs are exorbitant and escalating.
Even if the proposed pricing could be somehow deemed reasonable, Hu Honua’s
environmental-impact discussion is incomplete and its claim of
“carbon-neutrality” is unsupported. Furthermore, Hu Honua’s approach is in
violation of the Hawai’i Revised Statutes, §5-7.5, the Aloha Spirit, and
displays a disturbing disregard for community concerns. The Commission should
reject Hu Honua’s proposal.
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