Categorized | Business, Energy, Featured

PUC hears resounding ‘No’ from island rate payers

HELCO president Jay Ignacio speaks to the state Public Utilities Commission in Kona. (Karin Stanton | Hawaii 24/7)

Karin Stanton | Hawaii 24/7 Editor

Big Island residents appear to be against a HELCO rate increase and a HELCO – HECO – Aina Koa Pono partnership.

The three members of the Public Utilities Commission heard from dozens of residents who urged them to reject a requested 4.2 percent rate hike and a 20-year deal between the electric companies and a biodiesel project in Ka‘u.

About 100 residents showed up Tuesday evening in Kona – along with a similar number at a Monday meeting in Hilo – and heard Jay Ignacio, Hawaiian Electric Light Co. president, explain that the utility needed the 4.2 percent increase to cover the costs of system upgrades, bolstering renewable energy technologies and grid maintenance, including tree trimming.

The proposed increase would net HELCO nearly $20 million and add $8.32 to the typical 500-kilowatt-hour household monthly bill.

In Kona, more than one dozen people testified. All but one were strongly opposed to the rate increase, telling the commission their efforts to cut back on energy use would be negated by the hike. Many also said they believe HELCO should pay for its own maintenance, upkeep and improvements, just like any other business.

“HELCO has made heavy profits for quite some time now,” Wayne Reese said. “The company should be able to fund maintenance out of their current budget. They’ve been doing that all along. Why a rate increase is needed to continue ongoing maintenance is beyond me.”

Albert Prados, manager of the Fairway Villas at Waikoloa Beach Resort, explained how his family shuts off everything except the refrigerator every night between 10 p.m. and 6 a.m. in an effort to reduce his bill.

“Last month, with these cutbacks, I was only able to save 27 cents per day,” he said. “Every effort I’ve made will be immediately taken away. That $8 means a lot.”

Rep. Denny Coffman, chairman of the House Committee on Energy & Environmental Protection, also spoke on behalf of HELCO customers.

“I don’t see anything that speaks to rate payer benefits,” he said. “This grid has not grown. It doesn’t make sense.”

Several others questioned whether the power company’s management was effective and efficient, and whether the top personnel should be drawing $1.5 million salaries.

Dusty Tubbs said “The problem is the business is being run as a failure.”

He noted that if he invests in a company and the stocks go down, “I lose money. They don’t get to raise the price of the stock because they’re losing money. Let’s replace the management.”

Sen. Malama Solomon testified that the average household pays $217 a month for power.

She presented the commission with a 1,200-name petition, which called for rejecting the rate hike and also rescinding two agreements signed by former Gov. Linda Lingle – one that passes on utility business costs to rate payers and one that spells out a state-federal partnership to development natural energy resources.

Jeff Ono, executive director of the state Division of Consumer Advocacy, said he and his staff would evaluate the proposal and make a recommendation to the board.

The second half of the meeting focused on the HELCO and HECO contract with Aina Koa Pono.

According to the request before the PUC, Aina Koa’s planned refinery would supply HELCO with 16 million gallons of biodiesel each year for 20 years to fuel its Keahole power plant.

HELCO contends the contract would necessitate a biofuel surcharge for customers to offset the costs associated with production, transportation and storage of the biodiesel. The average rate payer would be hit with an additional 84 cents to $1 per month.

While the companies have not publicly announced the price of the biofuel spelled out in the contract, HELCO does admit the biofuel is currently more expensive than oil, but will eventually be cheaper as oil prices rise. HELCO estimates consumers could save up to $500 million over the two decades.

HELCO bills the plan as an significant development in advancing alternative energy sources.

The PUC nixed a similar contract last year ago, citing the “excessive” high cost of the fuel.

Opponents don’t want to finance an unproven project that doesn’t benefit them and object to a 20-year contract; supporters tout the economic boost it will give Ka‘u and the additional source of alternative energy.

Ono, the state consumer advocate, said while the application requests charging customers on the Big Island and Oahu, the PUC could amend it to charge only Oahu residents.

“I’m interested to know if your views of the biodiesel supply contract would change if maybe all of the costs were borne by Oahu ratepayers and none of it by Big Island ratepayers,” Ono said.

Aina Koa Pono Partner Chris Eldridge clarified that the surcharge is not intended to fund the project development and won’t be charged until the facility is completed.

He said the company had learned from errors made during its last year’s application process and apologized.

“We realize we made a number of mistakes in addressing the community last time,” Eldridge said. “We’ll do a much better job in the future.”

Dick Matsumoto urged the commissioners to reject the long-term, fixed-rate contract.

“The public should not be charged a surcharge to support a private enterprise,” Matsumoto said. “Signing a long-term contract is unreasonable and not helping our electricity bills. We will pay more and it is not a proven commodity. When the biofuel is ready to be purchased, we will see if it’s cheaper. They take all the risk.”

Farmer Richard Ha questioned the Aina Koa Pono technology.

“This process uses more energy than it makes,” he said. “They don’t need a subsidy from us. They should all be billionaires.”

One person from Ka‘u spoke in support of the proposal.

The deadline to submit public testimony to the PUC is Nov. 30. Letters can be emailed to hawaii.puc@hawaii.gov. or mailed to 465 South King Street, #103, Honolulu, HI 96813.

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