KIUC $75 million GenX Plan

SUBHEAD: False choices with flawed forecast. With KIUC's mindset it is no wonder we are in trouble.

By David Ward on 02 August 2009 for Island Breath -
(http://islandbreath.blogspot.com/2009/08/kiucs-75-million-genx.html)

[IB Publisher's note: Some people say we can meet demand through energy efficiency. Some say we've got to use more renewable energy. Some say new technology will solve the problem. Some haven't said anything yet.]

Image above: Cartoon by Pat Bagley in the Salt Lake Tribune

From http://extras.sltrib.com/bagley Kauai is headed for an electricity crisis. Luckily there will be many opportunities this month to talk story with Randy Hee, KIUC President and CEO, and the KIUC Board of Directors about their plans for our future. Have you read the KIUC Strategic Plan 2008-2023? 2008 KIUC Strategic Plan Everything in there is painted with broad brush strokes. It appears they want to keep everything vague and obscure.

What are they hiding, you ask? My guess: they want to talk-the-talk without having to walk-the-walk.

 "KIUC is committing itself to generate at least 50% of its electricity renewably without burning fossil fuels by 2023. Continuing business as usual is something we all now know is unacceptable. We must stop depending on oil to generate most of our electricity when its price is completely beyond our control and adversely affects our members. It is wrong to continue using oil to generate most of our electricity now that we understand this is causing our planet’s climate to change and destroying the environment our children will one day inherit. We must also seek energy independence by decreasing our appetite forForeign Oil. KIUC’s goal is much more ambitious than the previously established goals. It requires a paradigm shift that will result in a radical restructuring of the way we do business." 

Doesn't that sound wonderful? So bold and confident. What's not to like? The words, without burning fossil fuels, is the big loophole they plan to jump through. They know they can meet this goal tomorrow, not 2023 by just burning biodiesel. And what is so wrong about that? For one, rainforest destruction, diverting food to fuel, too many others to list in this article, but cost is the big one that would impact KIUC . T

he cost of biodiesel will always be higher than the cost of fossil fuel liquids. The cost of both fossil and biofuel liquids will soon be too high for KIUC members to be able to afford to burn in our power plants. So what is the real strategic plan that is plainly obscured? Hold on to your chair. They plan to spend $75,000,000 of our money on a new biodiesel-ready generator for improved efficiency "like a Prius" as Mr. Hee likes to say.

The code name for this project is GenX. The base fuel forecast used in their Integrated Resource Plan (IRP) is listed in Table 1-2, as are the high and low fuel price. Where did these forecast prices come from? These price forecasts are just pie-in-the-sky dreams. The human mind almost seems hard-wired to expect the future to resemble the past. The fast converging crises of peak oil and climate change will lead to a future far different from our past—a future of less energy. Where is the scenario planning for a disruption to our economy?

What if oil becomes suddenly unobtainable? For example, the collapse in the value of the dollar or the grim possibility of war in the oil-producing regions, oil tanker transport choke points, i.e. the Straits of Hormuz (40% of world’s oil exports pass through the Straits). Think of the current political crisis in Iran. There is a mental disconnect at KIUC: a failure to put things together: We are on an oil-usage treadmill that is unsustainable.

Kauai depends almost entirely on foreign sources of fuel for its energy needs. High global demand for oil is linked with Kauai's electricity pricing, which is more that three times the national average. The island is vulnerable to fluctuations in the world oil market and sends millions of dollar each year out of the local economy.

Our current economic difficulties are not going to end, we’re in for a long-term—perhaps even permanent—state of decline. It is an unprecedented discontinuity of historic proportions, as never before has a resource as critical as oil become scarce without sight of a better substitute. To replace the oil we are losing by depletion, investment in renewables would have to be an order of magnitude higher than current spending.

Ken Stokes sounded the alarm on Gen X over two months ago at his blog site SusHI Sustainability in Hawaii and in part 2 and part 3. Here is the 26 May 09 testimony Ken gave to the KIUC Board regarding the load forecast.  

"As a sustainability expert and former strategic planning consultant, I feel compelled to comment on the consultant reports to KIUC throughout the just completed IPR process. I notice that these reports, especially including the "Load Forecast", suggest that we have a near-term generating capacity problem, especially in the "morning peak" hours, that must be quickly addressed. And I am very concerned by your "GenX" proposal to add new fossil-fuel generating capacity to solve this problem.

At the least, events of the past 12 months have dramatically altered our energy outlook and fundamentally changed how we think about fossil fuels and sustainability. I would like to help all Kauaians come up to speed on this new framwork so we can avoid a situation where, to paraphrase Amory Lovins, our biggest problem is our solutions. For openers, you need to look again at the consultant's Load Forecast, which you first saw last October, and which was based on actual trends through 2007.

I find that if this forecast is updated to reflect the actual events of 2008, then any "morning peak" capacity issues move out 4 years, from 2013 to 2017. so, any sense of time pressure should be significantly reduced. Moreover, it is my firm belief that KIUC can help change these results by not simply accepting this forecast, but working to make sure it doesn't come to pass.

For example, our ratepayers need to know that you are contemplating a major expenditure for a fossil-fuel generator strictly on the basis of your consultant's outdated forecast that assumes our per capita electricity demand will continue to increase indefinitely. The fact is, our electricity demand per residential meter has been falling continuously since 2006 and is down 10% in 3 years, according to your monthly energy reports. We can and will do better. We wouldn't want to face false choices with flawed forecast." 

  KIUC has 114 MW of firm, net generating capacity, the all-time peak demand on the KIUC system was 78 MW.

Demand is dropping due to a declining economy which shows no signs of recovery. Demand is dropping because the smart money is going ahead to renewable generation without KIUC. Yet the leadership at KIUC thinks spending $75,000,000 on another fossil / biofuel generator without having invested anything in renewable generation is good planning.  

Per KIUC: Hawaii’s Renewable Portfolio Standard (RPS) mandates cost-effective renewable energy development with goals of 10% renewable net electricity sales by 2010, 15% by 2015, and 20% by 2020. In 2007, KIUC achieved 11.4%. It is important to note that this percentage includes demand side conservation (6.0% of net sales) as well as supply-side generation (5.4% of net sales).

KIUC recognizes that significant additional renewable generation is required to meet the State’s mandate of 20% by 2020, and the co-op is actively working to develop utility-scale renewable projects. The Green Energy LLC biomass plant, which will have a capacity of 6.4 MW, is scheduled to come online in 2010. KIUC is also actively working toward adding other renewable sources of energy,including hydro, wind, solar, and landfill gas (LFG). 

 KIUC would already be failing to meet a state mandate for 10% renewable energy without an accounting crutch because only 5.4% of net energy sales came from renewable energy (refer to conservation credit of 6.0%). And that was from a 100-year-old hydro plant. How does the leadership at KIUC plan to meet the 2020 20% state mandate for renewables?

How is KIUC going to get off the unsustainable oil-usage treadmill? I was at a meeting where CEO Mr. Hee conveyed that all potential small hydro projects were too small for KIUC to waste time on and all large potential hydro projects were too environmentally challenging. With that mindset running our co-op it is no wonder we are in trouble.

 Board of Directors meeting
is scheduled for 1:30 on Tuesday, August 25th. Staff has advised the Board that they may have some documents in front of the Board for approval that relate to Gen-X at this meeting. This will not include any requests for FINAL APPROVAL of this project, but, as this is one of a number of very important items being looked at by our Board, it merits the attention of our member-owners. KIUC 

Quarterly Update: Please join us for an informal discussion about our rate case, new generation options and recent updates. KIUC Main Conference Room, Tuesday, August 4, 2009, 6 p.m.  

KIUC Membership Meeting: Come share chili & rice with the Board and Leadership of KIUC. Learn what's happening at your co-op, ask questions, and let us hear your thoughts. Sunday, August 16, 2009, 4 p.m. to 6 p.m., Kaua'i War Memorial Convention Hall.  

NOTIFICATION OF PUBLIC HEARING 
August 25, 2009, 6 p.m. Wilcox Elementary School Cafeteria