Make HEI pay us for going off grid

SOURCE: Ed Wagner (ed.j.wagner@gmail.com)
SUBHEAD: The Hawaii electric monopoly is a creation of our state government and could be changed legislatively.

By Tom Brandt on 23 September 2015 in Island Breath -
(http://islandbreath.blogspot.com/2015/09/make-hei-pay-us-for-going-off-grid.html)


Image above: Robin Hood and his men stop the wealthy Bishop of Hereford. Illustration by Howard Davie. From (http://mythfolklore.blogspot.com/2014/05/robin-hood-bishop-of-hereford.html).

[IB Publisher's note: This article wsa derived from a email interchange between Tom Brandt and Ed Wagner (among others). We have shortened and edited the piece hoping to make it more understandable to an outside reader.]

I am aware and agree that geothermal already is a viable, cost-effective, and POSSIBLY long-term environmentally-friendly source of at least utility-scale electricity. This might be by either directly  creating steam to power generators, or indirectly (via hydrogen production)  in many locations... possibly including Hawaii.

But, in my mind, the question remains unanswered whether or not the investment required to scale up geothermal to a level comparable to that required in the past to provide ALL of Hawaii with utility-scale fossil fuel power versus the investment required  to provide ALL of Hawaii with conventional utility-scale solar, wind, bio-mass renewable power is  more cost-effective.

It is not clear that geothermal is more environmentally "friendly", or customer friendly when considering emerging generation and storage techs for home solar voltaic.

These new and less costly stand alone solutions  will only ensure that the "utility death spiral" expected by many (including former US Energy Secy Steven Chu) is just a matter of "when" rather than "if".

These technologies may also promise increasing customer independence from ANY centralized utility-scale source or sources of not only electricity, but also ground and air transportation fuel.


Here in Hawaii we have a power generating monopoly. Hawaiian Electric Industries (HEI) now includes the Hawaiian Electric Company (HECO) on Oahu, the Maui Electric Company and the Hawaiian Electric Company on the Big Island. Only the Kauai Island Utility Cooperative (KIUC) is not part of HEI. Presently HEI is the target of a takeover by utility giant by NextEra. This does not bode well for renewable energy independence or lower utility costs in Hawaii.

Having said that, I realize that no one has a crystal ball capable of factoring in ALL of the many variables that have to be considered as we try to develop consensus on an optimal path forward. It is uncertain which combination of technologies, policies, and investments should receive highest priority going forward.

But it is precisely this uncertainty and complexity that compels me to favor a "contingency planning" approach that would prioritize a strategy that proves more resilient and flexible in the widest possible range of future scenarios.

That range would be from continued growth (continued "jobless" growth, and continued mostly low-wage job growth)  to various possible versions of social, economic, and/or environmental stagnation, decline, or collapse. We might even see some form of more fundamentally restructured or transformational futures.

From this perspective, I think smaller and more incremental investments in the best current and emerging distributed and decentralized power generation with stand alone storage may be the least financially risky and costly path, as well as the most flexible path.

Going forward that might not only minimize the cost of trying to reach our current goal of so-called 100% "renewable" energy, but also reduce customer costs and increase customer independence and self-reliance sooner and at less expense.

So, after trying to stimulate more thought and discussion, for the past 13 years, about converting our for-profit monopoly utilities to some form of non-profit customer or taxpayer ownership, I have more recently suggested we should also consider a "third" alternative to both continuation of our for-profit monopolies, as well as to converting them to non-profit entities.

The third alternative I now have in mind might immediately strike many as even more "out of the box" compared to even a buyout and conversion of HEI to non-profit ownership.

I think we should try to estimate the costs and benefits of actually subsidizing/paying the likely shrinking number of HEI customers who still not cannot afford the upfront costs of the generation and storage techs necessary to go "off the grid" themselves.

I expect as the "utility death spiral" runs its course, and the value of HEI stock to decline while borrowing costs are still near record-lows will be the time to act.

If this pencils out, I also think it is possible that pairing such subsidization of increasing defection from the legacy centralized grids with gradual replacement of legacy grids with newer, more decentralized, and possibly cheaper and more resilient/reliable micro-grids and nano-grids may be more cost-effective than EITHER:

1) hoping HEI or NextEra can deliver on suggestions, which are NOT guarantees, that asking customers to stay connected to their legacy grids, and then asking customers to pay for the cost of upgrading and "smartening" their grids, will eventually pay for itself at some unspecified point in the future, by at least reducing the need for future rate increases, if not actually lowering rates (and far more than the insignificant and even insulting amount of $5 to $7 per customer per month as recently estimated by NextEra);

OR

2)  using eminent domain and/or the Public Trust doctrine as the legal basis for compelling HEI to sell their electric utilities to their Hawaii customers and/or taxpayers instead of NextEra, and then using some combo of debt, equity, or on-bill financing to transfer ownership from HEI to public ownership on each Hawaiian island currently controlled by HEI.

I think the following current HEI revenue streams expenses could be used to help pay for the buyout WITHOUT necessarily having to increase electricity rates until they can potentially be lowered after the buyout is completed:

1. The guaranteed dividends HEI currently has to pay to its shareholders from HEI's guaranteed profits (which will no longer be the case after the utilities become a non-profit);
2. The exorbitant salaries and compensation packages HEI currently feels it must pay its executives in order to remain "competitive";
3. Any taxes HEI must pay as a for-profit entity (that it would not have to pay as a non-profit);
4. Any revenue received from its current customers that HEI  uses to make investments NOT related to lowering customer electric bills, improving service, and/or reducing our dependency on imported fossil fuels--which are intended to increase return on investment for its shareholders rather than benefit its customers;
5. Any revenues received from HEI customers used to pay for public relations campaigns intended to convince HEI customers how "green" HEI intends to become, instead of spending that money on actually becoming more "green".

Finally, I think these current HEI revenue streams business expenses could also be used to subsidize the possibly shrinking future number of HEI customers who cannot afford to go "off the grid" themselves to go "off grid".

As the costs of decentralized generation, storage, and transmission technologies continue to decline we should reach 100% "renewable" energy well before our current target of 2045.

If possible, then the biggest unanswered questions of all may be these:

• Could subsidizing a  shrinking number of future HEI customers to go off the grids at some "optimal" future point in time be cheaper and more efficient than first buying out the HEI utilities and converting them to some formof non-profit ownership?
• And, if so, would it be legally and financially feasible to compel HEI to do this in some way without first having to buy out the HEI utilities and convert them to some form of non-profit ownership?  While I realize this may strike most as implausible initially, the HEI monopoly is, after all, a creation of Hawaii's state government.

As such, why CAN'T we simply change this legislatively, and perhaps without HEI customers and taxpayers having to spend a dime to buy out HEI shareholders and executives?

All comments, questions, and criticisms are welcome. Contact: (tbhawaiiowan@aol.com)

• Tom Brandt (former planning and economic development specialist for the State of Hawaii, and former Ph.D. candidate at UH-Manoa, currently working for the USDA Natural Resources Conservation Service)

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NextEra & Heco play the PUC

SOURCE: John Bond (ewabond@gmail.com)
SUBHEAD: Inexplicably, the Hawaii Consumer Advocate has given NextEra an opportunity to file more direct testimony.

By Henry Curtis on 21 August 2015 for Ililani Media -
(http://ililanimedia.blogspot.com/2015/08/salvaging-heco-nextera-train-wreck.html)


Image above: Photo shows signs of degrading concrete at the aging Seabrook power plant in New Hampshire operated by NextEra. They sold off $760 million of hydro-electric power owned by Seabrook upstream of its cooling water reservoir in order to "concentrate" on "areas with greater growth potential." From (http://enformable.com/2012/04/nextera-and-nrc-to-continue-monitoring-asr-degradation-at-seabrook-station-nuclear-power-plant/).

The Hawaii Public Utilities Commission (PUC) is conducting a contested case proceeding involving NextEra's proposed takeover of the Hawaiian Electric Companies (HECO and subsidiaries MECO and HELCO). The Consumer Advocate is by law a party to the proceedings. The Commission also granted party status to twenty nine intervenors, of whom one has withdrawn.

Twenty eight intervenors from all sectors of society submitted direct testimony in the merger proceedings. All of the intervenors asserted that NextEra's bid to takeover HECO is a bad deal as it is currently configured.

The intervenors include three levels of government (federal, state and county) and three utilities (water, gas and electric). The intervenors include a union, environmental and cultural groups, trade groups, and renewable and fossil fuel companies. (See analysis of testimony from Maui County, Hawaii County, Office of Planning, DBEDT, Department of Defense)

The Governor then asserted that the deal was bad. “We are taking the position that the merger as proposed at this point is unacceptable.”

Three weeks later the Consumer Advocate filed their testimony. Almost every news agency concluded that the Consumer Advocate agreed with all other consumers, the deal is bad. This blog asserted that the Consumer Advocate's testimony could be interpreted as laying out the path towards making the deal acceptable. (Consumer Advocate: Hedging their bets regarding the merger)

On August 31 NextEra will file their rebuttal testimony. By law they must restrict their filing to rebutting adversarial testimony. They may not file responses that supports or reinforces friendly testimony. They may not file new direct testimony.

On August 19, 2015, one month after the 28 intervenors filed their direct testimony, one week after the Consumer Advocate filed their direct testimony, and 12 days before NextEra has to file their rebuttal testimony, the Consumer Advocate has given NextEra an opportunity to file more direct testimony.

The Consumer Advocate is proposing a new procedural step, number five.

1	Applicants’ Direct Testimony
2	Intervenors Direct Testimony
3	Consumer Advocate’s Direct Testimony
4	Applicants’ Responsive (Rebuttal) Testimony
5	Applicants’ New Testimony

The Consumer Advocate wants NextEra CEO Jim Robo and Hawaiian Electric Industries CEO Constance "Connie" Lau to become witnesses.

"Mr. Robo possesses knowledge and information that only he can know and possess concerning the circumstances, events, rationale, and reasoning that resulted in NextEra deciding to acquire the Hawaiian Electric Companies.

Consequently, Mr. Robo, through his personal appearance and testimony, would provide information, evidence, and exchanges which are material and relevant to the issues and questions raised by the Commission."

"Constance H. Lau serves as the President and Chief Executive Officer of HEI. In her capacity as President and Chief Executive Officer of HEI, Ms. Lau made critical decisions that resulted in the merger agreement for acquisition of the Hawaiian Electric Companies by NextEra.

Accordingly, Ms. Lau possesses knowledge and information that only she can know and possess concerning the circumstances, events, rationale, and reasoning that resulted in NextEra’s decision to acquire the Hawaiian Electric Companies."

The Consumer Advocate is not asking for the right to file Information Requests upon two people with key knowledge of the proposed merger. Instead they are asking for the right "to take testimony."

"The Consumer Advocate hereby informs the Commission that it has provided written notice ...to James L. Robo and Constance H. Lau indicating the Consumer Advocate’s intent to take testimony by deposition upon oral examination.

The Consumer Advocate notes that the Commission’s rules do not provide specific procedures or guidance related to the taking of depositions, thus ...if the Commission deems necessary, the Consumer Advocate seeks an order requiring that the following individuals be made available for oral deposition."

On the one hand the two witnesses could reinforce what is already known. The deal is bad and should be rejected. But the record already contains tens of thousands of pages that comes to that conclusion. So say 28 intervenors and the Governor. Additional testimony is not needed.

Or the Consumer Advocate could be trying to find a way to salvage the deal.

Historically, in PUC administrative proceedings in which intervenors were permitted into a regulatory proceeding by the PUC, the Consumer Advocate has signed a settlement agreement with the utility prior to the Evidentiary Hearing. The Consumer Advocate and the utility have agreed not to question each others witnesses.

In many of these cases the Consumer Advocate has taken positions that appeared to be more hard-lined than the utility, that is, the utility position is more reasonable.

In this case, Robo and Lau would be entering direct testimony into the record after the deadline for the intervenors to file their testimony. It could either do little or could tilt the playing field against the public and interfere with the due process rights of intervenors.

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$1 Billion hit seen for Ratepayers
SUBHEAD: Nextera using cost control gimmick to soak ratepayers in Hew Hampshire.

By Dave Solomon on 13 Janury 2015 for N.H. Union Leader - 
(http://www.unionleader.com/article/20150201/NEWS05/150209956/0/NEWS02)


Image above: NextEra's website's touched-up idyllic shot of their Seakbrook nuclear plant - the same kind of General Electric boiling water reactors that were built at Fukushima Daiichi, Japan and now poisoning the pacific Ocean.


New England ratepayers will soon be on the hook for a new transmission project that could cost as much as $1 billion when all costs are in, with two energy giants competing for the opportunity. In an unusual move for the regulated utility business, one has guaranteed to get the project done within its bid price, or make up the difference.

A decision by the organization that runs the New England power grid, ISO-NE, is due on February 18th, and the lobbying is reaching a fever pitch. New Hampshire and three other New England states recently urged ISO to consider the cost guarantee in its deliberations.

The upcoming decision on the Greater Boston and Southern New Hampshire Reliability Project is being carefully watched in the six-state region. The outcome could do more than decide who gets to build new and much-needed transmission lines, and collect a guaranteed return of about 10 percent in the process.

It could change the way transmission projects are evaluated to the benefit of ratepayers, according to a wide range of voices that have weighed in on the process.

In one corner stands PSNH owner Northeast Utilities, its partner National Grid, and their AC Plan (for alternating current).

In the other corner is the Florida-based challenger, Nextera - an outgrowth of Florida Power and Light - owner of the Seabrook Station nuclear power plant. Nextera has created a subsidiary - New Hampshire Transmission - to develop, build and manage their project, called SeaLink.

The AC Plan calls for new overhead lines in existing rights of way through Tewksbury, Andover and Dracut, Mass., and Pelham, Hudson, Windham and Londonderry; two new underground cables through several Massachusetts communities, including Boston; and upgrades to existing lines.

The SeaLink plan calls for 68 miles of direct current cable running mostly along the ocean floor, from Seabrook Station to the Mystic substation in Everett, Mass., with 18 miles of line on land buried underground and upgrades to existing lines.

Cost analysis in dispute
Whichever project is approved will be deemed necessary for grid reliability and could obtain property by eminent domain if necessary. But neither the AC Plan nor the Sea Link plan require land-taking, as one relies on existing rights of way and the other is under water or underground.

The biggest issue is cost. And on that score, things are not looking so good for the SeaLink proposal. An independent study of both proposals commissioned by ISO was released in November, and concluded the AC Plan would cost $510 million, compared to $770 million for SeaLink. Both require an additional $221 million in upgrades to existing transmission lines.

The ISO decision on such a project can be nuanced by various factors when the cost estimates are fairly close, according to ISO officials, but when the gap is so wide, cost becomes a pre-eminent factor.

In a letter to SeaLink in December, the ISO outlined eight different criteria it could use in evaluating the two projects, but then went on to say, "However, these factors are typically only utilized where costs are comparable. Where there is a significant cost gap, and each project addresses the identified needs, the ISO will normally make its determination ... based on estimated project costs."

The SeaLink team says the consultant's evaluation was flawed - that the AC Plan costs are under-stated and the SeaLink estimate inflated.

New Hampshire Transmission has taken the unusual step of guaranteeing in writing to ISO that it will build the SeaLink project for $679 million, and will take responsibility for every dime over that amount, according to Matt Valle, NHT president.

That's still more than the $510 million estimate for the AC Plan, but the folks at NHT are claiming it's unlikely the AC Plan will come in at that cost, given what they called a history of cost-overruns on transmission projects in New England.

Late last week, they presented ISO with an analysis of power line projects from 2004 through 2012, claiming that 11 projects by NU or National Grid estimated to cost a combined $2.2 billion ended up costing ratepayers $3.9 billion.

Cost-cap called gimmick
Spokesmen for NU and National Grid disputed that analysis. "We have no idea where those NHT numbers come from," they wrote in an email. "NHT has previously made statements and allegations based on their assumptions about our proposed solution that we have shown to be factually incorrect."

Whatever the cost overruns were, the ratepayers took the hit.

As long as regulators deem the costs were "prudent," utilities are free to exceed their estimates by any amount, and the result is reflected in rates. That puts all the risk on ratepayers, and none on the project builders, according to Valle.

"Until we put this offer on the table, customers were bearing the full risk of cost overruns," he said, "which we demonstrate in our analysis happens a lot in New England."

NU spokesman Martin Murray said the NU/National Grid consortium has no plan to put a cost-containment proposal on the table.

"We really think that this so-called cost cap that they have proposed is a gimmick or an artifice to distract from the fact that there is a quarter of a billion dollar price gap between the two sets of solutions," he said. "ISO doesn't have a process by which it can consider that sort of letter."

And that's the rub, according to a wide range of regulators and governmental officials at the local and state level who have weighed in on the process over the past year. (See related story)

"This idea of transmission projects having cost containment is not new in the industry," said Valle. "It's being done in California, New York and in the (13-state) PJM market. Entities are proposing cost-containment and have been selected on that basis. There is no gimmick here."

Michael Harrington, a former Public Utilities commissioner for New Hampshire and now a private energy consultant, has had a behind-the-scenes look at the transmission construction process, which he said is rife with cost overruns. "The estimates are routinely way short of actual costs and there is no penalty," he said. "It's a huge amount of money ... billions of dollars in New England."

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