The Hawaii Public Utilities Commission will hold public hearings on August 2 & 4 to accept testimony on the proposed HECO-Aina Koa Pono (AKP) Biofuel Contract
by Henry Curtis, Executive Director Life of the Land
According to the PUC Notice, AKP will provide 16 million gallons of biofuel to HELCO’s Keahole Generator at above the cost to use fossil fuel based diesel. The Companies maintain that “it would be unfair for customers on Hawaii Island, where AKP will operate, to bear the full burden of this important step toward reducing Hawaii's imported oil consumption, a goal which will benefit everyone in the State.” According to the Companies, the application of the biofuel surcharge “would apply to HELCO and HECO customers, and would add about 1/3 of a cent per kilowatt hour.”
HECO responded on July 27, 2011 to questions asked by the Consumer Advocate: “The proposed surcharge is intended to be implemented as a cents per kWh rate that is the same for all customer classes of Hawaiian Electric and HELCO.... The Companies confirm that the proposed biofuel surcharge is meant to apply to all rate classes of Hawaiian Electric and all rate classes of HELCO. ...The cost anticipated to be reflected in the tariff is estimated to be the incremental cost of the biofuel over the equivalent cost of the petroleum fuel that the biofuel replaces.”
According to Hawai`i Electric Industries (HEI) filings with the U.S. Securities and Exchange Commission (SEC), last year HECO sold 7.657 billion kWh and HELCO sold 1.194.2 billion kWh. These two utilities sold 8.8 billion kWh. A subsidy of 3 cents/kWh would raise $26.553 million/year. Since 16 millions of gallons of biofuel is being subsidized, the subsidy per gallon would be $1.6595. Since there are 42 gallons per barrel, the subsidy for a barrel of biodiesel would be $69.70.
Price (Barrel Biodiesel) = Price (Diesel) + $69.
Puna Geothermal Ventures proposes to increase their output from 30 to 38 MW. The additional geothermal-based electricity would be sold to HELCO at 9 cents/kwh (on-peak), 6 cents/kwh (off-peak), with an average of 7.99 cents/kwh. The effective average price (including fixed payments for firm capacity et al) would 11.59 cents/kwh. (PUC Docket 2011-0040)
This would be less that the cost for HELCO to generate the electricity themselves. In February, 2011 HELCO’s avoided cost was 16.75 cents/kwh (on-peak), 14.447 cents/kwh (off-peak), averaging 15.79 cents/kwh.
The logic of HECO’s approach to adding renewable energy is bizarre. O`ahu ratepayers are being asked to heavily subsidize unproven microwave biodiesel technology which will raise rates for HELCO customers. Adding additional geothermal energy would result in rate reductions for HELCO customers.
Public Utilities Commission, 465 South King Street, #103 Honolulu, Hawaii 96813
- Hilo (August 2, 9:00 am-12:00 pm) 75 Aupuni Street (joint AKP & Young Brothers hearing)
- Kailua-Kona (August 2, 4:00-6:00 pm) 74-5044 Ane Keohokalole Highway (joint AKP & Young Brothers hearing)
- Honolulu August 4, 6:00-8:30 pm) Basement, 465 South King Street (Territorial Bldg across the street from Hawaii State Library)