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Monday, February 24, 2014
Kanoho Helm Debunks 'Developer-Driven' Big Cable Scheme
By Selected News Articles @ 7:19 PM :: 3745 Views :: Maui County, Energy

Opening a Proceeding to Investigate Whether an Oahu- Maui Interisland Transmission System May Be in the Public Interest

I Aloha Molokai’s Response to The Two Public Meetings Held on Oahu on January 21 and Maui on January 23, 2014

by Kanohowailuku Helm, President, I Aloha Molokai, Docket No. 2013-0169, January 28, 2014

IAM appreciates the opportunity to participate in these public meetings. We applaud the Commission for holding them, and in particular for asking the essential question, “Is this proposed interisland cable project in the public interest?” We find it unfortunate that so few members of the Oahu public chose to make use of this opportunity, but we were gratified by the variety and intelligence of the testimony on Maui. We agree with the docket comment of Ms. Lori Buchanan, who asked for an additional meeting on Molokai, since the chance of this project impacting Molokai remains high. Given the aggressive push by Castle and Cook for an industrial wind farm covering half of Lanai*, we believe a meeting should also have been scheduled on Lanai. But we also recognize that soliciting public input on major issues is primarily the kuleana of our elected officials, and we thank the Commissioners for volunteering to help them with that job.

All this being said, IAM would still like to caution the developers, the State Energy Office, and the Consumer Advocate not to view public silence or a small turnout as evidence of public consent. There is in fact a very large public out there, and it can become very vocal once it is understood that plans are afoot which will impact lives, wallets, and beloved traditions. Public reaction may lack foresight, but it can build silently under a clear blue sky, and sweep suddenly ashore with devastating force.

IAM identifies two major problems with this project as presented to date.

Problem Number One: Developers Should Not Be Allowed to Shape Public Policy.

In our view one big problem with this interisland cable project is that it appears to be developer-driven. The sequence of events seems to go like this: Elected officials – in this case our Governor – are treated to a persuasive sales pitch and sign off prematurely on a “bold new concept.” Timelines and a sense of urgency are immediately generated, not by the needs of Hawaii residents, but by the availability of tax credits and other government subsidies. State staff are then directed to develop the concept and sell it to the PUC and the public. Staff dutifully comply, resulting in the kind of best-case rosy scenario presented in DBEDT’s 220 page “Initial Public Comments” in this docket. The Consumer Advocate then reviews this rosy scenario, perhaps noting omissions and internal inconsistencies, but basically accepting the “bold new concept” as given.

IAM believes that development agendas should be shaped by the needs of our communities. We also believe that state staff should be directed to critique sales pitches. NextEra’s “Initial Public Comments,” for example, sound absolutely wonderful. Their cable will solve nearly every energy problem facing our state. They are so concerned about impacts and public buy-in they have already created “Cultural and Natural Resource Advisory Councils” on both islands [p. 13]. It seems positively mean-spirited to ask them who is on these councils, how they were appointed, who they are supposed to represent, when and where they meet, who they are supposed to advise, and how we can all obtain copies of past minutes. NextEra offers “twice the projected benefits from the Lanai cable” [page 28]. Best of all, hiring them immediately will save our state 50% and two years lead time over other bidders [page 58]. All these conclusions are based on proprietary research and uncertified scenarios from the 2012/13 IRP, neither of which is readily available to the general public. For the lay public it boils down to this: “trust us; we’re good guys… really!” This is why we elect and pay public officials; this is why we have a State Energy Office: to sort and check these promotional claims, to match them against community needs and to fit them to our community budget.

In this docket it isn’t clear that this has happened. State officials seem to be making the developers’ case for them. On the issue of “will it work?,” for example, Mr. Ono pointed optimistically at the Trans Bay Cable near San Francisco. Even a casual online search might have made him pause, however, since he would have learned that that cable is in much shallower inland water, is laid on mud rather than sharp lava, passes through fisheries which have already been shut down due to pollution, has already been sold and re-sold three times, and is, according to press reports, repeatedly off line.

IAM further believes that major projects should be restricted to an open and competitive bidding process. Nextera’s initial public comments include a plea to bypass this requirement. This seems a risky bidding tactic, unless they have already been led to believe that they have the inside track. This suspicion was only strengthened when, on the same day as our first public meeting, the Governor mentioned a different deal with Nextera in his state of the state address – a reference which was later expunged from the published text.

No one can fault a developer for making an attractive pitch. The whole point of salesmanship is to hook the customer with happy numbers and glowing possibilities, while downplaying drawbacks, potential damage, and cost overruns. Nor should one fault state staff for cheerleading when ordered to do so. Even wishful thinking about a project can sometimes raise important questions and identify new possibilities. The real problem with all this is that it really does little to answer the Commissioners’ essential question, “Is this project in the public interest?”

With all due respect, a mainland or mainland-style developer has no clue, and no real way of getting a clue, as to what the public interest of the residents of Hawaii might be. Nor is a repetition of developer scenarios by state staff particularly helpful. By Mr. Ono’s own admission, for example, a more realistic cable cost estimate ($880 million instead of $650 million) is by itself enough to wipe out DBEDT’s projected $423 million in ratepayer savings. It also seemed telling that Mr. Glick’s sense of fairness caused him to interrupt his own power point to concede that projected ratepayer savings would only begin to accrue after the cable bill is paid in full. As Mr. Henry Curtis pointed out in Oahu, the true costs of this project (monetary, environmental and cultural) are more likely to emerge through discovery and cross-examination, than in the opening briefs of interested parties. By the same token, independent engineering analysis might well raise questions about whether the proposed cable can perform as advertised. Can it really balance the two grids, or will the smaller Maui grid go dark every time Oahu sneezes? Will this cable really open the grids to more renewables, or instead saturate them to the limit?  Will it halt the so-called “death spiral” of a shrinking rate base, or might it actually accelerate that trend?

IAM claims no engineering expertise, but we do note with trepidation that the utility itself remains resolutely skeptical. Surely utility enthusiasm is essential if this project is really going to work. On the contrary, HECO has stated publically that it doesn’t need this cable to reach HCEI goals. In this docket HECO warns that “this type of interconnection has not been implemented to date” and that this grid tie “is new to HECO’s systems.” [HECO’s “Initial Public Comments,” pp 16 and 17]. At this point neither the developers nor state staff have been able to explain to the utility exactly how much retrofitting, replacement and re-engineering will actually be necessary to make this connection workable and safe.  IAM is also concerned that similar unknowns seem to be eroding Maui County’s original enthusiasm for this cable. In a sense, this project was their idea, but they now say they want to wait and see the actual costs. Knowing that Maui ratepayers are still waiting for promised savings on previous projects, one can hardly blame County officials for being cautious about a much bigger leap into the dark.

IAM contends that looming uncertainties like these are inherent in any top down planning process, where commitments are made before facts and opinions are thoroughly explored. It’s all too easy for the glittering promises of salesmen to trigger a kind of wishful groupthink, in which hard questions are dodged or deferred ------------ until they suddenly explode onto the evening news, with protests, work delays and finger-pointing. According to the initial order for this docket, this is precisely the kind of problem the Commissioners are trying to avoid.

As we have repeatedly stated, IAM believes that the best way to avoid groupthink and buyer’s remorse is to practice bottom-up planning. It’s messier and more time-consuming, but it will save time, money and grief in the long run. There are four basic steps. First: Inventory the needs and resources of the community – in this case, of the state. Second: Bring experts, stakeholders and the public together to brainstorm possible solutions. Third: When a solution looks promising, take it back to the community and ask, “What if we do this?” In our experience, people who have no taste for general discussions will often respond creatively to a specific request. (Through our own efforts to find the right energy solutions for Molokai, we have seen for ourselves that government often pays too much, and gets too little, from experts, while the tremendous talent, ingenuity and insight of ordinary people in our own communities remains a largely untapped resource.) Fourth: Once you achieve substantial buy-in, then interview developers and pick the one who seems most likely to deliver on his promises. It’s much easier to determine if a project is in the public interest if the public has been involved in the process from the very beginning.

Government is entrusted with public money; government is therefore obliged to be a smart shopper, and smart shopping means comparing prices, checking out products carefully, and resisting the artful seductions of salesmen. Salesmen do have their place, but to let them frame public debate and drive public policy is a formula for disappointment. On a project of this magnitude, it’s a recipe for disaster.  Each time a developer invites them to lunch, public officials need to remember Arthur Miller’s eulogy for his most famous character:

“Nobody dast blame this man. …[F]or a salesman there is no rock bottom to the life. He don’t put a bolt to a nut; he don’t tell you the law or give you medicine. He’s a man way out there in the blue, riding on a smile and a shoeshine.”

Problem Number Two: Hawaii is Not the Mainland.

Several speakers have likened the proposed interisland cable to grid ties on the mainland. Wouldn’t it be great, they suggest, to be able to shift loads instantly back and forth from island to island as needed throughout the day? Think of the efficiency! Think of the cost savings! This enthusiasm is understandable. Poor Hawaii’s isolated, import-dependent grids enjoy none of these mainland advantages. IAM wishes to go on record, however, with this warning: Both in this docket and generally, Hawaii policy makers need to be very careful about adopting mainland–style assumptions and mainland practices. What works there doesn’t necessarily work here.

On the mainland, for example, land is abundant --- so abundant, in fact, that the better part of the continent was at one time or another given away free to settlers and corporations. Except within cities, mainland planners and developers rarely give a thought to the intrinsic value or alternative best uses for land. In their thinking, land is just parcels on a map --- a raw commodity whose value is the same as its price. When they come to Hawaii, they bring these attitudes and assumptions with them.

The Hawaiian Islands, in sharp contrast, are small, mountainous and fragile. There is no empty land here; there are no surplus resources. In Hawaii, every parcel damaged or developed, every reef or bank dredged or drilled, entails a significant opportunity cost. In Hawaii, every development decision is a Solomonic choice.

For example, this docket contains much ado about imported oil. An equal challenge concerns the issue of imported food, which also involves burning fossil fuel. How much farmland is left on Oahu? How much will be left on Maui, after another decade of malls and new home sales? Wouldn’t we be better off devoting the cost of this cable to the preservation and development of Hawaiian agriculture? Or consider the tourist industry. What is the full present and future value of Molokai’s reef for swimming, boating, diving, fishing? What is the real value of the whale sanctuary? Is it a problem that the latest cable route runs right along the South shore of Lanai, which is a hotbed of whale activity and observation? Can anyone say? Has anyone even bothered to ask? Questions like these are not part of mainland-style thinking. They are rarely raised in connection with mainland style development. The assumption is rather that whatever may be lost to a given project can be made up somewhere else. But here in Hawaii there is nowhere else. The proper standard for all projects in Hawaii has to be the Commissioners’ question: “Do the benefits outweigh the costs?” –-- meaning all the costs. Letting mainland or mainland-style developers frame our public policy almost guarantees that this vital question will be ignored. IAM would like to take this opportunity to propose a moratorium, in all future dockets, on comparisons of Hawaii with the mainland. It’s apples and oranges. They’re just not the same.

In the case of this cable project one major opportunity cost concerns our fisheries. On Molokai alone many residents live from the sea; many others fish for sale and distribution through family networks. They harvest every part of the water environment, from the shore to the deep water in mid channel. They are, for the most part, careful to monitor fish stocks and avoid overfishing. As Mr. Kaeo, Mr. Larson and many others mentioned at the Maui meeting and in the docket record, no one really knows what impact the construction and operation of this cable will have on various fish species, at various depths and temperatures. What we do know is that any developer will do what NextEra has done here, which is to pick and budget the cheapest cable route [NextEra, “Initial Public Comments,” p. 9].  Whoever lays the cable, the fate of fish and fishermen will be an afterthought. It is IAM’s considered view that this proposed interisland cable project gambles not only with other people’s money, but with other people’s present and future livelihood.

Conclusion.

I Aloha Molokai respectfully urges the Commission to rule that this project cannot now be affirmed to be in the public interest. There are simply too many persisting uncertainties about costs, projected benefits, environmental and cultural impacts, and technical feasibility. We appreciate the political pressures, the time and staff constraints, and the legal obligations within which you work. We can readily understand that it might be far easier to kick this can down the road, hoping perhaps that the Federal permitting process might force some of the close scrutiny and sober weighing of impacts that are still largely missing from this docket. As noted above, however, Federal scrutiny may also be based on an assumption of resource abundance that is tragically inappropriate for the most isolated archipelago on earth. We therefore urge you to consider that there is no authority at any level of government which is better informed than yourselves, nor is there any authority better positioned to insist that this project should not go forward unless it can meet the necessarily strict standards of Hawaii’s public interest.

Mahalo for your attention, and for your service.

DATED: Molokai, Hawai’i, January 28, 2014

Kanohowailuku Helm,

President, I Aloha Molokai

*Somehow 500 MW from Lanai on Tuesday became 200 MW from Lanai on Thursday (?).

  *   *   *   *   *

January 26, 2014: Whitewash: State of State Transcript Deletes Reference to Big Cable Deal

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