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Sunday, March 09, 2014
Solomon Pushes for Approval of Mililani Trask's Overpriced Geothermal Contract
By Andrew Walden @ 8:16 PM :: 7947 Views :: Energy, OHA, Cost of Living

by Andrew Walden

In a January 22 letter released to the media March 4, Sen. Malama Solomon is "questioning and requesting clarification of the delay in awarding a contract for the development of a 50-megawatt geothermal project on Hawaii Island by Hawaiian Electric Company (HECO) and Hawaii Electric Light Company, Inc."

This comes in spite of clear evidence that the geothermal bids are quite high, but possibly just a tad lower than other forms of 'green' energy recently approved by PUC.

Obviously Solomon is just doing her part for her cronies at "Innovations Development Group" (IDG) which includes convicted Unity House fraudster Roberta Cabral, Mililani Trask, Patricia Brandt and others.  At the urging of Solomon, Richard Ha, and others, OHA has already given away $1.25M of trust funds to these cronies

According to records filed with the Campaign Spending Commission, IDG officers and associates gave over $10,000 to Malama Solomon for her tightly contested 2012 primary race against Lorraine Inouye.  Inouye has announced plans for a 2014 rematch.

Clearly what has happened in the bidding process is that IDG has presented a ridiculously high bid which is lower than the other ridiculously high bids.  This is why pressure for awarding the bid is helpful to IDG. 

Because geothermal electricity is a very cheap source of baseline power it  creates unparalleled opportunities for sandwich profits to a politically connected felon and a former anti-geothermal protester who changed sides as soon at the money was flowing to them.   

The actual bid amounts are secret but if one presumes that IDG has shared bid information with Solomon then it is easy to read between the lines. 

Here are a few key points from Sen. Malama Solomon's letter to PUC January 22, 2014 followed by appropriate translations:

PG 3 -- The County of Hawaii, in its Statement of Position in DOCKET NO. 2013-0141 noted (p. 4-7) that "Having already achieved 46.7% renewable energy generation, the focus now for the Island of Hawai'i is on energy projects that provide cost reduction benefits to ratepayers (whether directly or indirectly) and that improve and maximize integration of additional lower cost renewable energy ''

Translation: These bids are being held up because they do not save the ratepayer money.  Since geothermal is an ultra-low cost base-load generation system, these sandwich profits are waaaay over the top even by Hawaii standards.

PG5 -- I am also being told by industry experts that the HELCO RFP contains unrealistic operating requirements making it impossible for bidders to advance pricing structures that would benefit the ratepayer and make it economically feasible for a developer.

Translation: The bids I am pushing PUC to accept do not benefit the ratepayer.  

PG5 -- Most importantly, no disclosure has been made by HECO or the PUC of the pricing and cost data relating to the bids. For example, HECO claims that Bidders did not meet HECO's requirement to "lower costs for ratepayers". This claim by HECO is false. Over two years ago this office learned that electricity prices on Hawaii Island are extremely high because the initial contract for geothermal production on Hawaii Island tied the price of electricity to the price of oil. When it reviewed the last HECO request to expand production at the Puna PGV plant, the PUC issued an Order "requesting" HECO to lower the rates because avoided cost contracts were "not in the public interest".

Translation: HECO says the bids did not "lower costs for ratepayers".   Malama Solomon says a penny or two is good enough even though it could be possible to cut rates by 66% or more with more geothermal power.  

PG6 -- While HECO is criticizing the geothermal bidders for price structuring that disadvantages the ratepayer, HECO and the PUC have just approved the Hu Honua agreement that set rates (Capacity Charge) at an incredibly high of $253MW. Did the bids tendered for the Geothermal RFP exceed this figure? Were they lower, and if so, how much lower?

Translation: If any of the bidders, such as my cronies Trask and Cabral, came in lower than the ridiculous prices being paid for Hu Honua, then they must be accepted.  (This is a sign that IDG and Solomon know that IDG has posted the low bid--but the low bid is still ridiculously high.)

A tidbit from the PUC Independent Observer's response February 21, 2014

"...we find the lack of clarity in HELCO's planning inhibits anyone from determining whether the system will be able to accommodate a new geothermal resource, and also how the project being solicited by the RFP should be defined in terms of size, capacity factor, and dispatchability."

Translation: Any and all bids received will be more costly because of the information HELCO has chosen to withhold.  This means that HELCO is working on behalf of competing alt-energy sources none of which can touch geothermal for low costs.  Their ridiculously high prices combine with the artificially-maintained high price of LSFO fuel for HELCO's oil burners to create the sandwich profit opportunity that IDG is seeking to take advantage of.  Its really just a question of timing.  The wind and solar being built today will all be junk 10-20 years from now--which is about how long it will take to bring any geothermal plant on line.

---30---

News Release from Office of Sen. Malama Solomon March 4, 2014

Honolulu – Sen. Malama Solomon today released a letter sent to the Public Utilities Commission and Boston Pacific Company, Inc. questioning and requesting clarification of the delay in awarding a contract for the development of a 50-megawatt geothermal project on Hawaii Island by Hawaiian Electric Company (HECO) and Hawaii Electric Light Company, Inc. (HELCO).

“I am alarmed that HECO and HELCO have now consumed close to three years in a process that included a “request for information” and a “request for proposals” related to geothermal power generations,” Solomon, who represents Senate District 4 – Hilo, Hamakua, Kohala, Waimea, Waikoloa, Kona, said in the letter sent on January 23, 2014.

In February 2013, HELCO issued a Geothermal Request for Proposals (RFP), but several months later, on December 20, 2013, the utility company announced that “Hawaii Electric Light has determined that none of the submitted bids sufficiently meet both the low-cost and technical requirements of the Geothermal RFP.” HELCO was expected to award the contract last August or September.

Solomon, in the letter to Chair Hermina M. Morita and PUC commissioners, called this a unilateral and unjustified determination by HECO.

“For the past several years,” continued Solomon, “consumers on Hawaii Island have sought to expedite the production of affordable renewable geothermal energy…geothermal development has not progressed because HELCO/HECO have refused to retire their old fossil fuel plants in order to integrate cheaper renewable energy, including geothermal energy, onto the grid.”

Solomon identified “bad faith actions” taken by HELCO/HECO including their failure to submit an Integrated Resource Plan (IRP) that was compliant with specific industry framework requirements.

“I strongly believe the recent actions of HECO/HELCO in the Geothermal 50-megawatt RFP demonstrate that HECO is intent on delaying (and/or preventing) geothermal development on Hawaii Island,” said Solomon. “This is due to HECO’s preference for fossil fuel and bio fuels for its own plants to the detriment of the development and integration of other renewable sources for energy.”

In the letter, Solomon also asserted that she had been told that the “RFP was a confused mess that did not conform to industry standards and that it required information from bidders based on data that HECO failed to provide.”

She goes on to say that industry experts have claimed that the RFP contained unrealistic operating requirements making it impossible for bidders to advance pricing structures that would benefit the ratepayer and make it economically feasible for a developer.

Solomon urged the PUC to consider reactivating the 2007 Docket on Wheeling in order to provide energy producers and ratepayers with options that can be met by private sector energy transmitters and developers. She also requested information on the qualifications and experience of Boston Pacific Company, Inc., the Independent Observer, claiming a lack of notable hands-on experience in geothermal energy production and transmission.

In addition, Solomon questioned HECO’s criticism of the price structure for ratepayers offered by the geothermal bidders when HECO and the PUC have recently approved an agreement with Hu Honua Bioenergy LLC setting rates at a high of $253 per megawatt hour. She asked whether the bids tendered for the Geothermal RFP were lower or higher than this figure and by how much.

“The PUC has an affirmative obligation to address this matter; the time has come for the State regulatory agencies and bodies to stop supporting the HECO monopoly and to act to protect the interests of its residents and ratepayers,” Solomon said in ending the letter.

---30---

PDF: Letter to PUC

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