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Sunday, December 25, 2011
Big Wind, Big Cable: To Stampede Legislature, HECO Trumpets High Rates
By Andrew Walden @ 6:31 PM :: 7546 Views :: Energy, Cost of Living

by Andrew Walden

Just in time for the Legislative session, Hawaii Electric is deploying television ads warning of high electric rates and promising higher rates to come.

The purpose: To “talk about the importance of pursuing renewable energy sources….” In other words, in the face of protests on Molokai and Lanai, and the December 31 expiration of Federal 1603 cash grants for alternative energy, HECO is attempting to stampede the Legislature into forking out even more money for Big Wind and the big undersea cables that go with it.

KITV’s headline reads: HECO: High Rates For First 6 Mos. Of 2012. The Star-Advertiser reports: “(Robbie Alm, HECO executive vice president) said the utility will run four different 60-second commercials in the coming months….” The timing couldn’t be more obvious. The Legislative session runs from January 18 through May3.

Fortunately, HECO was arrogant enough to lay out its arguments in the December 23 Star-Advertiser. At the core of HECO’s case for more taxpayer giveaways is the claim that somehow HECO since May has been paying about $35 more per barrel of Low Sulfur Fuel Oil (LSFO) than the market price of West Texas Intermediate crude oil. According to the Star-Advertiser:

Several factors have caused the pricing disparity between Asia and the rest of the world, including the fact that Japan has increased its fuel oil imports after curtailing its nuclear energy production in the wake of a devastating earthquake and tsunami there in March, said Kang Wu, a senior fellow at the East-West Center.

Of course this is not the first time there has been a discrepancy between LSFO prices and those of other fuels. For instance Bloomberg June 11, 2010 explains:

The premium for low-sulfur fuel oil is rising, according to Rotterdam swaps futures. Fuel with 1 percent sulfur for July delivery is $32.25 a ton above that for 3.5 percent (sulfur), widening to $59 by July next year, Bloomberg data show.

As for the Asian pricing disparity, apparently HECO hopes that nobody notices that Hawaii is not in Asia. In fact Honolulu—unlike Japan and Taiwan--is only 5464 miles from LSFO suppliers in Cartagena, Colombia. Hawaii’s current source of LSFO in Jakarta, Indonesia is 6758 miles from Honolulu. Colombia has a newly minted free trade pact with the US and US Export-Import Bank loans back refinery construction at Cartagena “to create US jobs.” Does this include the jobs that would be created in Hawaii by lower electric bills?

There is no need for Hawaii to pay Asia’s higher prices--unless of course it was convenient to create political pressure in order to force Big Wind and Big Cable on Lanai and Molokai. Jacking up oil prices has long been a staple of green energy scammers’ strategy. For instance Pierre Omidyar’s Kanu Hawaii group in 2009 pushed for a Barrel Tax which would have raised the price of oil to $100 a barrel entering Hawaii. (Isn’t there something perverse about the richest guy in Hawaii working to jack up everybody’s gasoline prices and electric bills? Is he trying to push us all out?) In a report issued December 30, 2009, the Hawaii Greenhouse Gas Emissions Reduction Task Force created by Act 234 of 2007 outlined its support for a Carbon Tax in Hawaii. Robbie Alm, representing HECO, was a member of the Task Force and supported the Carbon Tax.

While geothermal, hydroelectric, and waste-to-energy power are able to produce electricity at below-market prices, wind, solar and biofuel do not. Thus the efforts to raise prices are an intervention against workable clean energy solutions on behalf of overpriced inefficient clean-energy technologies which require permanent taxpayer and ratepayer subsidies.

There is more. Attempting to further buttress its claim, the HECO/Star-Advertiser article throws in this clunker:

Hawaii's two refineries, operated by Tesoro and Chevron, can't buy crude oil with higher sulfur content because they lack desulfurization equipment.

But an October 26, 2007 Honolulu Advertiser article says otherwise:

Tesoro Corp. yesterday announced plans to upgrade its Kapolei refinery along with three other locations to process lower cost, high-sulfur crude oil.

The equipment, which removes sulfur from oil, has been ordered; however, no installation dates were announced.

The upgrades will allow Tesoro's Kapolei plant to refine higher-sulfur crude oils, which are cheaper and more readily available than low-sulfur crude, said Lance Tanaka, Tesoro's government relations manager.

"This just gives us the ability to run a wider slate (of crude) so we can continue to reliably deliver the kinds of fuels our customers need," he said.

And Tesoro’s May 6, 2008 Quarterly Report describes the results:

In the fourth quarter, the company disclosed several initiatives to improve the profitability of the Hawaii refinery. These included: reducing reliance on light sweet crude from Asia, achieving better value for finished products and improving reliability through controls modernization and installing a new electric substation. As an update to those initiatives, during the first quarter of 2008, the refinery reduced light sweet crude as a percent of total throughput to 19% from 30% a year ago by moving from light sweet grades to more advantaged heavy sweet and light sour crudes.

Tesoro now has a production capacity of 34 short tons of sulfur daily from its non-existent desulfurization process. Since it doesn’t exist, maybe it should be delivered to the Legislative Chambers, HECO’s Board Room, or the Star-Advertiser newsroom. This reporter volunteers to drive the dump truck.

According to the Star-Advertiser HECO’s first commercial, “will consist of a ‘straight talk’ conversation between (HECO’s Robbie) Alm and former television journalist Jade Moon, who has appeared in previous HECO commercials as a ‘clean energy spokesperson.’"

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