Life of the Land`s Statement of Position re Hu Honua

Life of the Land filed its Statement of Position with the Public Utilities Commission on July 10, 2017. This is a web-based version, excluding many footnotes, and formatting it in a web-friendly version.

This proceeding involves a Hawai'i Electric Light Company (HELCO) proposed Power Purchase Agreement (PPA) with Hu Honua Bioenergy LLC which was filed with the Hawai'i Public Utilities Commission. After reviewing the filings in this proceeding. Life of the Land (LOL) believes this project is not in the public interest and should be rejected

I. Hu Honua’s Proposal Fails to Fully Address Issues of Climate Change and the Environmental Impact of their Proposed Operations.

The first two sentences of SB559 SD1 HD2 CD1, which Governor Ige signed into law as Act 32, read: “The legislature finds that not only is climate change real, but it is the overriding challenge of the 21st century and one of the priority issues of the senate. Climate change poses immediate and long-term threats to the State’s economy, sustainability, security, and way of life.”

Notwithstanding this clear statement of State policy, Hu Honua 1) declined to discuss the environmental impact of its operations, 2) made unsupported “carbon” claims, or 3) simply refused to answer Information Requests on the subject.

Hawaiian Electric Industries CEO Constance Lau spoke at the VERGE Hawai'i 2017 conference. (Lau`s comment started at about 41 minutes 57 seconds).

“Everybody is still moving in the same directions, that they were moving in, and particularly for the electric utility industry, that's been towards much more renewables, and it all started with climate change, and it's still is about climate change, but frankly, there are so many forces that are actually making it economically right, to have renewables.”

When community members asked the Hu Honua team about their statements on climate change at a community meeting in Kukuihaele Village, on June 19, 2017, one member, Rob Robinson told the community, “We are carbon-neutral.” Another team member, Kevin “KJ” Johnson qualified this to, “In our case...it ends up being carbon neutral.” No details were offered aside from an assertion that they would plant trees that would be harvested and replanted every seven (7) years. No discussion of the carbon costs of transportation or the harvesting operation itself was discussed.

When LOL subsequently submitted Information Requests on June 29, 2017, including whether, “In Hu Honua's view, is Climate Change a public interest issue?” and “In Hu Honua's view, is avoiding greenhouse gas emissions a public interest issue?”, Hu Honua responded on July 7, 2017 that it objected to each request: “It is not relevant or material to Issues Nos. 2.a.i or 2.b, which are the only issues for which the Commission authorized LOL's participation.”

In reality, the issue of climate change is embedded in both issues the Commission assigned to LOL to consider:

Issue 2(a)(1): ''Whether the energy price components in the Amended and Restated PPA properly reflect the cost of biomass fuel supply.” According to HECO's Project Economic and Bill Impact Analysis, the benefits of the project include reductions in emissions and increases in energy security, but “the benefits from these other factors have not been explicitly quantified or monetized in the calculation of the Project’s benefit-to-cost (B/C) ratios but nonetheless are important considerations in the determination of the overall viability of the project.” The cost of biofuel includes both financial and non-financial components, which Hu Honua has failed to adequately address.

Issue 2(b): “Whether HELCO's purchase power arrangements under the Amended and Restated PPA are prudent and in the public interest.” The issue of climate change is of major public interest to the State and to the world, except, apparently, to Hu Honua.

Contrary to Hu Honua’s contentions, it is beyond doubt that LOL can, and has, raised climate change issues and greenhouse gas emission issues in previous Commission proceedings. In fact, this proceeding before the Commission is the ninth regulatory action dealing with Hawaiian Electric Companies bioenergy applications in which LOL is the only party or participant that represents environmental and community interests.

When HECO filed an application for the Campbell Industrial Park Combustion Turbine 1 with the Commission, Docket No. 2005-0145, LOL was a party, and was permitted to cross-examine a number of HECO witnesses on climate change. Several HECO witnesses testified to the effect that “Aren’t there two sides to this question?” and “It’s not my kuleana,” and “I`m not really up on this issue.” However, one of HECO’s witnesses, Senior Vice President for Public Affairs for Hawaiian Electric Company, Robbie Aim, conceded as follows:

“You know, Hawaiian Electric does not have the resources to conduct independent science, scientific research on the issues related to global warming. But like you, we've seen the growing body of scientific evidence which tells us the following: That human activity has caused an increase in global warming, that the human activity which has the strongest impact on this increase is the burning of fossil fuel, and that global warming has associated climate change impacts. We accept — you know, even though we cannot independently, scientifically verify that, we accept this as an operating premise for our actions and we accept our need to be part of the solution.”

Also in that Docket, LOL sponsored one of the world's pre-eminent scientists questioning the role of biofuels. Dr. Tad Patzek’’ has been a consultant and expert witness for the California Energy Commission, General Electric, Inc., and has testified before Congress. In testimony before the Commission, Dr. Patzek had this to say:

"People, especially the so-called pure environmentalists, are loath to accept the fact that what they think religiously -- that is, green is good — is not necessarily so. And they really have a hard time believing or accepting or- thinking that not everything that is green is in fact good."

“One must calculate the C02 emissions over the life cycle of the Corn-Ethanol System. Emissions of other gases, mostly nitrous oxide N20, ammonia NH3, and methane CH4, must be converted to equivalent C02 emissions using their relative potencies in creating the greenhouse effect. The methodology for determining equivalent C02 emissions must include all emission sources.”

For ethanol production, Patzek listed in descending order, the equivalent C02 emissions from 18 different aspects of production, use, and disposal. The top three were (1) use in a power plant, (2) Humus Oxidation of the soil, and (3) Nitrogen as Ammonia Fertilizer. The fifth element to be considered was transportation, which Hu Honua ignores.

Cognizant of the fact that the number of bat takings is a central issue in the pending Habitat Conservation Plan (HCP) for the Na Pua Makani wind generation facility in Kahuku, LOT also asked Hu Honua questions about potential impacts to endangered and threatened species. Despite Hawaiian Electric Industries CEO Constance Lau’s comments to the VERGE Hawai'i 2017 conference, that the community must have a voice to express concerns such as bird kills, “They are all really important issues that must be on the table.” Hu Honua refused to respond to LOL’s questions regarding whether bats or other endangered species would be impacted by proposed logging operations, stating it is beyond the scope of LOL’s participation in this docket.

To summarize: Hu Honua plans to chop down existing trees for seven years, and then to rely on a rotational system of growing new trees and then chopping them down. Omitting any discussion of the fossil fuels used in the mechanization of growing, chopping, chipping, and transport, Hu Honua alleges that this operation is carbon neutral. In the absence of hard facts, however, the only thing supporting Hu Honua’s analysis is an audacious statement that amounts to, “Trust us, we're green.”

Hu Honua also plans to supplement tree harvesting with other not clearly identified biomass supplies. Again, these are assertions of carbon neutrality without supporting facts or analysis. Hu Honua’s attempts to avoid meaningfully addressing climate change and the environmental impacts of their proposed operations with absurd statements such as “the Commission will not allow LOL to ask questions relevant to these issues”, speaks volumes.

II, The Pricing of Hu Honua's Proposal is not in the Public Interest and its Economic Analysis is Incomplete.

In the face of dramatically falling prices across the globe, Hu Honua has proposed a 30- year contract, running from 2019 to 2048. Hu Honua is asking to be paid over 20 cents per kilowatt-hour in 2018, which would then rise to over 32 cents per kilowatt-hour in 2048. Unidentified additional costs to cover transmission, distribution, and administration will then be tacked on by HELCO.

Compare the above with the following examples of lower priced proposals: the Hawai'i Public Utilities Commission approved the KIUC-AES Lawai Solar, LLC Power Purchase Agreement for solar-based electricity, at 11.08 cents per kWh, in Docket No. 2017- 0018, and approved the KIUC-SolarCity Corporation solar-plus-battery Power Purchase Agreement at 14.5 cents per kWh. 

The Commission also approved a waiver from competitive bidding for the proposed West Loch PV Project, stating, “the Equivalent Levelized Energy Payment for the Project, as well as the PPA equivalent energy price, is estimated by HECO and the Consumer Advocate to be 9.56 cents per kilowatt-hour (kWh).” 

With respect to the West Lock Project, the Commission took notice of Tucson Electric Power's solar-plus storage project priced at 4.5 cents per kWh.

Moreover, Hu Honua's cost analysis included “Comparing HELCO Fossil Fuel Units to Hu Honua Bioenergy” whereby they asserted Hu Honua’s operations would save Big Island ratepayers some $600,000,000.00 starting in 2040. These numbers, however, are based on the high cost of biomass relative to the higher cost of fossil fuel, despite the fact that HELCO has asserted it will not be selling fossil-fuel-based electricity by the 2040s. When LOL questioned Hu Honua on these issues, Hu Honua refused to answer, stating that it was beyond the scope of what LOL was permitted to address in this proceeding.

The question for Big Island ratepayers and for the Commission is: why should a 30-year contract lock in high prices in the middle of a turbulent transformational period in which the price of firm baseload solar plus storage is sharply decreasing, and the power and duration of storage is rapidly increasing?

In addition to the dramatic and continuing downward trend in the cost of electricity generated by solar and solar-plus-battery systems, there are other advances being made which will fundamentally alter the reality of today. 

The Commission has an open proceeding on Demand Response, whereby utilities can rely on customer-based energy efficiency, renewable energy, and energy storage systems, to displace the need for centralized firm power, while saving money for all ratepayers. The “demand response” approach is poised to change everything. Hawai'i is at the leading edge of a vast energy-based technological revolution. What will the cost and environmental impact trajectories look like in the second and third decade of Hu Honua’s fixed-price, cost-escalating proposal?

An additional weakness in Hu Honua’s proposal is its analysis of economic benefits. Hu Honua stated that one economic benefit of the high-cost electricity they propose to provide would be job-creation: “Hu Honua operations are projected to generate about 190 jobs on the Big Island, including approximately 30 jobs at the power plant, 70 forest jobs, 20 trucking jobs, and 70 indirect jobs. ... Earnings from these jobs are expected to support 430 residents living in about 190 homes.” 

When LOL asked a series of questions concerning Hu Honua’s job creation claims, including an analysis of the number of people employed in different potential energy futures, like biomass relative to solar plus battery, Hu Honua responded that it was none of our business and beyond the scope of what LOL was permitted to address in this proceeding. 

Hu Honua then suggested that IF it decided to do something in the future (but to which it was not committing, merely speculating that they are capable of doing), then the Big Island will obtain additional benefits. “If Hu Honua uses Albizia trees”, Hu Honua opines, this “would have a value to the community.” This “value” was not defined by when it would potentially be implemented nor was it quantified.

Hu Honua’s pricing is not reasonable nor in the public interest and its economic benefit analysis is incomplete

III. Conclusion

Hu Honua’s offer of pricing is unreasonable and not in the public interest. In light of steadily-decreasing costs for other energy sources, Hu Honua’s costs are exorbitant and escalating. Even if the proposed pricing could be somehow deemed reasonable, Hu Honua’s environmental-impact discussion is incomplete and its claim of “carbon-neutrality” is unsupported. Furthermore, Hu Honua's approach is in violation of the Hawai'i Revised Statutes, §5-7.5, the Aloha Spirit, and displays a disturbing disregard for community concerns. The Commission should reject Hu Honua’s proposal.

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