Tuesday, April 20, 2010


...AND WARMER STILL: A week ago Monday, in focusing on “the price of the electricity that Pacific Light & Power’s (PLP) proposed ‘solar thermal’ power plant sells us” we critiqued the corporate model of “we sell you electricity” under which Kaua`i Island Utilities Co-op (KIUC) still operates.

We asked way, assuming the veracity of the rhetoric that limits the number of homeowners’ photo voltaic systems that receive “net metering” (the meter running forward and backward at the same price)- something we’re not convinced of- why we would use up a portion of that limited solar power we can practically use on a huge investor owned project rather than promote the consumer friendly net-metered home units.

But after talking to many over the last week and after reading a piece by Greg Wiles in Sunday’s Honolulu Advertiser we’ve come to see another bigger problem with the“power purchase agreements” that KIUC will undoubtedly be signing with the PLP and many other “alternative energy” investors in the future.

Wiles writes:

A 10-megawatt solar power project that would have boosted the amount of renewable energy on Kauai isn't moving ahead at this time.

The reason? The Kauai Island Utility Cooperative wouldn't agree to pay what the developer wanted for the electricity.

The stalled project provides a glimpse into a not-so-often discussed portion of green energy as the state drives toward adoption of sustainable power projects: Going green could translate into higher electricity prices in the short run for Hawaii residents.

Utilities are being offered and, in some cases, agreeing to wholesale power purchase contracts that could translate into people paying slightly more for power than they do now. Proponents say it will help stabilize energy costs and lower energy bills in the long run.

"The prices that they're agreeing to are higher than what they might pay if it were fossil fuel," said Dean Nishina, who as head of the state Division of Consumer Advocacy regularly spars with utilities on proposed rate increases.

"Initially you'll see that bumping of costs. But in the long run the hope and vision is that we will be thinking 'it's great we have these renewable energy projects.'"

The main theory of course is that oil prices will be sky rocketing and so we can bet on that by locking in a price that is higher now but will almost assuredly be lower in the future.

Almost assuredly? All right- that sounds right. But the real question is why we are gambling and playing games with the investor and setting up winners and losers in the first place?

Of course KIUC isn’t alone in this mindset. It’s going on across the electricity generation and delivery “industry”.

But in many ways Kaua`i is unique in that not only is KIUC owned by the users under the co-op model but, much more importantly, we operate in a closed system. We cannot bring in or ship out electricity which means the choices we make- and how we make them- can’t be plugged in to an existing model.

The article is full of phrases like “complex set of variables...variety of factors...very complex problem...no one is willing to say...may result in higher prices” but that’s because we are choosing to play this “winners and losers” game with secret negotiations and everyone “stuck with” whatever is worked out behind closed doors.

It need not be like that although Kaua`i doesn’t have a very good track record when it comes to what’s needed here- smart growth.

It comes down to being a planning issue and like the county’s planning department and commission we are being driven by the decisions of the “developer” rather than the community.

There are any number of people “investing” in “green energy” these days and if we simply use those “complex set of variables” and “variety of factors” to determine the actual cost of the energy and add on a fair rate of return on the investment- something the State Public Utilities Commission has been doing for years- we can come to an agreement that doesn’t gamble on our energy future.

No one, neither the consumers or the investors- needs to “put one over” on the other and wager as to future oil costs- as a practical matter the price of solar energy has absolutely nothing to do with the cost of oil.

Yet somehow we’ve allowed those numbers to become part of the model where what we pay for alternative energy- which in the long run is probably going to be cheaper than even the current price of using fossil fuel for generations to come into the equation.

And if these “investors” are intransigent and refuse to negotiate a fair price independent of what oil is costing us- a type of extortion when you really think about it- there’s a new bill moving in the U.S. Senate that “would allow an entity such as KIUC to construct a large scale PV farm with member investment, and the individual member investors can take the tax credit” according to KIUC Board Member Ben Sullivan.

Current incentives are all pro-corporate investment so KIUC has had a harder time self-performing on PV projects because the tax credits, which KIUC cannot use directly, cover as much as 65% of the cost of these project.

The bill would enable KIUC to allow individual member investors to take advantage of the economy of scale of a solar “farm” without having to have units in their yards or on roofs and keep the much of the savings that individualized units would provide if not more.

When assessing the PLP project perhaps it’s wiser to, instead of having them and KIUC pull a price our of their, er, ear and tie it to the exorbitant prices we’re paying for oil, using smart growth principles to tell them where to go with their oil-price-based “investment” return.

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