Thursday, October 23, 2008

Briefing Outlines Background of New Agreement To Hasten Renewable Energy Development in Hawaii

Ted Liu briefs Hawaii Energy Policy Forum today.

Monday’s press conference by Governor Lingle on agreements between the State, Hawaiian Electric and the consumer advocate covered the highlights on the proposed regulatory changes intended to create a new business model for the utility and integrate more clean energy onto the islands’ grids. Today, the Hawaii Energy Policy Forum meeting in the State Capitol was briefed on what led up to the agreement, which has been described as “historic” and “transformational.”

Ted Liu, director of the Department of Business Economic Development & Tourism, spent the better part of an hour describing a dialogue that began last year. Here are the highlights:

There was a gradual recognition that business as usual wasn’t acceptable, wasn’t tolerable and put our economy and quality of life for all of us at risk. The question became what do we do about it? What are the major drivers? There was a recognition that we needed to take a close look at our regulatory system – one, not just in Hawaii but elsewhere that was erected based on a series of assumptions that are no longer valid, cheap abundant never-ending fossil fuels, central power generation stations and electrons that flowed one way. 

But as much as we kept talking about changing, we needed to make sure that we put in place the regulatory environment that allowed, incentivized, rewarded that type of change, so there was a big focus on looking at what we could do in terms of the regulatory environment, and looking at it collaboratively and cooperatively with the other players.

And so the idea actually came up, I would say -- as a matter of fact, in my recollection it preceded the Hawaii Clean Energy Initiative (HCEI). There were a couple discussions at the end of last year about what could we do on a voluntary basis, what could we do together? There was a situation there – you all know this – in which people were publicly talking about each other, some in tougher terms than others, but was that really what was going to drive change? I think that helped drive change, but we really needed to focus on the specifics of what needed to get done.

A Seminal Event

So over the course of the last six or seven months, helped by the HCEI process, helped by the regulatory discussions that we had with the DOE’s regulatory assistance project and helped by some pretty intense interactions, the framework of this agreement started to emerge. It really took off toward summer. To my mind, a seminal event was this big group that we took to NREL. The National Renewable Energy Lab had never hosted a state delegation like this before, and what was striking to them was in the room we had all three PUC commissioners, Mina was there (Rep. Hermina Morita, chair of the House Energy & Environmental Protection Committee), Senator (Ron) Menor (chair of the Energy & Environment Committee) was there, the consumer advocate and her staff were there, the senior staff of the PUC was there, the Governor was there and the CEOs of every major utility – we only have two – were there with their senior staff. And NREL never had seen that type of gathering representing one state in one room wondering what the options were, reaching out for technical assistance. But the fact that we were there also meant we were interacting and that was extremely positive. 

So events like that helped spur the process along, and we started getting serious the last couple of months. Every one of us had to negotiate our own processes. There’s been some grumbling about this being sort of not inclusive. Well, this was a relatively sensitive negotiation for a publicly traded utility whose premature release of information could have had negative consequences, not only on them but also on our process. There was no assurance that any one of these things would ever reach conclusion. It’s not the type of thing we could talk about what we hoped to do. We could only talk about it after it had been essentially agreed to. So we all had to work with our own processes. I had to work with mine, believe me, because there’s a lot here that we all needed to understand. My staff understood it, but I needed to convince various people within the Administration from a policy perspective that they were the right policies to try to pursue. I give a lot of credit to Cat Awakuni, the consumer advocate who was very much involved in this. She has stated, and we’ve all stated, that this moves us all a little bit outside the zone of comfort. This is clearly not how we have always done things, and we need to have to adapt to this new environment that we’re in.

Is it as broad as it could be? I’m sure we probably could have included many things that others in different circumstances would have included or included things that many think are not as important, but it was in our best judgment all the factors that we needed to look at from a more comprehensive integrated perspective. It does change a lot of things. There are some things the utility can do voluntarily, moving out on some of these renewable energy commitments. I’m looking forward to being one of the first to complement my PV on my roof with an advanced meter on my home. 

In the PUC’s Court

Things that they can do voluntarily, but a lot also is going to be in the court of the PUC. In our discussion with the PUC – who were not involved in the process because they can’t be – to the extent that strong signals were given that they recognize it and hopefully will be – and I can’t speak for the PUC – processes that they will adopt that will get us to our objectives in a more efficient, timely manner.

I won’t get into the details because you all know this better than I do. You all can see what’s in it, and we’d be happy to answer any questions and engage you in conversations. This won’t be the last time I’m sure that we’ll have a chance to talk about it. And it’s going to be a living document. I will tell you that, even now, we’re already talking to the utility about improvements. Even now we’re talking about further agreements, so it’s going to be a living document. Not only will there be opportunities for input and conference about it but we can improve it and make it better. 

Liu’s presentation followed one by the U.S. Environmental Protection Agency’s Ed Chu, a Hawaii native now living in the Washington, D.C. area.  Chu’s presentation – “Closing the Loop on Climate Change” – included some fascinating facts we’ll include in future posts; for now, here are a couple concerning sustainability:

• 426,000 cell phones are retired each day, totaling (in 2005) 50,000 tons of discarded material in those phones.
• 2 million plastic bottles are used/consumed every 5 minutes in the United States.

That last one made us push the bottle under the chair a little further out of sight.

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