Thursday, January 6, 2011

HECO ‘Spreads the Wealth’ to Support Biofuel Use; Customers on All Islands To Pay for Big Isle Power; BREAKING NEWS: Scroll Down for a Blockbuster

We can’t wait forever for ocean thermal energy conversion to live up to its hype, so it’s great that other local renewable options are coming on line. The latest is biofuel, as announced today by Hawaiian Electric Company. HECO has signed a contract with Aina Loa Pono, a local company that will supply biofuel grown on the Big Island for use in the Keahole Point power plant operated by HECO subsidiary Hawaii Electric Light Company.

THIS JUST IN at 8 PM: According to online subscription news service Civil Beat, a local group "aims to buy out Hawaiian Electric." Ted Peck, whose last day as State Energy Administrator is tomorrow, is said to the president of the company, called Kuoloa Inc. Noted Big Island farmer Richard Ha is also involved. Ha was a guest nearly a year ago on Hawaii Public Radio's "Energy Futures" program when the topic was sustainable agriculture. He expressed considerable interest during the program in Hawaii Island's geothermal energy potential, and it's possible Kuoloa Inc. will investigate ways to develop the resource. Peck was a program guest on three occasions, including our first and final shows. Hawaii Energy Options will be following this story in the days ahead with considerable interest.

The contract contains a provision that seems to be a “first” in Hawaii. Quoting from HECO’s press release:

“Subject to approval by the Public Utilities Commission, with input from the Consumer Advocate, the contract would initiate an innovative plan to provide economic support to Hawaii Island customers while encouraging more renewable energy statewide. It asks for the PUC to spread among customers of Hawaii Electric Light Company, Maui Electric Company and Hawaiian Electric Company the difference between the price of locally grown and produced biofuel and the fossil fuel it replaces.”

In other words, customers on all islands served by HECO and its Maui Electric and HELCO subsidiaries will help pay for power produced by Aina Loa Pono and consumed only by HELCO customers on the Big Island. HECO’s release says the subsidy would add less than 1/3 of a cent per kilowatthour, or between $1.55 and $1.86 per month for customers whose monthly use is between 500 and 600 KHW.

It seems like an innovative way to help spur development and use of renewable energy on one island when the cost of doing so might be too much for that island’s customers to absorb.

Price and terms of the biofuel contract are being kept confidential for now, so we don’t know how much more expensive the locally grown fuel will be per KWH than the fossil fuel it replaces. HECO’s release notes that the cost of oil is likely to surpass the biofuel’s cost over time.

In sum, this seems like a favorable development in Hawaii’s decades-long quest to Get Off Oil, an innovative approach that might find its way into other renewable energy contracts.

As philosophers like to remind us, the ocean connects rather than separates our islands. The new Aina Koa Pono contract is a tangible way for residents of many islands to help the residents of one of them reduce oil imports and keep some of that money at home.

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