The table is set, I’ve invited friends, a stiff glass of good bourbon’s been poured and I’m ready to dig in to this crow — particularly over my prediction that the Public Utilities Commission would reject Hawaiian Electric’s recent Power Supply Improvement Plan in favor of a return to the drawing board.

They’ve done quite the opposite in fact, publishing Decision and Order No. 34696 on July14. (The order is posted at the end of this article.)

The irony that it was released not three days after my inaugural piece (A Call To Action On Renewable Energy From An Impatient Millennial) was posted to Civil Beat on July 11 is not lost on me.

Do I have the hubris to believe that I was the catalyst for this decision? Not hardly, but dreamers can dream.

I do, however, think that this is a wonderful opportunity to dive into the order and parse out what I think is really going on. I was chastised a little by my father for 1) shying away from the wonky parts and 2) being a smart aleck in my previous piece. I can’t (won’t?) help the second part, but I can certainly address the first.

Hawaiian Electric power plant. Pearl City. 22 aug 2015. photograph Cory Lum/Civil Beat

Hawaiian Electric’s power plant in Pearl City. The author shares his views on the utility’s energy plans.

Cory Lum/Civil Beat

Join me, won’t you?

A slight disclaimer before we begin: This is my read of the order based on background and experience with the PSIP process and my own thoughts on the matter.

I highly suggest you read it yourself and come to your own conclusions if you’re at all interested in energy policy. It can be found filed in Hawaii PUC Docket No. 2014-0183, at the end of the filed documents list. Disclaimer over.

After getting through the procedural history and a recap of the parties’ statements of position, our first stop is Section V. Discussion, sub-section A. Overview beginning on page 23.

The PUC asserts that, after a lengthy and complicated process taking many years, the original intention of the plan, to “determine a reasonable power supply plan for each of the HECO Companies that can serve as a strategic basis and provide context to inform important pending and future resource acquisition and system operation decisions,” has been met.

I largely agree. HECO’s most recent PSIP draft is a hefty tome of complex and fascinating energy policy that seeks to get us to a renewable 2045, given the various constraints inherent to an isolated island grid. Lots of things are in there, including residential solar, utility scale renewable, distribution planning, “unknown future renewable energy sources,” and, no joke, Donald Trump.

HECO’s Framework

It does provide a framework for how to get there and, given the long timeline, attempts to reconcile a considerable number of variables with limited and sometimes asymmetric information. HECO did make an effort to engage stakeholders, address their numerous questions, and devote countless resources and hours to coming up with this plan. For what its worth, I commend them.

Here’s the rub, though: While this is a framework, is it the right framework for Hawaii and all its people?

Which leads us to our next stop: the concerns.

Immediately after the PUC admits that the goals of the PSIP were largely met (in the same sentence people!), they mention that approval of this most recent plan is subject to the concerns that they articulate throughout the bulk of the Order. The

concerns begin on page 32 and can be split into four categories: customer rate impacts, conventional generators (think big power plants), energy storage and system stability, and transmission.

Before we get into the concerns, let me make a really quick pitstop at the “High Priority Near-Term Actions,” which caused me a little heartburn. This can be found on page 27-31.

Briefly, its somewhat concerning to me that the PUC intends to “open a series of new dockets to serve as repositories for filings” even if its just for procurement of new renewable projects to meet the investment tax credit deadline.

First, I don’t think these will be the only dockets. Second, serious consideration should be given to the idea of docket consolidation. There’s too many conversations going on between too many parties all at the same time.

This might be conducive to large organizations with significant resources to handle all the paperwork flying around, but it’s not so with smaller agencies and stakeholders who are forced to focus their efforts on a comparatively small number of dockets. From a public admin standpoint, true stakeholder collaboration happens when all stakeholders are given an outlet to comprehensively represent their constituencies.

Back To The Concerns

The first big flag that goes up, that the PUC immediately points out, is that implementation of near term action plans increase rates across all service islands by 18-25 percent in the first five years.

Listen, I get that infrastructure upgrades cost money, but this gets back to the root of my previous criticism — that the traditional utility business model incentivizes spending money to build things, which gets passed on to the rate payer in a rate case. Why would the utility look for a “least cost, highest reward to the consumer” option when is not incentivized to do so?

The answer is that it wouldn’t, and that is clearly evidenced here. What makes this even more perplexing is that the PUC seems to have been caught off guard about this and is now concerned.

My opinion continues to be that the only way for this problem to be fixed, in the short term, is through an independent planner who is as divorced as possible from private interests, both fossil fuel based and renewable. In the long term, I see no other option but to change the utility business model away from a vertically integrated, build-to-profit structure.

The second concern, regarding HECO seeking PUC approval for certain large-scale renewable and fossil fuel generators across several islands, hints at HECO’s troubling tendency to assume blanket commission approval on these types of projects.

This isn’t a showstopper, as it’s hard for me to imagine a world where the PUC doesn’t approve a large-scale generator without a backup plan, but it does give the PUC a chance to remind HECO who’s boss. As citizens and consumers, we should hold the PUC accountable to make sure that HECO builds out these types of generators in the public’s best interest.

Not Deal Breakers, But …

The third and fourth concerns are also not a deal breaker but should still be mentioned.

The PUC’s apprehension about HECO’s ability to sufficiently analyze a suite of resource options to meet the demands of an aggressive renewable portfolio standard is no light-hearted jab. They’ve had years to think about this stuff, and yet continue to undervalue or under represent certain resources over others. The PUC specifically mentions pumped storage hydroelectric, thermal and electrical storage technology, and demand-side utility storage.

We need an independent planner who is as divorced as possible from private interests, both fossil fuel based and renewable.

The rest of the order lays out the PUC’s guidance on asking the utility for more in-depth analysis on a variety of aspects regarding the PSIP. These include things like community based efforts to get Molokai and Lanai 100 percent renewable ahead of schedule, a more comprehensive analysis on system security, and some encouraging guidance on future implementation of the plan.

There are some gems in there, specifically a line in the second paragraph of page 47 that reads suspiciously like the PUC telling HECO not to be obsequious but instead just to do a good job. I’ll leave that one for y’all to read.

Our final stop in this wild ride is page 48, section F, entitled “Future Planning Activities.” This is the point where I’m saving parts of the crow I’ve been eating for other transgressions I am likely to commit. The reason for this is that I believe that I wasn’t completely off-base when I said that the most recent iteration of the PSIP is the best we could have.

Clearly there’s enough caveats and asterisks in this order that imply that the PUC doesn’t think so either, and in fact they pretty much say this on pages 48-49. Yes, the PUC has “accepted” the plan by closing this docket, but you’re fooling yourself if you think this is the last we’ve seen of ol’ PSIP.

Our Energy Future

In the space between this order and now HECO has filed the Grid Modernization plan (draft and final), all the stakeholders in the DER docket have filed their smart export plans for the most part, the PUC approved Hawaii Gas’s petroleum feedstock agreement, and I still have yet to visit the Rainbow Drive-In.

Loco mocos notwithstanding, I’m really excited to see what the near future holds for energy policy in this state. Putting aside all the contentious opinions, there is some really progressive and interesting stuff happening here that’s not happening anywhere else.

You can bet that I’ll be reading, writing, and participating in all of it and I hope you do to. If you see me around, say “hi” and we can chat about alternative ratemaking theories. I’m always game.

Hawaii PUC Decision and Order No. 34696, July 14, 1017:

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