Maui County officials say the electric utility’s reluctance to retire decades-old oil-fired generators is keeping electric costs high on the island.

Maui wants to burn solid waste to generate electricity, which would also keep the county landfill from filling up. More than 100 companies have expressed interest in bidding on the “waste-to-energy” project, but the county can’t move forward because Maui Electric Co., part of the Hawaiian Electric Co. which dominates island power generation, won’t commit to buying the power, county officials say.

This month, Maui Mayor Alan Arakawa criticized the utility for holding back the county’s plans and not doing enough to try to lower electricity rates for residents.

“When we can go to a RFP and get 111 companies to bid on taking trash to energy, and Maui Electric won’t accept all of that firm power, and they are resisting it, then it is time to really hold their feet to the fire,” he told Akaku, Maui’s community television station. “They are charging this community roughly four times that what is paid on the continental U.S. — four times more. And we are offering options to be able to lessen that cost.”

Hawaiian Electric Co., which oversees the utilities on Oahu, Maui and the Big Island, declined an interview request for this story.

Maui energy commissioner Doug McLeod said the island’s old generators require significant maintenance and are expensive to operate. Customers end up paying those costs, he said. One generator in Kahului was built in 1948 and was recently ranked sixth on a list of state facilities that release the most toxic pollutants into the air.

“That’s insane. It’s only 38 megawatts,” said McLeod. “That just shows you how obsolete that equipment is. If we could get the public thinking about why none of these are turned off, it would be a very valuable discussion.”

Swapping oil-fired generators for facilities powered by renewable energy could translate into major cost savings for Maui residents.

Kyle Ginoza, Maui’s director of Environmental Management, said the target price for the energy produced by the county’s waste-to-energy project is about 15 cents to 18 cents per kilowatt hour, compared to the current 20 cents per kilowatt hour to produce oil-powered electricity. Maui customers currently pay about 38 cents per kilowatt hour when distribution costs and other fees are factored in.

MECO had said in early 2011 that it would issue its own call for new energy sources that would include waste-to-energy projects. But two years later, MECO still hasn’t released the RFP, prompting the county to move forward with its own.

The deadline for companies to bid on Maui county’s project is Thursday, Ginoza said.

Oil Generators Not Being Retired Despite State Mandate

The Hawaii Clean Energy Initiative, signed in 2009 between the state and utilities, mandates that 40 percent of electricity be derived from renewable energy sources by 2030. And as more renewables are brought online, the utility is required to retire its oil powered generators, according to the agreement:

As a key part of the transition of the Hawaiian Electric Companies’ systems to a renewable energy future, the utilities will “retire” the older and less efficient fossil-fired firm capacity generating units by removing such units from normal daily operating service as expeditiously as possible.

But on Maui this hasn’t happened, even though the utility now generates about 30 percent of its electricity from renewables, primarily from wind farms.

More than 100 mw of renewable energy has come online in recent years, according to McLeod. By comparison, Maui has a peak demand of about 200 mw.

“You can’t keep adding renewables without taking something offline,” said McLeod. “The public is paying for everything plus. And that is a problem.”

HECO spokesman Peter Rosegg said in an email that the utility planned to issue its own RFP for energy sources such as waste-to-energy projects, which must be approved by the Hawaii Public Utilities Commission, but he wouldn’t say when.

“This process is on-going and we will not have a firm time line until the final draft is approved for release,” he said.

Rosegg would not say whether there was a written draft of an RFP that the utility was actively working on.

McLeod is skeptical about the utility’s plans.

“They always hold out there that someday they will put out a RFP for firm renewable energy, but we are pretty doubtful at this time,” he said.

While the county has already issued an RFP for waste-to-energy projects, the utility is also required to issue its own competitive bid. An alternative is to seek a waiver from state regulators, something the utility said it is exploring. The waiver would allow it to negotiate directly with a winning bidder of the county’s RFP.

In the past, critics have said that HECO doesn’t want to retire its generators because it would hurt the utility’s bottom line. McLeod notes that the Kahului generator should be fully depreciated by now.

In addition to retiring old generators, McLeod said that there could be a cost benefit to adding a modern fossil fuel plant that would burn less oil to produce the same amount of power, as well as pair better with renewables.

Rosegg, the HECO spokesman, did not respond directly to a question about why the utility hadn’t retired any of its generators. In an email, Rosegg said that MECO had reduced the output levels of its fossil-fuel units to make room for renewables.

“Maui Electric has worked to use as much renewable energy as possible by reducing the output levels of our fossil-fuel-units and reducing the amount of time we run some units over a year,” Rosegg said. “To date, new renewable projects on Maui have taken advantage of the wind and solar resources of the island. These are welcomed additions but their output is variable and not controllable.”

In the past, the utility has said that it must keep generating units online as an emergency backup for intermittent renewable energy sources such as wind and solar, which are subject to power fluctuations.

However, how much backup power is needed for wind and solar sources is disputed by energy experts. The American Wind Energy Association calls the claim that wind plants “require an equivalent amount of ‘backup power’ provided by fossil fuel plants” a myth.

The trade group says that large amounts of wind energy can be added to the grid with only minimal increases in the use of reserves.

Backup fossil fuel sources are not needed for sources such as waste-to-energy projects which are available all the time, according to information on HECO’s website.

Still, MECO has shown a reluctance to add the power as a replacement for oil-powered generation.

In a letter to state regulators last year, MECO president Sharon Suzuki said that the utility didn’t need any more power until about 2019.

And even then, it’s not clear if MECO intends to retire any of its generators.

Suzuki wrote that the additional firm power would “allow MECO to possibly replace existing oil-fired generating capacity.” (emphasis added)

Despite the lack of commitment from MECO to buy power from a waste-to-energy plant, the county still hopes to have such a facility up and running by 2017. A winning bidder could be announced as early as April, according to Ginoza.

The county would pay the winning bidder to burn Maui’s trash. But the waste-to-energy company would also need MECO to buy its power.

There’s a chance that the utility will only buy a percentage of it, said Ginoza, which would likely kill the project.

“Curtailment is almost a deal breaker for a project like this,” he said.

McLeod said that the utility had previously estimated that the power could be curtailed 12 hours a day.

HECO said it couldn’t determine how much of the firm power could be accepted at this time.

“Curtailment impacts need to be considered when any new generation is added to the grid,” Rosegg said in an email. “The size of the County’s project, its operational characteristics and the mix of other generating resources on the Maui system in 2017 (when the County desires the facility to come on line) are not yet known so it is not possible to predict how much power can be accepted.”

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