- Special Projects
A group of Big Island residents who have pushed for more geothermal development and lower electricity rates is exploring the possibility of converting the island’s electric utility, Hawaii Electric Light Co., into a publicly owned cooperative in light of the pending sale of the utility’s parent company, Hawaiian Electric Co., to Florida-based NextEra Energy.
Hawaiian Electric Co. operates the electric utilities on Oahu, the Big Island and in Maui County.
NextEra’s purchase of the utilities is expected to close in December, pending regulatory approvals, including that of Hawaii’s Public Utilities Commission. But some Big Island residents are worried that the sale, and HECO’s focus on importing liquefied natural gas in particular, could derail efforts to bring down electricity rates.
Wallace Ishibashi, a member of the co-op steering committee, which also includes Big Island farmer Richard Ha, said that any plans to try and break HELCO off from its parent company are preliminary.
“We are just investigating right now to see what options are available,” said Ishibashi. “There is nothing definitive.”
Both Ha and Ishibashi were reluctant to disclose who sits on the co-op steering committee.
Ishibashi said that the group grew out of the Big Island Community Coalition, which in the past opposed the proposed Aina Koa Pono biofuel project planned for Kau, which was ultimately shot down by state regulators as being too expensive.
The group has also supported more geothermal development on the Big Island as a way of bringing down electricity rates, which have trended 25 percent higher than Oahu. The state’s electricity rates overall have been about triple the national average.
Most recently, the Big Island Community Coalition joined in a petition to the PUC urging regulators to hold off on approving NextEra’s purchase of Hawaiian Electric until there is a clear roadmap as to where the electric utilities should be heading in their energy policy.
“I think the NextEra deal is going to be very devastating to Hawaii’s renewable energy goals.” — Rep. Cynthia Thielen
After that, the PUC should open up the purchase of HECO to other bidders with suitable business models, according to the petition, which was also signed by Life of the Land, the Puna Pono Alliance, Friends of Lanai, Community Alliance on Prisons, Ka Lei Maile Alii Hawaiian Civic Club and I Aloha Molokai.
The PUC is reviewing the petition.
For now, the Big Island co-op effort has raised more questions than answers. NextEra already has a merger agreement with HECO, but that doesn’t prevent the board of Hawaiian Electric Industries, which owns HECO, from entertaining other bids if they are presented, according to company SEC filings.
It’s also not clear where the financing would come.
But to get a better sense of how such a model would work, members of the Big Island Community Coalition last month invited David Bissell, CEO of the Kauai Island Utility Cooperative, to the Big Island to talk about how its co-op model works. Bissell was joined by Dennis Esaki, who helped form the co-op in 2002, when its owner, Connecticut-based Citizens Communications’ Kauai Electric, put it up for sale.
KIUC operates as a nonprofit and is controlled by ratepayers, who elect the utility’s board. It’s one of about 900 electric cooperatives operating in 47 states, according to KIUC.
Kauai’s utility has lagged behind HECO in renewable energy development and its electricity rates are still some of the highest in the islands.
Ha cited a number of benefits to a Big Island co-op model on his blog, including “local, democratic control over one of the most important infrastructures and public goods on the island” and lower electricity costs through cultivating local renewable energy sources.
“We are doing all the legwork and research and information gathering now so that if there is an opportunity, we will be in position,” wrote Ha in a blog post. “If we don’t do this, we won’t be in the game.”
Ha is also the former chair of Kuokoa, the company that failed in its bid to take over HECO in recent years despite attracting a number of high-profile board members, including James Woolsey, former director of the Central Intelligence Agency, and TJ Glauthier, the second highest-ranking official at the U.S. Department of Energy during President Bill Clinton’s administration and a member of President Barack Obama’s transition team.
KIUC has often been touted among people in the local energy sector as being more nimble than HECO and able to borrow capital at lower interest rates for renewable energy projects because of its nonprofit status. But the utility has lagged behind HECO in renewable energy development and its electricity rates are still some of the highest in the islands.
Currently, KIUC generates 15 percent of its electricity from renewables, including solar and hydropower, with the rest derived from imported oil. By contrast, HECO’s utilities overall derive about 18 percent of their energy from renewables, according to Hawaii’s Department of Business, Economic Development and Tourism.
There has been significantly more progress on HECO’s neighbor island grids — on the Big Island, nearly 50 percent of electricity is derived from renewables, and about 30 percent on Maui.
Rob Gould, a spokesman for NextEra, declined to comment on the Big Island co-op idea.
Exploring other business models for HECO is a subject that comes up every year in the Legislature, but has gained more emphasis this year with NextEra’s move to purchase the utility.
Rep. Cynthia Thielen has proposed a bill this session that would require the University of Hawaii and the Department of Business, Economic Development and Tourism to study the benefits of creating publicly owned electric utilities in the state. House Bill 3 cites concerns over NextEra’s purchase of HECO, “which could negatively impact the state’s commitment to the development of renewable energy use.”
“I think the NextEra deal is going to be very devastating to Hawaii’s renewable energy goals,” Thielen told Civil Beat. “It sets us back immensely and takes the power out of the residents’ hands and puts it in this Florida corporation.”
Thielen said that she wasn’t aware of the movement on the Big Island to explore a co-op model when she introduced the bill.
NextEra officials haven’t disclosed much about their specific energy plans for Hawaii if the sale goes through.
But they have stressed their commitment to achieving Hawaii’s renewable energy goals. The company is one of the biggest wind developers in the country and also has investments in large-scale solar, including a proposed solar farm in Waianae.