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HomeMy WebLinkAboutMIN RAWEEMC 2022/03/22 2020-2022 Committee on Regenerative Agriculture, Water, Energy, And Environmental Management 18th Session West Hawaii Civic Center 74-5044 Ane Keohokalole Highway, Building A Kailua-Kona, Hawaii March 22, 2022 CALL TO The regular meeting of the Committee on Regenerative Agriculture, Water, ORDER: Energy and Environmental Management was called to order at 11:16 a.m., in the Council Chambers, Kailua-Kona, by Mr. Herbert M. "Tim" Richards, III, Chair. ROLL CALL: Present: Mr. Herbert M. "Tim" Richards, III, Chair Mr. Holeka Goro Inaba, Vice Chair Mr. Aaron S. Y. Chung, Member Ms. Maile Medeiros David Mr. Matt Kaneali`i-Kleinfelder, Member (via videoconference from Hilo) Ms. Ashley L. Kierkiewicz, Member Ms. Heather L. Kimball, Member Ms. Susan L. K. Lee Loy, Member Ms. Rebecca Villegas, Member (came in later) STATEMENTS The Chair directed the Committee to proceed to the next order of business, FROM THE Statements from the Public on Agenda Items. PUBLIC ON AGENDA ITEMS: (There were none.) CHR. RICHARDS: So with that, now here we are with a little bit of time constraint here. There's a very specific reason for HELCO to be before us today. So with that, we're going to close statements from the public and move on to communications, Mr. Clerk. COMMUNI- The Chair directed the Committee to proceed to the next order of business, CATIONS: Communications. Comm. 691: REQUESTS AN UPDATE FROM HAWAII ELECTRIC LIGHT COMPANY REGARDING ITS NOTICE OF INCREASED RATES From Council Member Herbert M. "Tim" Richards III, dated March 13, 2022. Motion to Close File: Ms. Lee Loy moved to close file on Comm. 691. Seconded by Ms. Kierkiewicz. CHR. RICHARDS: HELLO, Zelko, please come to the table. And we have a very focused conversation here today concerning a lot of changes going on in the RAWEEMC-18 March 22,2022 world right now, its impacting things overall. In further discussions with Hawaiian Electric they want to be sure that the communication got out well on this. Ms. Zelko is before us today to give a quick update, I allotted about 10 or 15 minutes of the presentation. We'll have about 15 maybe 20 minutes, of conversation. With that, I'm going to ask Council Members to keep your questions focused. Mr. Clerk, could you run the timer? Can you set that for three minutes, so we allot enough time for each of the Council Members. So with that, Ms. Zelko, go ahead HELLO. (Note: At this time, Director of Government and Community Affairs, Hawaiian Electric Light Company Jennifer Zelko came forward to address the members of the Committee.) MS. ZELKO: Aloha, and good morning, I'm Jennifer Zelko. I'm the Director of Government and Community Affairs for Hawaiian Electric. Thank you, Chair Richards, Vice Chair Inaba, and Council Members, for having me address your committee today. I was told to keep my presentation very brief so that I leave adequate time to answer your questions. Really appreciate that this was already set up ahead of time, so thank you. I am here to provide an update about Hawaii Island's electric bills. When this pandemic as we know has created a lot of issues across our communities, families are struggling. And we're seeing the higher cost of basic needs like food increase, and unfortunately electric bills are not immune to what we're seeing across the board. So really my purpose is to come before you to explain why we are forecasting an increase, what we are doing about it, and I think what the community can do to be prepared both at home and in their businesses. (Note: At this time, Ms. Zelko provided a PowerPoint presentation to the members of the Committee. For viewing of the presentation, see the DVD copy of the proceedings on file in the Clerk's Office, or online at http://hawaiicounty.granicus.com. A hard copy of the presentation is made a part of the record. See Comm. 691.1.) MS. ZELKO: I hope that was brief enough. CHR. RICHARDS: Okay, yeah, that's clear and to the point. So with that, I'm going to open this up with for questions from the fellow Council Members. Again, I want to be mindful that Mr. Clerk, you have the three minute timer on this, so we can get everybody through the conversation by the time we adjourn. So with that, I am looking for any lights on. Mr. Inaba, please. MR. INABA: Thank you, Chair. Good morning, Jennifer. And as we proceed, you know, we know that there's an expected 20 percent increase, it's on the papers you're here before us today. Does HELCO currently have any thoughts as Page 2 RAWEEMC-18 March 22,2022 to when we might see it start going back down,just so the public—you know, we know the bad news, but MS. ZELKO: I mean that's a great question. I think although we don't have crystal ball, I think the hope is by summer we would see some relief. In some ways last week there was good news, we had seen oil go up to $120 a barrel and then it was down under a $100. So it really was a forecast that we put out, we weren't really sure what we were going to be seeing. We generally purchase fuel 30-days out, which is why we didn't see the impact sooner. Even though you could kind of see gas creep up higher. So that's part of why you don't see that happen so quickly. But I think we were hoping by summer. MR. INABA: Okay. And then as you did give us that recap as to the renewable energy across the island, some of those contracts being renegotiated to untie them from the price of oil, and I think we've touched on this every time you folks come, with future development of renewable energy sources with these contracts going away from the price of oil, will we ever see either some prices drop or will we see it at least stay still? What is your honest assessment of that, and what people should be expecting in the long term in light of all what was presented? MS. ZELKO: What we are hoping to see is that instead of this chart, as we procure renewable energy projects as we're able to renegotiate some of these legacy contracts,that this line will be much flatter, you're not going to see that up and down. This is directly related to the cost of fuel. MR. INABA: Okay. And as we produce however more renewable and there is no—as much cost beyond the initial creation of these facilities, do you think we'll ever be seeing ? MS. ZELKO: I think what we're hoping is to see a reduction. But I certainly think what we would want to see is what you see in places like Kauai, who made new contracts over the last 10 years. It's a stabilized rate. So that people can plan. They know what's happening, and they're not seeing again this up and down based on the cost of oil. MR. INABA: Thank you. And thank you for the direct and succinet presentation today. Appreciate it. Chair, I yield. CHR. RICHARDS: Thank you. Ms. Lee Loy. MS. LEE LOY: Thank you, Chair. Thanks Jen for being here, great presentation. Walk us through what that augmenting of the contract would look like. How do people engage in that process, because this is where they can really empower themselves, right? Whether it's the PUC (Public Utility Commission) or how would they engage, so that they can let decision makers know we want to Page 3 RAWEEMC-18 March 22,2022 uncouple and divorce ourselves from this barrel of oil. share with us how we do that. MS. ZELKO: What you really need are two parties to the contract that are willing to modify that part of the contract which links it. If you actually look at these four independent power producers,they're all between 13 and 14 cents. That would be let's say the bottom. It is just when oil goes over that amount they're able to get a windfall they get whatever is above the 13 and half cents. And I'm using that as an example. But that's about right for all four of them. We only have two left, because HRD (Hawi Renewable Development), theirs expired and they had agreed to modify. PGV (Puna Geothermal Venture) although theirs was not set to expire until 2027, because they were looking at doing expansion, they met with us early and said, "Hey we will agree to take that whole 46, and put it on a fixed cost." Which is really a great savings to customers. It's Tawhiri Wind Farm down south in Wailuku River. You would need the party to agree to modify that contract. MS. LEE LOY: And currently they don't want to come to the table. MS. ZELKO: We did send another letter last week, and are awaiting Tawhiri. That's the one that's longer out. We're talking 2027, so we're hoping that we can modify that before that date. MS. LEE LOY: And when they expire, they go back to the Public Utility Commission, and then they would be subject to the new rule. MS. ZELKO: Yeah, everything after 2008 which doesn't have—was not tied with the cost of oil, it wasn't required to be, so all of them would be off of that. MS. LEE LOY: Thanks, Jen. Chair, I yield. CHR. RICHARDS: Thank you, Ms. Lee Loy. Ms. Villegas. MS. VILLEGAS: Aloha, Jen, thanks for being here. Great succinct presentation. I just had a quick question because there is some confusion. And people questioned how on page seven you have the fuel prices impacting rates. And how those rates go up and down. But your everyday resident would say, "My rates never went down, they just keep going up." And so how do you reconcile this chart, with people's perception that our rates just keep going up. MS. ZELKO: So we do file monthly our rates, and they're actually available on our website. So if you look at average rates from May 2020, it was about $151.00. Last month you're probably talking over $200, it has been a difference. So if folks are using about the same energy, you would of seen much lower rates Page 4 RAWEEMC-18 March 22,2022 in 2016. In fact in March 2016, was the lowest rates we had in a decade. They do go up and down, but again it is because the cost of fuel. MS. VILLEGAS: Okay. Just trying to ask on that, and then I figured that was the case. MS. ZELKO: Yes. But there's a cover letter which kind of explains it, but we do it monthly. And I think it goes all the way maybe before 2008. It is on our website. MS. VILLEGAS: Okay. And then my question is because as we all know and is a shared vision and goal, is to transition away from our reliance on fossil fuels for creating energy. However myself and number of people who reached out to me have very strong concerns about what's perceived as a archaic technology when it comes to Honua Ola or Hu Honua. And there is a lot of fear and tension right now concerning that. And I see it on the list here with renewable contract status. I wondered what HELCO's overall perspective and perception of that project is, because I know they've been fighting tooth or nail to get things passed. And they hired the right marketing company to try and do it for them. CHR. RICHARDS: Ms. Villegas, as a point of this we are specific on the rate increase, and I'll allow a quick comment but I don't want to open it up with conversation because that could be here all afternoon. MS. ZELKO: Well I can answer that question. We do have a contract before the Public Utilities Commission with Honua Ola. I think we've been very clear, and were clear in the evidentiary hearing recently that while we agreed on everything, we never agreed on the price. I think we told the Public Utilities Commission it was the one aspect of that contract that we did not agree upon. And because of Public Utilities Commission it really is their jurisdiction to tell us whether the price is reasonable or not. Now the evidentiary hearing did just conclude and I think briefings may have just been due. But I think—yeah, that was the one area we hadn't agreed upon. But we do have a contract before the Public Utilities Commission and we're just waiting on decisions about what the next steps are. MS. VILLEGAS: Okay, thank you. I yield. CHR. RICHARDS: Thank you, Ms. Villegas. Mr. Kaneali`i-Kleinfelder. MR. KANEALI`I-KLEINFELDER: Thank you, Mr. Richards, appreciate it. Thank you for the presentation today, Jennifer. Appreciate you reaching out to me last week or week before. It prompted a post from my office just to remind everybody. You know, we've been through this, we've seen this before, we've seen it again and again. It's probably not going to be the last time we see prices rise. We all want our bills to come down. Part of the responsibility is on government, part of the responsibility is on utility, part of the responsibility is on Page 5 RAWEEMC-18 March 22,2022 the individual homeowners. And people who utilize HELCO energy to be more efficient in how they use energy, to look into doing solar, to buy electric vehicles. And there's a lot of things that each and every one of us can do to lessen our utilization of the energy on the grid and be more efficient in what we do. So it kind of goes both ways. But I appreciate the presentation. I wanted to ask couple of questions. What do you guys use for the most part to run your fossil-fuel based energy system? MS. ZELKO: The crude oil. MR. KANEALI`I-KLEINFELDER: Crude oil. And then I'm guessing you guys that you guys pair fairly large amount of taxes on that crude oil? MS. ZELKO: Yes. MR. KANEALI`I-KLEINFELDER: Okay. That's all my questions. It's our job as legislators to really get a feel of what we can do to help the situation from all different angles. And that was helpful. Thank you very much, Jennifer. I appreciate it. MS. ZELKO: Thank you. CHR. RICHARDS: Thank you, Mr. Kaneali`i-Kleinfelder. Ms. Kimball. MS. KIMBALL: Thank you, Chair. Thank you, Ms. Zelko, for being here. Couple quick questions. The PGV capacity are they operating—at what capacity right now and what is the expanded capacity? MS. ZELKO: You know, I should of checked before I came today. But we've been basing it on the average, a monthly average. And I think they've been averaging about 25 megawatts. MS. KIMBALL: And then what are they planning on expanding to, do you know? MS. ZELKO: Forty-six. MS. KIMBALL: Okay, thank you. Did the two projects that you have listed under future projects, have those already gone through the PUC or no? MS. ZELKO: So are these the Hawaii Island Stage 3? MS. KIMBALL: Yeah. MS. ZELKO: Okay, so we didn't file the draft in October of last year. There was community input, and we are getting ready to file the final. RFP (Request for Page 6 RAWEEMC-18 March 22,2022 Proposal) with the commission, and then it will be before them for the decision making. Shared solar yes, CBRE (Community-Based Renewable Energy) was finally approved, and again launching in March of—like today. MS. KIMBALL: Thank you for that. Going back to your pie chart of basically very simple business model, you mentioned that your profits if you will, or the return for HECO is not tied to the fluctuation in the price of oil. If I recall correctly, your model is to have a guaranteed rate of return right? MS. ZELKO: We actually don't have a guaranteed rate of return. We have a ceiling which I think is nine and a half. We never hit it. MS. KIMBALL: Okay. So do you know we've got nine percent here as the current rate of return. MS. ZELKO: That was as of last quarter. I don't think we have numbers for first quarter. MS. KIMBALL: Okay. And you had no response to your letter from the wind farm, about potentially renegotiating during this time period for maybe temporarily? MS. ZELKO: To be fair, I believe that letter was sent out at the end of last week. And so I wouldn't of expected to have one by today. But I did want to let you folks know that we are again making that request. We had made it 2012, the price of oil was really high because of Fukushima. We made it again in 2016, and at that time even the price of oil was low, I think the comment, I can't remember who made it, we can see that this goes up and down though, and so what we were trying to avoid this happening again. I think we're hopeful that we could come to some agreement with Tawhiri. MS. KIMBALL: Being the situation that we're in rises to the level of an emergency? An energy emergency? MS. ZELKO: Yeah. I think part of—for Hawaiian Electric we have to continue working with our Public Utilities Commission and our stakeholders. You folks are considered part of our key stakeholders on Hawaii Island. And so anything we can do to help if it's being part of conversations that you folks are having, if you need information we're happy to provide that to you. MS. KIMBALL: There's been a lot of coverage about a request from our Mayor to the Governor, to declare an emergency situation. I don't know if, Mr. Adams, you're here to weigh in on that. But there's a couple of other places here, one you've identified, when a company agrees to a temporary reduction, or untying from the price of oil. There's looking at the potential rate of return for HECO, for a short shift. There's a possibility in other various, where we utilize oil to give a Page 7 RAWEEMC-18 March 22,2022 tax holiday or something like that could provide a radiant relief for an emergency situation, without going too far astray. CHR. RICHARDS: Yeah, hang on. This is about(inaudible), it's not about declarations or anything like that. So I'm listening very carefully. MS. KIMBALL: Yes. My question is going to circle back to the statement that you've been talking about with regard to the PUC and your negotiations with them. And how much is the process of the PUC an actual barrier to reduction of the cost for the energy payer. Is the timeline of PUC actually a barrier at this time to respond to this emergency situation? MS. ZELKO: I was really happy to see the PGV approval last week, Council Member Kimball. I think to me that was a really big first step, though I wish it was sooner. For me, yes. But I do think there's a purpose for the regulatory process in part of that. And I think we've all learned our lesson, is the community input piece. And when you see some of the projects that have been sitting there, there has been significant community opposition. And the regulatory process like anything allows for communities to come together and talk. So I don't really want say do I think they should move faster. I was happy to see PGV come through, I see the savings to customers. I think you also had brought up the rate of return. And I failed to mention this but I wanted to say, over the last two years our shareholders, HEI (Hawaiian Electric Industries), has provided $4 million to households across the islands. Including Kauai. Last year $2 million was—we were the founding sponsor of Aloha United Way utility bill assistance program. That helped folks not just with electric bills, but also with gas, water, and sewer. And then in January of this year we had the kokua fund bill payment plan, or bill forgiveness—let me try get that right. Shareholders gave another $2 million, it went across the islands we serve and it helped 4,800 customers on Hawaii Island. I wanted to make sure I read that comment as well. MS. KIMBALL: Thank you, Ms. Zelko. And I agree with everything you said, and I'm also pleased to see PGV contract come through. And I agree with your comments that the PUC holds an important role. These are people that are appointed and vetted and knowledgeable about their subject area. And the regulatory process exists for a reason. It may not always go as quickly as we'd like, but there's intention behind that. Thank you for sharing your comments on that. With that Chair, I yield. CHR. RICHARDS: Thank you, Ms. Kimball. Anybody else, any further comments? There we go I'm seeing a red hand, and a red light on a red shirt. MR. KANEALI`I-KLEINFELDER: Thank you, Mr. Richards. One follow up. Jennifer is there a cap on how much you can raise rates within one year, or is it an open adjustment that can just go with the price of oil and never stop? Page 8 RAWEEMC-18 March 22,2022 MS. ZELKO: There is a cost-risk sharing mechanism. The Public Utilities Commission has instituted, which requires the shareholders at some point to come in to share in the cost. MR. KANEALI`I-KLEINFELDER: Okay. I was thinking, I mean I don't quite understand that. But I don't want to get into that too much. But I'm thinking like real property we can't raise more than three percent per year for some of our tax classes. Is there anything like that where you can only go up so many percentage points per year, or is there no cap? MS. ZELKO: I don't believe that there's a cap. But again, there is this cost-risk sharing mechanism that the Public Utilities Commission did institute, which requires shareholders, and it maybe a 98 percent to two percent cost per percent. But I can get that information to you folks, as a follow up. MR. KANEALI`I-KLEINFELDER: Okay. Thank you. That's it, then. Thank you. CHR. RICHARDS: Okay. Thank you, Mr. Kaneali`i-Kleinfelder. Ms. Kierkiewicz. MS. KIERKIEWICZ: Thank you, Chair. And thank you for putting this communication forward, so we can hear from you, Jen. And thank you so much for just being really diligent, and reaching out to all of the elected officials to just be a resource for information. I appreciate, you know,the reminders of everybody needing to conserve on energy, but it's really beyond that. You know, our island community folks know how to be resourceful, and resilient. And they are already cutting costs where they can, because it is so fricken expensive to live here. And now we're feeling it at the pump, we're feeling it when we turn on the lights, we're feeling it when we go grocery shopping. I cannot imagine what it's like for people living on fixed incomes, dealing with this right now. There's so much pressure. I really want to acknowledge and mahalo Council Member Kimball for bringing up what more we can do, because I really do feel we are experiencing a level of crisis that really needs to be addressed. And the PUC yes, very important function, but I wonder if there is some gentle urging that we might be able to do in our capacity as legislators,to get them to take a look at dockets. Prioritizing what they look like so that customers are feeling a little less pinched. What can we do in our roles as Council Members? Is a resolution helpful, is a letter campaign helpful, letters to the editor? What exactly do you think, in your opinion, right, can we do to just get the PUC to move a bit faster in some of these decisions? MS. ZELKO: I think it's important for not just the Public Utilities Commission, but I think even for our State officials to understand impacts for Hawaii Island. I Page 9 RAWEEMC-18 March 22,2022 keep hearing from you folks, you are the leaders, you are the closest to constituents. I mean when I think about your folk's role, the constituents feel closest to you. And I think that brings a lot of responsibility for all of you, and I think your all doing a phenomenal job. But I think letting your voices be heard when you know a project is good, when you know it's important, I think plenty folks know. But I feel like you guys have been doing that. I think you've all been so involved, and I think just continuing to say that. I mean initially what is it that we're trying to do, we want to get out of these avoided cost contracts. Until we're out of those last two, I feel like we are still tied to those strings of the cost of oil. And then again as we get AES Waikoloa and Waimea Solar helps us to purchase less fuel for the fossil fuel plan. So I think all of this has to be working, I wish that it were faster. But I want you folks to know, we're being very diligent on our part. And again, part of the message for customers, and I do understand what you're saying about people are already stretched so thin. Even at home I'm kind of going around hey turn off lights, do we need to take that extra trip, can my husband do all of the errands at one time, or me. But I think at some point everybody's bare minimum. I think we're resilient on this island, I think we have been. I think the community is doing everything they can, we did want to get out in front of this and just see if there's any place in your home where you conserve a little bit more, I mean every little bit counts. And I think actually going forward, conservation of energy is important just for the future. I mean not just for right now, even when you see the price go down, I think it's going to be important. But I think making sure that you folks are talking to Mayors in other areas and for other organizations including the Public Utilities Commission about projects that you think are important and why they are important for Hawaii Island and the community here. MS. KIERKIEWICZ: Thanks, Jen. And thanks again, Chair, for allowing us to have this conversation. I think where we are at this moment and time really just shows that we have to do everything we can to rid ourselves of oil and just really create that renewable, sustainable, energy-secure feature that we really need so that we're not caught in these types of situations that are the results of so much instability in the global environment. Thank you, Chair. I'll end there, I yield. CHR. RICHARDS: Thanks, Ms. Kierkiewicz. And looking around and seeing no further, we're going to wrap this up and stay on timeline. First of all Jen, thanks for being before us. Catch on a couple of things. I fully appreciate Hawaiian Electric reaching out and saying, "Hey look this is coming at us, we want the public to understand what's before us." So I fully appreciate that. Also thank you for pointing out that the volatility of the oil does not affect your profit, this is not for you. That's just an added cost going up. And we've all seen this before. In our transportation cost when it comes to shipping, they have a fuel surcharge. That's essentially what we're seeing in this situation here. Page 10 RAWEEMC-18 March 22,2022 And it's obvious that Hawaiian Electric has been proactive, not reactive in trying to get these things corrected. And kudos for getting part of it done. And thanks for continuing to work on this, because that's truly taking care of the community going forward. Ms. Kierkiewicz, to your question about what we can do with the PUC in working on a shipping situation, I think what we did was, what my office did, we testified and submitted written testimony. So I think as much as we can do to make a statement for the concerns of the community. I think that's what we need to advocate going forward. Ms. Zelko, renewable by 2030, I think that's what Hawaiian Electric said for Big Island. MS. ZELKO: Hawaii Island Stage 3, will help us get to 2030. CHR. RICHARDS: So that is a direction as we transition away from the fossil fuel. That makes all the sense in the world. As we decouple from the fossil fuel and from the oil surcharge, we'll see an improvement overall. But I want to remind people, remember after the Hurricane Katrina, our State passed the law that tied our retail value cost of—excuse me, before Hurricane Katrina, tied our retail value of cost of our gasoline to the Gulf Coast cost. And during Hurricane Katrina, the cost of gasoline on the Gulf Coast skyrocketed. So did our State gasoline, it had nothing to do with anything other than the fact the law mandated it. I don't want to put the PUC in the same category, but it is a mandate. So it's not something that the delivery of the energy can do anything. That's something that's coming forth. Decoupling is going to help, but I think the idea is just to keep the big picture in mind as we go forward. So with that, I appreciate, thank you so much, Jen, for being here today. And thanks for clearing that up. Please get the information out concerning that one slide you had for people that need help with their rates to contact HELLO. And be sure they can work something out, because you said, you had zero interest payments, extensions, etcetera. So please get that information to all the Council Members Offices, so we can help the community. And with that, we have a motion on the floor to close file. All signify by saying Ic aye. Page 11