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PUC Consultant Refuses to Certify Integrated Resource Planning Report

Report and the action plans are not compliant with specific requirements and “do not meaningfully address several of the Principal Issues,” including customer rates.

October 31, 2013
Susan Halas , Maui Weekly

Part of the process for determining Hawai'i's energy future is a lengthy report called "Integrated Resource Planning" (IRP). This document sets out long-and short-term energy goals for the state as required by the Public Utilities Commission (PUC).

According to information on the Hawaiian Electric Company's (HECO) Website, "On Friday, June 28, 2013, the Hawaiian Electric Companies filed with the PUC their IRP and Five-Year Action Plans detailing plans to meet future electricity needs for O'ahu, Molokai, Lana'i, Maui and Hawai'i Island."

"Integrated Resource Planning," the company news release continued, "aims to develop comprehensive 20-year plans for meeting energy needs under various scenarios in the Hawaiian Electric service territories, evaluating and integrating resources that supply electricity and those that reduce or better manage demand for electricity. The goal is to ensure delivery of reliable electric service for residential and business customers, while striving to decrease the use of imported fossil fuel, increase efficiency and reduce electric bills.

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Independent Entity Carl Freedman is a consultant to the PUC. He refused to certify Hawaiian Electric Companies’ Integrated Resource Planning report, a lengthy document that sets out long-and short-term energy goals citing many deficiencies.

"The action plans were developed after a year of research, community discussion, analysis and deliberation, including input from a community advisory group of almost 70 business, community and government, environmental and other leaders." The statement concluded noting, " two rounds of public meetings were held on O'ahu, Maui, Molokai, Lana'i and Hawai'i Island to seek questions and comments."

But in a new wrinkle, Carl Freedman of Maui, the consultant hired by the PUC to review that report--a role that is called the "Independent Entity" (IE)--declined to certify it, raised objections to the way it was compiled and questioned many underlying assumptions that were included.

On Monday, Oct. 21, Henry Curtis, executive director of Life of the Land and a noted energy blogger, summarized some of these concerns.

Here are some of the points raised by Freedman as taken from the Curtis blog:

According to Curtis, "The PUC gave direction to the HECO Companies. Take a year. Develop long-term scenarios and five-year Action Plans. Answer specific questions. File the report with the PUC.

"[It] wanted answers to 'important over-arching policy questions,' including the affordability of utility rates.

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Then Curtis wrote, "In July of this year, IE Freedman issued a non-certification, concluding that:

The IRP Report and the Action Plans are not compliant with specific [IRP] Framework requirements and do not meaningfully address several of the Principal Issues.

The IE found that 'rates and bills for all customer classes for all of the HECO Companies are projected to increase substantially over the initial five-year Action Plan period.

Even though the projected rates are going up, the rate and bill impacts were 'understated and downplayed' in HECO's analysis.

The HECO Companies were required to discuss rate impacts with the Advisory Group. But they didn't.

The affordability of energy services is not explicitly or substantially addressed in the HECO filing. Rather, the projected rate increases were 'unduly optimistic' and were 'underestimated in several respects.'

The system upgrades and associated costs necessary to effectively interconnect distributed generation have not been identified.

As more and more customers produce their own energy, those 'captive' customers who stay with the utility will wind up paying larger and larger shares of the fixed costs needed to run the grid.

In addition, increasing renewable energy penetration levels require more sophisticated and costly system management. This also adds costs to the remaining customers.

The PUC required HECO, MECO and HELCO to analyze the rate impacts to those who remain dependent upon the utility. The IE found that the HECO Companies did not 'meaningfully address the issue.'

HECO analysis relied on a computer program [that] allows the utility to analyze changing generation portfolios in periods of rising and falling demand. [It] was not designed for and could not answer some of the PUC's questions, especially as it related to captive customer rate impacts and the curtailment of wind and solar.

A year ago, the Consumer Advocate pointed this weakness out to HECO, but HECO did not consider other programs that would have enabled them to answer the PUC's questions.

The HECO Plan failed to address cost issues associated with planned utility proposals such as Smart Meters, Smart Grid and Energy Storage.

The HECO Companies only included known costs in rate projections, ignoring contingency allowances for unanticipated costs."

"Following the non-certification filing by the IE, several Advisory Group members added their comments," Curtis' blog continued.

"Earthjustice wrote that the "Captive Customer Rate Impact was one [of several] that the HECO Companies entirely missed answering. In fact, they may have answered it by default, by pursuing a course of essentially utility-business-as-usual. Ignoring this issue, however, does not diminish its importance for the future of the HECO Companies, their customers, and the public."

"Life of the Land concluded that 'the ratepayers should not be saddled with financing this report.'"

 
 
 

 

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