“The governor of Hawaii fully supports Hawaii’s energy industry, including its investor-owned electric utilities, to pursue the most economical mix of energy resources. Hawaii’s energy consumers deserve the lowest energy prices possible while experiencing high standards of reliability and service. In an era where fracking technology has revolutionized the oil and gas production industries, and resulted in historically low crude oil prices, we call on these energy providers to pursue an ‘all-of-the-above’ energy strategy that includes prudent steps toward the expansion of renewable technologies, while taking advantage of favorable pricing of traditional fuels and indigenous energy sources such as geothermal and hydropower.”
“The governor of Hawaii fully supports Hawaii’s energy industry, including its investor-owned electric utilities, to pursue the most economical mix of energy resources. Hawaii’s energy consumers deserve the lowest energy prices possible while experiencing high standards of reliability and service. In an era where fracking technology has revolutionized the oil and gas production industries, and resulted in historically low crude oil prices, we call on these energy providers to pursue an ‘all-of-the-above’ energy strategy that includes prudent steps toward the expansion of renewable technologies, while taking advantage of favorable pricing of traditional fuels and indigenous energy sources such as geothermal and hydropower.”
NOT!
You’re not likely to see a press release from Gov. David Ige’s office like this anytime soon. But, wouldn’t it be refreshing if the state were more concerned about the costs that are borne by us, Hawaii’s consumers and businesses, for ambitious and arbitrary renewable energy goals?
Recently, the governor dissed the proposed sale of Hawaii’s electric utilities to NextEra because, “Although I welcome capital investment in Hawaii with respect to energy, any merger or investment must align with the state’s 100 percent renewable energy goal.”
This is not a good reason to oppose the merger. From a cost standpoint, an energy policy focused 100 percent on renewables is no better than one focused on 100 percent oil, gas and coal, and may be even worse.
Consumers don’t care as much about the percentage of electricity that is “renewable” as they care about how much it costs them to use it in their appliances. The state’s Division of Consumer Advocacy is supposed to understand this, but by also opposing the merger, the agency is caving in to ineffective “feel good” politics.
But their case against the merger differs somewhat from that of the governor. The Consumer Advocate argues that NextEra is deceiving Hawaii’s consumers with its pledge to reduce electric bills for Hawaii’s consumers (which means, hopefully, all Hawaii’s consumers, not just the net-metering customers).
I don’t see how NextEra can please both of them. A grid utilizing 100 percent renewable energy is going to be much more expensive than one in which renewable energy only fills its most economic, sustainable niches within the fuel mix. The governor seems fearful that NextEra won’t follow his Apollo-program-like rush to expensive 100 percent renewable, while the Consumer Advocate fears no consumer savings will result from it. Double whammy: NextEra is damned if they do and damned if they don’t. One would think that the governor and the Consumer Advocate would have gotten together to get their stories more consistent.
Like others who have promoted renewable energy technologies over the years, I have become frustrated lately by ham-handed government efforts to force the premature adoption of these technologies at any price, most diabolically by regulating up the cost of traditional energy sources. Paraphrasing President Obama’s words, “The price of energy will necessarily skyrocket”… and “they can continue to construct coal plants, but they will go bankrupt doing so.”
You don’t have to look far to find an example of state government driving up the price of electricity. Just look at net-metering. Under this government requirement, the utility company accepts a kilowatt-hour of energy from a customer at any time of day, then delivers that same amount of energy back to the customer at a time of the customer’s choosing.
The utility “avoids” the cost of fuel to generate that unit of electricity (say, about 20 cents), but it incurs a cost of several cents to transfer the unit to someone else, and then back to the net-metered customer. In so doing, it also forfeits roughly 40 cents of revenue, and therefore takes a net loss on each kilowatt-hour so transferred. Who pays for that loss? Well, of course, the ratepayers and the stockholders do.
A couple of years ago, few would have imagined that the price of crude oil could drop below $50 per barrel and remain there for a lengthy period. We must change course in Hawaii by adopting a more fiscally responsible renewable energy strategy, balancing our desire for a quick green transformation with prudent restraint, and careful market-based approaches to adopting renewable technologies. Hawaii’s consumers deserve no less.
(Full disclosure: I am a former HELCO employee and an HEI stock owner, and am likely to benefit from the sale of HECO to NextEra. However, the opinions expressed herein are solely my own. And I do believe that NextEra will be able to produce our electricity more economically, with an “all-of-the-above” strategy which they already have proven in their own service territory.)
Curtis Beck is a professional engineer licensed to practice in the state of Hawaii since 1984, and a retired former department manager with Hawaii Electric Light Co. He writes an occasional column for the Tribune-Herald.