PUC hearing to cover KIUC standby rate

The Public Utilities Commission on Tuesday will hold a hearing to review a proposed rate increase for Kaua‘i Island Utility Cooperative customers who generate more than 30 kilowatts of their own power.

The new rate calculations provided in November by the utility represent more than a 700 percent increase per kilowatt over the current charge. Some companies say the jump could dampen the economic feasibility of distributed generation systems — including green energy initiatives — planned for the island.

The new numbers provide more of a starting point for discussion than a final number, said Randy Hee, acting president and chief executive of the cooperative.

“We just took what the PUC said, and we supplied that rate,” he said.

The PUC asked utilities throughout the state to conduct the same review.

The proposed change could also initiate a rate case, which is an across the board review and reassessment of rates paid by all members, he said.

“It’s probably better to look at the entire rate structure instead of one element,” he said. “Single line rate making is not common practice.”

KIUC customers who generate more than 30 kilowatts of their own power while connecting to the island’s grid as a back-up currently pay $5 per kilowatt of standby demand.

The utility told the PUC in November that the infrastructure, capitalized cost of generators and other demands of providing that back-up service actually cost KIUC between $31 and $37 per kilowatt — an expense currently borne by other members, Hee said.

“Either we get the money from one of these customers or (KIUC members) subsidize them,” he said.

The distributed systems relieve some day-to-day stress on the power grid, but the utility at all times must maintain enough capacity to serve the customer if a failure occurs, Hee said.

In 1984 Kaua‘i Electric established the $5 rate, and since then only two distributed systems, including the combined heat and power system at the state-run Kaua‘i Veterans Memorial Hospital, have come online, Hee said.

But socioeconomic pressures, the availability of technology and the state’s own energy initiatives have fueled increased interest in distributed generation, making the issue of a fair rate more pressing.

At least 10 non-residential customers have been talking to KIUC about installing either photovoltaic or CHP systems to provide part of their energy requirements, said Anne Barnes, KIUC spokeswoman.

The National Tropical Botanical Garden, for example, planned two 50 kilowatt photovoltaic systems, including one for the Botanical Research Center currently being developed, said Chipper Wichman, director of the garden.

If the current rates go through, NTBG would likely scale back the systems to come in at, or below the 30 kilowatt requirement, he said.

“It’s creating a 30-kilowatt cap for alternative energy projects,” he said.

The county of Kaua‘i won’t scale back plans to install a photovoltaic system on top of the Civic Center, even though savings associated with the 72-kilowatt initiative would disappear, said Glenn Sato, energy coordinator for the county.

“We have committed to put the project through,” he said. “We need to be a leader in renewable energy development. We don’t expect (the calculated cost) to be approved, and we’re going to fight like crazy for something reasonable.”

Power companies responding to the PUC request for reassessment of standby costs on O‘ahu, Maui and the Big Island exempted photovoltaic energy systems from the proposed standby rate increase, said Catherine Awakuni, executive director for the state Division of Consumer Advocacy.

“People believe renewable energy projects will be hampered or impeded,” she said, though she noted that the division has not reached formal conclusions. “We don’t have enough information.”

The other type of distributed generation seen on Kaua‘i, combined heat and power, reduces but does not do away with fossil fuel consumption.

CHP harnesses the electricity from heat released from a generator, significantly reducing the bills of customers with high heating and cooling demand, Hee said.

The Kaua‘i Marriott Resort and Beach Club, for example, spent “tens of thousands of dollars” investigating the ability of a CHP system to cut the costs of heating its swimming pool, according to a letter sent to the PUC.

“If the CHP pool heating option is rendered not economically feasible, the result will likely be reduced occupancy as timeshare owners elect to vacation at other available resorts with heated pools,” wrote Joseph P. Allan, assistant director of engineering with Hospitality Properties Trust.

“The impact of reduced occupancy on the local economy may be significant.”

KIUC plans to begin weighing the impact the standby rate could have on state energy initiatives, the economy, cooperative members and renewable energy, Hee said.

“We know there has to be some kind of balance of interests,” he said, noting that the public hearing would open that dialogue with members.

“This is their cooperative. The process that starts to consider those things is happening right now.”

Copies of the proposed changes are available online at kiuc.coop.

The public hearing will be held Tuesday at 5 p.m. at the Lihu‘e Neighborhood Center, 3353 Eono St.

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