KIUC looking at green energy, rates, power purchase agreements

The Kaua‘i Island Utility Cooperative board of directors discussed a number of big issues yesterday at its monthly meeting — from green energy initiatives to power purchase agreements to rates.

The board approved $180,000 in consultant fees to determine a standby rate, as requested by the Public Utilities Commission. The rate is applied to customers who produce their own power but remain connected to KIUC should their own generation prove insufficient.

But it’s not as simple as picking a figure, said co-op CEO and President Randy Hee. The co-op must establish a methodology for such a rate in addition to examining its entire rate structure.

Taking a hard look at the way customers are billed is a mandate of the 15-year Strategic Plan, which calls for 50 percent renewable energy by 2023. As power generation changes in the coming years, so, too, must the rate system.

Hee said the utility is not prepared to file a rate case with the PUC anytime soon, but preparation is important and a consultant will be key in navigating the waters.

“We need to understand what the rate options are going forward so we understand what makes sense,” Hee said.

PUC approval is required for any change to the rate a utility charges for its services. KIUC’s last adjustment was in 1996, when it was a private company and not a member-owned co-op. Since then, KIUC has accounted for rising fuel costs by charging an energy adjustment that increases accordingly.

Hee said the co-op is not ready to file a rate case in the immediate future; however, it appears likely to happen in the next few years.

The approved consultant funds were budgeted, but policy requires board approval when the amount exceeds $100,000.

Legislative initiatives

Hee will speak in the state Capitol today in support of a bill to exempt utilities from the 1 cent diesel fuel tax, which was passed last year to make up for a decrease in taxes on alcohol fuels such as ethanol.

Sen. Gary Hooser, D-Kaua‘i/Ni‘ihau, introduced Senate Bill 2519, which proposes to exempt entities that use diesel fuel for power-generating facilities.

If passed, it will lower the co-op’s fuel costs. Diesel is expected to hover around $2.89 per gallon in February, after breaking the $3-per-gallon mark in December. For naptha, the price per gallon increased from $2.34 in December to $2.49 in February.

Seabirds

KIUC this month filed an incidental take permit application along with a Habitat Conservation Plan draft. The documents are required by the Department of Justice to minimize unintended harm to protected seabirds.

According to Carey Koide, engineering manager for KIUC, the agencies involved will likely meet in March to iron out any deficiencies in the plan, which would then be turned over for final review.

The document could be ready for the public by late summer or fall.

Koide said the 2008 season for the co-op’s Save Our Shearwater program includes plans to shift some duties to the Kaua‘i Humane Society. Hee noted that while KIUC will continue to fund and be responsible for the program, the humane society might partially take on bird recovery.

Power purchase agreements

A power purchase agreement has been signed with Green Energy LLC, which proposes to burn albizia waste to fuel a power plant. The project is at the county permitting level. A hydro power purchase agreement is pending, also with Green Energy, though it needs approval from the Public Utilities Commission.

KIUC is currently working with a developer who proposes wind-generated power in Moloa‘a. The developer is preparing to collect meteorological data to determine the feasibility of a facility in the area.

Hee said there can’t be an agreement until that is completed.

Other forms of alternative energy generation were mentioned, including preliminary talks with firms using biomass, large-scale solar, thermal solar and microalgae.

• Blake Jones, business writer/assistant editor, can be reached at 245-3681 (ext. 251) or bjones@kauaipubco.com