KIUC Candidates questions and answers

The Garden Island provided a pre-forum set of questions to all candidates participating in The Garden Island’s forum. The questions and their answers are outlined below.

1. Commitment: Considering the estimated time of about 800 hours a year will be necessary to be a KIUC Board member, what changes are you considering in your life to accommodate this serious commitment of your time?

Ben Sullivan – This position certainly includes a serious commitment of time, but it is one I have no difficulty making. After having done considerable study of local and global energy issues in my time as chair of Apollo Kaua’i, I have come to believe that this is an area of critical importance to our island community, and one that we might all look to give more attention to. It has been in my capacity with Apollo Kaua’i over the past two and a half years that I have spent comparable unpaid time working as a renewable energy advocate for our island. In preparation for this new opportunity, I have stepped down from that position, and am fully prepared to commit myself to my responsibilities as a KIUC Director.

Phil Tacbian – None, I’m already doing it. I’ve been doing Board & Commission work for over 40 years now. Sacrificing my time for our Community is part of what I do on a regular basis. Serving at all levels of Government, County, State & Federal, I am committed to taking on any assignment and seeing it through to it’s successful completion.

Thomas C. Ellis – I am familiar with the personal commitment required to fulfill the duties and responsibilities that are required as a board member and have done so at an electric coop on two occasions in the past. I am happy to say it will be easier this time because I have fully retired this past November and do not have any other competing commitments other than family and in particular my wife of almost 45 years.

Ken Stokes – I believe KIUC members want high quality leadership that is willing to commit whatever time is necessary. I will be honored to serve as one of nine Directors, and I am prepared to spend far more than 800 hours a year in committing my best efforts to this enormous responsibility.

Dennis Esaki – I am already doing it. It takes a toll on family and personal business. Fortunately, I have good people around me who support me.

2. Experience: What is the largest operational budget and largest capitol budget for which you have been responsible, either as a manager or overseer?

Ben Sullivan – As a project manager for an architecture firm working in Denver, Colorado, I oversaw the design and construction of mixed-use residential construction projects with capitol budgets ranging from 4 to 8 million dollars. This responsibility involved creating projects within tight budgets & timelines, negotiating contractor bids, approving construction draws, change-order negotiations and general oversight of the progress of these time and money sensitive projects. My primary experience with operational budgets comes from the running of my own small design business here on Kaua’i for the past six years.

I certainly see a solid financial background as valuable experience to bring to the KIUC Board, and my experience in construction management will be an asset to the Board. Notably, however, there are already Directors on the Board, as well as employees of the COOP, with significant depth of experience in this area. An experience I consider to be no less valuable is that of a husband and father of three young children living on Kaua’i on a modest annual salary and at times struggling to make ends meet. It is my hope that I can bring this perspective to the KIUC Board, as I believe it is one that would bring valuable insight to Board decisions.

Phil Tacbian – No doubt it’s KIUC, prior to that it would be Kauai County Public Improvement Corp.

Thomas C. Ellis – I have been responsible for two large budgets. The first was after my retirement from the US Navy as a Program Manager for a company that was required to supply networked computer services for the US Navy Pacific Fleet ship maintenance data base and distribute it to Pacific Ocean rim repair facilities in near real-time. The value of the contract was $28 million over 3 years.

The second instance was as a elected board member of a Island Electric Coop. The coop’s budget was $18 million annually. I served as chairman of the finance committee. I also served as chairman of the technology committee. The finance committee was responsible for reviewing the annual coop budget and making recommended changes to the board for final board approval. The technology committee was responsible for evaluating technology as it would apply to the coop’s infrastructure with respect to future machinery replacement, large service extension or additional community required services in this last instance a startup cell phone company.

Ken Stokes – In addition to successfully starting and managing three companies of varying size in technology, tourism, and consulting, my corporate and government experience includes responsibility for a $10 million operating division and a $50 million capital projects budget.

Dennis Esaki – Of course, I’m currently chairman of the KIUC board with a 2008 operational budget of $145 million and assets of $300 million. I have also been on the board and served as Audit Committee Chair for Housing Finance and Development Corp with one billion dollars in assets. As Hawaii’s delegate I serve on the Board of Directors of the National Rural Electric Cooperative Association, NRECA. Although we don’t have budgetary authority over the funds, as an NRECA Director I help set policy to influence and direct more than 4 billion dollars in annual RUS funds to the entire cooperative network.

3. Regarding the KIUC present strategic plan: What do you consider the best aspects of the plan (deserving more emphasis), the poorest aspects (deserving reconsideration, or eliminated), and what is missing from the plan?

Ben Sullivan – I will start with the best aspects of the Strategic Plan;

Foremost, it represents an honest attempt by the KIUC Board to communicate on what is undoubtedly the single most important responsibility that the Board has; strategic planning. This point cannot be emphasized enough; we need much more discussion and engagement between the COOP Board and the community to address the significant challenges we face today.

Secondly, it contains a reasonable, albeit brief section assessing the situation that the COOP is in, including a recognition of the need to address climate change and the emission of greenhouse gasses by the COOP.

Third, the plan acknowledges the need to rethink the rate structure of the COOP, including incorporation of lifeline rates, standby rates, and time-of-use rates. All of these will be critical in the successful transformation of the utility as we move away from our severe oil dependence.

Now; the poorest aspect of the plan, without a doubt, is that it was created with very little dialogue with the community. It is hard to understand how the Board of Directors made the determination that they could, on our behalf, propose such a serious effort without engaging the community more comprehensively. It is my hope that as a Director, I can work with the community and my fellow Board Members in an extended and comprehensive process to both educate the public and to illicit their desired direction for the COOP. In my opinion, this is critical for two reasons;

1. The COOP is member owned, and unlike a corporation, is founded on democratic control. To me, this means that we, as member owners, should expect much more than simply a yearly vote for our Board of Directors.

2. The scope of the challenges we face is best addressed with the leverage created by broad community participation. Acting independent of the community, the Board of Directors can only make slow and incremental changes to the utility. The scope of the challenges we face demands more vigorous action that is only possible with broad community participation and support.

Finally, what is missing from the plan? Unfortunately, beyond what is mentioned above, there is very little in the plan that actually constitutes strategic planning. A strategic plan should not only address where the COOP is going (such as 50% renewables by 2023 cited in the plan), but also how it will get there. That said, a great opportunity exists over the next few years to augment this first effort and create an essential roadmap for the community and the Board to use in guiding our future actions. A community based strategic planning process must include an outline of the methods by which comprehensive community participation will be solicited and incorporated for the creation of the strategic plan. Once this process begins, key components to include would be;

1. A determination of the goals of the COOP, beyond the basic objectives of a typical investor owned utility or the mandates and limitations imposed by law.

2. An assessment of the liability of continued oil dependence, including a discourse on the uncertainty associated with price forecasts for oil in the coming years.

3. An assessment of the various energy conservation and generation strategies that are and might be considered by the COOP, including strengths and weaknesses of each.

4. A review of several possible strategic scenarios under which the COOP might proceed, and a discussion of the liabilities of each.

5. A review of recent and upcoming Board decisions and their place in the Strategic Plan.

Phil Tacbian – Our strategic plan is a three edge strategy, to deliver safe and reliable service, achieving a high standard of sustainability with regard to power supply, and providing fair and competitively-valued rates. These strategies need to be balanced so one will not have a negative effect on the other.

Thomas C. Ellis – Best: “KIUC is committed to seek fair, restructured rates. Striving for economically rational rates and focusing on controlling costs. If KIUC pursues these as primary goals, the right technology decisions will follow. For example, implementing standby rates that encourage distributed renewable generation without subjecting members to unfair subsidies will encourage customers to make the right decisions about installing renewable technologies on their premises, benefiting all of KIUC’s customers.

b. Poorest, “Reduce electric power generation sector Greenhouse Gas (GHG) emission to 1990 levels (measured by annual tons of CO2 equivalent from power

generation)� KIUC is committing itself to generate at least 50% of its electricity renewably without burning fossil fuels within 15 years”.

I believe that KIUC needs to both meet the legal mandates regarding the use of renewable resources and keep our customers’ costs as low as possible. Now, Hawaii’s Renewable Portfolio Standard (RPS) mandates cost-effective renewable energy development with goals of 10% renewable net electricity by 2010, 15% by 2015 and 20% by 2020 and I firmly believe that we must meet these requirements. They are the law. But to impose upon ourselves a target of 50% renewable energy by 2023 – a target that is not the law – could be extremely costly. If renewables are truly cost-effective, then we will achieve that 50% target simply by pursuing a strategy of least-cost operation. But if renewables are not yet that cost-effective, then adopting the 50% target could drastically increase customer costs, harming not only our residential customers, but also harming the competitiveness of the many businesses – agriculture and tourism, for example – that count on KIUC to provide quality service at reasonable prices.

No matter how “green” we would like to be, we cannot pursue energy strategies that would cause unnecessary rate increases for our customers. We must keep our priorities balanced.

If our community does indeed want our Coop to implement a “50% renewables by 2023” strategy, , the right thing to do would be to convince the state legislature to change the Hawaii Renewable Portfolio Standard. That would ensure that the important debate about the costs and benefits of such a policy took place in the proper forum – the legislature rather than the KIUC boardroom.

c. In short, the overall plan is extremely broad in scope and very idealistic. It covers the renewable energy issues, but it does not acknowledge that it could be very, very expensive to execute. My goal will be to bring a balance of environmental consciousness and customer costs into implementation of the plan.

Ken Stokes – I believe KIUC members view this document as a welcome, forward-thinking guide to tackling our island’s energy challenges. I am committed to helping KIUC achieve 100% renewable supply as soon and cheaply as possible, and this will necessitate a much more aggressive and collaborative strategy. Hopefully, my background in economics and strategic planning will be helpful as this effort is refined and pushed much further in the years ahead. I am especially concerned that we combine the use of Purchase Power Agreements with direct investment in renewable energy generation and distributed generation facilities.

Dennis Esaki – I’m pleased the board and management worked so well together. We spent a lot of time and energy to come up with the plan. I’m proud of the bold step to quantify the Renewable Goal of 50% far in excess of the goals set by State of Hawaii Renewable Portfolio Standard, Targets are moving such as technology, public sentiment, even the definition and classification of what is and what isn’t renewable energy. Through our NRECA training, we’ve learned the strategic plan is not the same as an action plan and I look forward to 2008 and seeing staff start developing those action plans..

4. How can KIUC integrate a much larger percentage of clean, renewable sources (solar, wind, hydro and wave) into our present system? Please discuss the possible difficulties of incorporating these intermittent sources of energy.

Ben Sullivan – This question has been central to much of my past efforts with Apollo Kaua’i. Our dilemma on Kauai is not a shortage of available clean energy sources, but an inability to manage them. We have abundant sunshine, wind, wave, and hydro resources on Kaua’i. Learning how to best manage these clean energy sources is one of the central challenges faced by our COOP. Within the current system, the biggest obstacle to incorporating clean renewables is doing so while providing consistent power output. Unlike fossil fuels, solar, wind, and water based energy are infinitely renewable, but also highly variable. Additionally, we are challenged by the fact that we have an isolated power grid that cannot simply �buy & sell’ electricity from remote areas, as is the case on the Mainland. This means that we need to make adjustments to the system to accommodate for these variable sources. The most typical response is to look for ways to store large amounts of the energy, allowing it to be released later when needed. Some storage options for Kaua’i include pumped water storage, utility scale batteries, and a number of other evolving storage technologies. The drawbacks of such solutions include high initial expense and often, high environmental impact.

There are a number of other, perhaps better ways to address variable energy sources on Kauai. However, as I have emphasized earlier in my previous responses, they require broader community participation to be put into action effectively. One such method, briefly mentioned in the current Strategic Plan, is to create time-of-use rates. Specifically, if we connect electricity consumers with data on renewables output in real-time, we can structure a rate system that makes electricity more or less expensive based on it’s availability at a given moment. Such a system might take considerable time to integrate on a large scale, but would yield many positive results. It would encourage greater integration of deferrable loads, development of small scale storage systems, and even eventually assist in a fruitful and necessary progression towards electric vehicles and other adaptive measures related to our broader energy consumption. Best of all, it would stimulate beneficial community investment in a cleaner and more resilient grid without creating additional debt to the COOP.

The key to making these big changes is to become active promoters of such initiatives, as opposed to resisting them based on the difficulties of implementation. To accommodate this increased work load, as a Director, I would advocate for the hiring of additional staff engineers expert in renewables integration to put more focus and planning into this process. This, of course, ties into a generally increased short term expense for rate payers and also to a better relationship with the PUC, both items that are discussed elsewhere in my responses.

Regardless of the particular type or strategy employed, it is imperative that we continue to push to integrate the maximum amount of clean renewable energy sources that are reasonably affordable and technically feasible at any given time. Again, this will be helped by increased public awareness and education. For example, there is some risk of reducing system reliability as we work to understand this new way of managing power. However, instead of simply taking no action, we should explain this challenge to the community and determine the extent to which we might temporarily reduce reliability in order to meet our long-term goals.

Phil Tacbian – We are already doing it. In 2006 we approved 4 Renewable Projects and authorized the KIUC staff to issue RFP’s (Request for Proposals) for the following projects:

1. Biomass to Energy, Green Energy Hawaii was selected and has already signed a contract with KIUC to proceed.

2. Wind Power, UPC Kauai Wind Power was selected to develop a 10.5 to 15 megawatts wind facility. They are still in negotiations with KIUC at this time.

3. Waste to Energy, Barlow Projects, inc. was selected to develop a 5.3 megawatt facility, This project is still pending.

4. Biomass Facility, Cleaves & Co. was selected to develop a 4.5 megawatt biomass facility. They have since withdrawn from this project.

Presently our Staff is in negotiations with Gay & Robinson regarding their biomass plant. The Board of Directors instructed our staff to inform G&R to not use coal as a supplemental source of fuel. As a result, they announced that they will not be using coal for that purpose.

We continue to test water flows for our Hydro projects to see if we can increase the size of our Waiahi Hydro Plants 1 & 2. We are continuing our dialog with the owners of the Waiahi Hydro Plant to see if they could also increase the size of their plants. I am personally talking to potential developers of Hydros in various areas of our Island. As I believe that many smaller Hydro Plants can be a big benefit for our members and our future generations.

Thomas C. Ellis – Two of the biggest difficulties or incorporating intermittent sources of energy into our system is the untested nature of many of these technologies and the need to have firm backup resources for these technologies. As to the first: for many types of renewable resources – such as ocean wave power – we do not know whether the power plants will be able to withstand the elements for a long enough time to pay for the costs of the power plants. So unless our contracts for purchasing energy from those resources protect KIUC, we might have a very costly, rude awakening down the road. As to the second: the cost of backup resources needs to be incorporated into the analysis of the costs of the intermittent resources.

As I stated earlier, KIUC needs to overhaul its rates to make sure that they don’t create impediments to new technologies, and to ensure that they don’t subsidize those technologies to the detriment of some or all of our customers.

Ken Stokes – KIUC is already participating in experiments to integrate intermittent and on-demand renewable energy sources within our increasingly distributed generation system. This exemplifies the kind of innovation that KIUC members expect from our coop and want to see accelerating into the future. Without the backup provided by interconnected grid systems on the continent, we will be uniquely challenged to create energy storage technologies that minimize the extra capacity and cost burdens associated with intermittent sources.

Dennis Esaki – I’m frustrated by the difficulty of attaching variable output renewables, like wind and photovoltaic. These sources have less inertia than the old power plants and they shut down too fast. That puts a much lower practical limit that we’d like on how much we can use these kinds of renewables. However, we work with NRECA’s CRN (Cooperative Research Network) and EPRI (Electric Producers Research Institute) and as technological advances we hope we can do more.. There may be solutions using batteries to store the energy, but that will be more complex and more expensive. At NRECA I work with Congress on incentives such as tax credits for producers of these renewable energy sources as well as low interest government loans for Coops like us. Finally the question refers to “clean” renewable, but for every technology there is someone who doesn’t think it is clean, protected bird issues with windmills, stream and ocean wildlife ecosystem with hydroelectric or wave energy systems, and land use issues for biomass that we must work through as a community, not just as a utility.

5. The present strategic plan utilizes a majority of biofuel and biomass sources to reach their goals. These sources present some of the same problems as fossil fuels (emissions), plus the potential in the future of a conflict over agricultural land of “foods vs. fuel.” What are your views on this issue?

Ben Sullivan – KIUC, like other electric utilities in the State, has put significant focus on biofuels, which allow minimum operational change to the utility itself. An example of this can be seen from the projects selected in their 2005 RFP, where three of the 4 projects selected by the COOP were biomass projects. Although easier to implement on the short term, many of us have come to recognize that these biofuels, in some cases, offer little or no benefit over the fossil fuels they replace. Although we should not reject biofuels outright, we must be critical in selecting biofuels projects for our COOP. Some important criteria;

1. To what degree does the fuel source decouple our COOP from the price of oil? Meaning; is the fuel heavily dependent on oil in it’s production and delivery?

2. Does the fuel source compete with oil on the global commodity market? For example, biodiesel is something whose market price will always be determined largely by petroleum markets. Therefore, that fuel would not likely offer significant economic benefits to the COOP members.

3. Does the project offer meaningful reductions in carbon emissions, based on closed loop analysis of the carbon cycle for the project?

4. (for any project, biofuel or other) What percentage of the total electricity for our COOP does the project represent? This is important in that overdependence on a singular source of output creates increased liability should that project/fuel source run into difficulties.

5. Does the growing of the fuel compete with the production of food crops in such a way as to reduce human access to food as a result?

6. Does the growing of the fuel create other human or ecological hardships, either where it is grown, or to others, and do the effected people have control of the decision to grow the fuel?

7. What other liabilities or benefits does the project offer our community?

Applying these criteria gives clarity to my position opposition on three types of biofuels being considered widely right now, two in state and one nationwide. They are;

-Waste to energy (being considered for the County, as selected by the COOP in the 2005 RFP)

-Imported palm oil (being considered heavily on Oahu, and to a lesser extent, on Kauai)

-Corn ethanol (not an issue on Kauai, but a disastrous and grossly subsidized failure in the Midwest United States)

Biofuels have an important role in bridging a path to our sustainable energy future. However, there is currently too much emphasis on their use, and a lack of systems thinking in choosing them. Corn ethanol offers the most egregious example of this, where both in terms of net energy and carbon offsets, studies are showing that the fuel is either only marginally positive or more likely, negative when looked at in a closed loop analysis. Although not directly related to the COOP, this example emphasizes the need for much more complete analysis when selecting biofuels projects, as opposed to simply choosing projects which are legally defined as �renewables’ by State Law.

Phil Tacbian – As a former member of the State Land Use Commission for 8 years, I know that there is enough land available in the Agricultural District to accommodate both uses. So as far as I am concerned, that is not an issue. As far as emissions are concerned, I don’t think that we can totally eliminate it, however, we can minimize it to the point that it will not have an adverse effect on global warming. Barring Natural Disasters that we cannot control, we can and will control our activities to minimize the effects of emissions.

Thomas C. Ellis – This is a public policy issue that I feel is way above the mission statement of an electric utility. In our society, decisions regarding social and economic policies are most-appropriately made by our governmental bodies though laws, regulations and economics. I believe that it is completely inappropriate for a power company to make social policy. For those reasons, I think that it is up to our county and state to address the tradeoffs that are raised by this question. KIUC’s role would then be to provide energy that meets the social goals that are mandated by government, using efficient pricing to make its decisions. KIUC’s Board should not be another quasi-legislative body that operates a parallel government.

Ken Stokes – I believe KIUC members are most concerned about the sustainability of our energy system, and I am delighted that KIUC is beginning to measure and reduce its emissions. At the same time, KIUC urgently needs new metrics, such as the “ecological footprint,” in order to more thoroughly assess our renewable energy options. No renewable energy technology is “zero-carbon,” yet renewable sources generally emit at least 10 times less CO2 than fossil fuels, and this is the order-of-magnitude reduction we now require to meet global warming mitigation targets. I am personally not in favor of bio-fuels that would require large amounts of prime agricultural land, because I see other superior options for achieving our renewable goals.

Dennis Esaki – Our strateig plan is a start, not a finish. When we first looked at the biofuel and biomass projects, they were thought to be “good renewables”. Now the scientists tell us that the net gain is negative with respect to carbon emissions if rain forests in foreign countries are cleared for these crops. We need to look at the net best gain for the specific projects being considered, keeping in mind the goal of reliable power, keeping up with technology and public concerns. The specific projects currently under consideration use fallow ag land on Kauai. We do need to understand the net carbon emmisions of these projects based on the specific net land use being proposed. Finally, for these specific projects I do not see a marked food vs. fuel issue on this island at this time. I grew up on a farm and realize that although the public call is for more agricultural products being grown here, most people want someone else to do it. I have seen the pineapple canneries and sugar plantations close on this island. With many thousands of acres lying fallow on Kauai, should agriculture become viable economically, there is enough land for that and for the local energy projects being considered to satisfy our strategic plan.

6. What changes should be made in present PUC regulations to facilitate KIUC more quickly incorporating clean, renewable sources of energy on Kaua`i?

Ben Sullivan – The short answer; I would greatly invigorate member control of the COOP by facilitating extensive and ongoing discussion between the COOP Board and the community on the energy choices our community faces. This would create true democratic control of our COOP, and continued PUC oversight would ultimately become unnecessary.

The long answer; Although I am not expert in PUC regulations, I do understand the basic historical relationship between Public Utilities Commissions and privately held utility companies. That is; the PUC has long held the role of watchdog for the public interest in utility operation. The paradigm under which this system has evolved is that of readily available, cheap fuel. Therefore, the PUC’s job has been to ensure equity for utility customers, so that the business interests of the private utility do not override the interests of the consumer. It is important to note that in this environment, there has been almost no need for long term strategic planning, because there has always been a cheap, readily available fuel source from which to generate electricity.

What is very interesting today is that Kauai’s situation has seen two fundamental changes to that structure;

1. As we all know, we no longer get our electricity from a privately held utility, but in fact, our community owns the utility. We can be thankful to many in our community for this, including several of our current KIUC Directors. The fact that we now own the utility means that successful COOP Board operation would give the community democratic control, and there would, in theory, be no need for significant PUC oversight. However, the current COOP Board’s operating policy is to �speak as one voice’ to the community, and they specifically exclude the public from debate and discussion between Board Members on these critical community decisions. This policy, although it might be well intended, effectively negates democratic control of KIUC. COOP members have no input on the direction of the COOP, because they do not have access to the positions of individual Board Members and decisions. Yes, they can vote for new Board members, but they have little basis for doing so in an informed manor. This situation, in turn, makes it considerably more difficult for the PUC to relinquish it’s oversight duties, as the PUC cannot be assured that the interests of the electricity buying public are adequately represented.

2. The second fundamental change for Kauai, and for the rest of the world, relates to the continued extraction and use of fossil fuels for energy. It is well understood that fossil fuel use is causing severe, potentially catastrophic changes to the ecological balance of the planet. In addition, a vigorous debate is currently underway around the world regarding the future price and availability of oil. The debate on this point has not yet yielded a consensus, but there is in fact broad consensus that oil prices will continue to rise and destabilize in the future.

Because our community has such a severe dependence on oil, this situation might be compared to planning a trip across the desert without knowing either how much water you’ll have or whether you’ll have the resources to get more once you begin your trip. Certainly the best response to this circumstance is not to proceed on blind faith, but instead to consider alternative routes, and to prepare ahead.

Phil Tacbian – I don’t think any changes are necessary. This question suggests that the PUC is responsible for delaying projects. This is not true. There are many other factors involved in moving projects ahead, which includes permits, land lease, equipment & material, etc.

Thomas C. Ellis – I am not aware of anything that is wrong with the current PUC regulations, but I am certainly opening to learning from KIUC’s customers about any problems that they believe exist and then working to remedy those problems.

Ken Stokes – I believe KIUC members see complacency as a greater threat than regulation in achieving our renewable energy goals. Precisely because we are a coop, the PUC has become much more willing to remove requirements it must impose on investor-owned utilities, which face conflicts between caring about their customers and serving their stockholders. I am committed to helping KIUC articulate a renewable energy strategy that is compelling to members and regulators.

Dennis Esaki – Presently, we are required to get PUC approvals for any substantial project, including contracts, rates, etc. This does cost time and money. But any changes to the system require legislative action. We need to prove that we are able to respond to the members’ needs in a fair and just manner in order to perhaps get lighter regulation.

7. What role do you believe KIUC should play in encouraging increased efficiency and conservation and maximum demand reduction in the use of electricity in our community e. g. solar water heating, CFLs, efficient appliances, efficient buildings, use of clotheslines rather than clothes dryers, possible life-style changes? How would you decide what percentage of KIUC’s budget to spend on these activities?

Ben Sullivan – KIUC should play a much a greater role in encouraging demand reduction strategies. At the risk of sounding like a broken record, a central element of this is community engagement. The COOP Board, as the would-be leaders in energy discussions in our community, should take the responsibility to educate the broader community on the irrefutable fact that electricity rates will continue to increase significantly as long as we depend on oil. Certainly the COOP has done some of this, but not enough. This is not an optional tactic or one that we can simply budget a given amount to; we must do this job irrespective of the cost, until the goal is achieved. Everyone on Kaua’i should come to understand that, as high as our rates our today, they will likely, on the short term, continue to rise, and that increased investment will be necessary to resolve these problems on the long term.

Not thoroughly communicating this liability to our community is like a doctor not clearly explaining to a patient that they have cancer. Let me be clear, we can absolutely solve our energy problems. However, we cannot even begin to solve them until we choose to face them. My apologies to those who might feel this is an unnecessary overstatement. I do not think so, and I welcome open discussion on this critical point.

There are several important components that relate to the above strategy. One will be to support those in the community who are already struggling to pay their electric bill. We can do that in myriad ways. Most directly, we should, as the strategic plan identified, establish lifeline rates for those people who simply cannot afford to keep the lights on. Programs such as �Pay as you Save’, which allows people to finance efficiency purchases through savings in their utility bill, could be employed to augment those efforts, further reducing costs. We must embrace this responsibility to help those struggling in our community, but we cannot let it stop us from increasing our investment in solutions.

Finally, KIUC must not be hesitant to take an aggressive role in advocacy on demand reduction related community decisions. Simple measures such as the proposed Solar Hot Water Mandate for new construction currently being discussed is an example of something that the COOP does in fact support, but could do so much more vocally. Engaging the County in strategies for reducing energy consumption should also be included, with items such as in-line hydro for the water department, alternative low energy wastewater treatment for wastewater, water catchment, lower energy computing, better building codes, etc. Although some of this might increase the short-term cost to ratepayers, it would be the same ratepayers who would receive greater lasting return from savings to the County operations.

Phil Tacbian – We are doing this right now. Look at the 2008 issue of the KIUC Currents magazine. The answer is in there.

Thomas C. Ellis – KIUC’s role is to ensure that customers have the best information about prices so they can make those decisions themselves, not to have the power company act as the overseer of our daily choices. KIUC can do this by distributing up-to-date info about technologies and through pricing electricity at marginal costs of production so consumers can see the true cost and make the choices themselves.

An electric company should not be in the business of using its rates to force lifestyle changes. Rather than turning KIUC into a sort of “energy Gestapo,” I believe that we can achieve the desired conservation and efficiency through policies that support “customer choice.” We should open up the electric grid through interconnection policies and through efficient rates, so that customers can make the right decisions about demand reduction and about installing distributed generation for their own needs and to sell back energy to KIUC. The rational pricing of electricity and removal of needless obstacles to interconnection, distributed generation and demand-side management is where KIUC should lead the way.

As for solar water heating or solar electrical panels, I think that these are policy issues that are in the realms of state or federal responsibility. Because they very often rely heavily on subsidies, those agencies should be the ones driving this program and providing the incentives.

As to how much of KIUC’s budget should be spent on those activities: as I’ve noted earlier, I want to focus on cutting our coop’s costs – not out of any lack of commitment towards renewables or conservation, but because I think that we will obtain the optimal amount of renewables and conservation by implementing economically-rational policies. The appropriate amount for KIUC to spend on any activity – whether it is a new power plant or demand reduction programs – should be determined by looking at the expected payback to KIUC’s customers in terms of reduced costs. We need to make that assessment, and then proceed to invest the money that will bring KIUC the right amount – the cost-effective amount – of energy efficiency.

I know there are a large number of my fellow islanders who are very focused on green power, but there are others who may not have the money to pay for the higher bills that come with some of the renewable technologies. I think the answer to that is, once more, “customer choice.” KIUC should provide innovative rate options that will allow such customers to step up to the plate by buying green power or purchasing carbon emissions certificates. (Remember that carbon emissions are a global issue, and reducing carbon emissions in Ohio is just as effective as – and maybe more cost-effective than – trying to reduce those emissions here.) The Pacific Northwest has been very successful in this approach letting those who want and can afford it to take the lead.

Ken Stokes – I believe that nothing is more important in the short-term than trimming our electricity waste, and I am pleased that KIUC’s Member Services staff has created multiple programs and incentives for achieving our energy efficiency goals. At the same time, I am concerned about the fairly slow uptake of these incentives by coop members, and I will personally commit time as a Board member to foster increasing member participation in these vital efforts. Engaging members in changing how we use energy need not be expensive, especially as it contributes to “avoided costs” in energy generation.

Dennis Esaki – KIUC should take the bull by the horn in encouraging energy efficiency and conservation measures. Not only will it reduce the members’ bills in the short term but since we are required to have back-up generators with the largest generator out of service, any delay in purchasing new generation that cost tens of millions of dollars will save the members money. We must be “At the Table” with these types of efficiency, conservation and renewable programs or we will be “on the menu” set by others. We will be given mandates, often without the means to accomplish them.

The amount to be spent must be considered in conjunction with the cost of providing reliable power in a safe manner at a reasonable rate. No amount can be set without careful consideration in evaluating the budget.

8. This fall, it will be six years since KE became KIUC. Where in the continuing transition from the old corporate model of ‘Sell-Max-Electricity for-Max-Sales-&-Profit’ to a more Cooperative approach of;’ MaxCommunity-Investment-for-Max-Community-Service-&-Value (environmentally responsible)’ do you think we are presently successfully pursuing that goal? What do you see as the next important steps to further this transition?

Ben Sullivan – I believe that we are presently pursuing that goal with some success. I believe that the current COOP Board is made up of dedicated and committed community members with the best interest of the community in mind. Although I am critical of some of the actions of the COOP Board, I do not question their intentions, and I deeply respect their service to the community.

However, for several reasons the question of �How successfully are we pursuing this goal?’ is a very difficult question for me, or anyone outside the board, to answer specifically. Because of the Board’s failure to communicate with the public, we do not have a clear picture of the challenges they see or the approaches that they might utilize to solve them. It is further very difficult to know what some of the struggles the Board has faced in getting to this point, and fair and reasonable to assume that they have been considerable.

If, from my perspective, I had to judge the Board only on specific actions to date, I would say that some good progress has been made, but we could do better. Where in particular?

� Community-based strategic planning.

� Engaging and educating the community on the enourmous challenges we face in ending our oil dependence.

� Fostering a culture of energy literacy.

These are parallel to the goals that I have been focused on for several years in my role as Chair of Apollo Kaua’i. I am eager for the opportunity, and up for the challenge of being a community oriented member of the KIUC Board of Directors.

Phil Tacbian – The Cooperative Approach has been our approach ever since I was elected to the Board. There is no question that KIUC has been successfully pursuing that goal. The Board is now united and working in concert with our Staff, working towards a goal that has been established in our Strategic Plan. We are taking action to bring together our members, Directors & Employees and go forward to achieve our goals, that is outlined in our Strategic Plan to have Safe & Reliable Service & Sustainable Power Supply & Fair & Competitive Rates.

Thomas C. Ellis – I really don’t think that this question, which tries to imply that there are two models (an antiquated “sell more electricity” model at one end and an “environmentally responsible” community service model at the other end) is in any way an accurate reflection of either the past or the desired future of the electric utility industry.

It is true that in the past, many electric companies tried to maximize the sale of electricity because it allowed them to spread the fixed costs of their plant (generators, transmission wires, customer service personnel�) over more kilowatt-hours, reducing the price of each customer’s kilowatt-hour. That wasn’t a bad thing, except that it in encouraging more consumption; it also encouraged more environmental impacts. So in most places, the utility model has changed to one in which the fixed costs and the variable costs are separated. An electric coop earns a return on its investment on the fixed costs (so that it can pay off its loans and operating costs) and then simply passes through the variable costs of fuel. So a coop like KIUC really has no incentive to promote consumption with its attendant environmental impacts.

First, KIUC should change so that it focuses on customer costs and on reducing those costs by removing both physical and financial obstacles to acquiring the right

resources (renewable and otherwise) and inciting customers to do the right thing regarding conservation and self-generation. If we can do that, then I think we will have achieved everything that a progressive, customer-owned electric company should do.

a. That said, I fear that the train is in the process of being derailed. The biggest risks that KIUC faces are: (i) getting involved in renewable resource boondoggles by investing in energy technologies that are not 100% proven or not 100% cost justified; and (ii) making decisions that are not based on solid economics but instead driven by a wishful thinking. Guarding against these risks will be two of my primary goals as a board member.

b. One thing that we have to keep in mind here on Kauai: it makes absolutely no sense whatsoever for a small utility like KIUC to take on any technology risk or economic risk associated with an immature technology. The consequences of a bad technology decision would be far too severe for our small community to bear. Larger companies can afford to take those risks, and after the technology winners and losers have been sorted out it is appropriate for the smaller companies to jump in. Like it or not, KIUC needs to be a follower not a leader in the area of untested technologies. KIUC’s customers can not afford to be on the “bleeding edge” of technology.

c. Pursuing the goal of reasonable rates will lead KIUC to the right technology choices. Think about it: if a particular renewable energy technology is truly economically “ready for prime time,” it makes no sense that KIUC would need to be forced to consider that technology through artificial pressures from special interest groups. Conversely if KIUC were to subsidize a technology, then that technology is simply unjustified.

Ken Stokes – I believe KIUC’s new management team has shed the traditional profit-seeking culture that characterizes investor-owned utilities, and has adapted to guidance by a member-elected Board. Now, I believe the Board needs to go much further in promoting a sense of member ownership. As a Board member, I will personally foster much broader member awareness and participation in major policy and strategy decisions before they come to a Board-level vote.

Dennis Esaki – Dividends and profits for investors are driving forces for for-profit companies whereas a Cooperative is like a family and our environment is our back yard. As a co-op we have made changes in leadership that resulted in more environmentally responsible forward thinking. DSM (Demand Side Management) programs that benefit the members and the environment, should not be based on profits for the company.

Education is the key to the next steps. The board and staff are constantly gathering more information, especially with new technology. We question the specialty consultants that we hire, to let them know that we do care about our land, that business as usual does not work.

9. Within the constraints of what might really be possible, what projects or plans would you like to see KIUC accomplish in the near future? What is your vision for KIUC?

Ben Sullivan – If you start with a clear vision, than anything is possible. My vision for KIUC is of an organization that leads the Kaua’i community towards a sustainable energy future. My vision for KIUC is that of an organization that helps us all recognize that we need to make sweeping changes in our community with regards to energy, both in how we use it and how we make it. Our COOP can help us to not fear these changes, but instead embrace them because great opportunity will come along in our transformation. My vision for KIUC is that of an organization that will strengthen our already powerful community and contribute to the betterment of our Island for future generations of Kauaians.

In the near future, should we embrace wind power? Yes. Should we embrace distributed generation? Yes. Should we embrace run-of ditch hydro? Of course. Should we embrace photovoltaic power and solar hot water and compact fluorescents in every socket of every home? Yes, absolutely, and I suspect that you would be hard pressed to find a candidate for this position that would argue the contrary on these points. What is much more important, however, is that, together, as a community, we embrace the immense challenge and opportunity of reshaping our perception of energy on Kauai.

Phil Tacbian – We presently have a 5 year plan for Capital Projects. To complete these projects on target would be a good accomplishment. My vision for KIUC is to be 90 n 95% in alternate energy in my lifetime with 50% in Hydroelectric Plants.

Thomas C. Ellis – In addition to everything that I’ve written earlier, I would like to see and immediate implementation of a LIFE LINE rate for our older and economically challenged members who subsist on low fixed or social security income. It is in the strategic plan but seems to be lost in the noise of more pressing issues.

I think that there are four key principles that KIUC should incorporate into its resource acquisition decisions:

1. Technology Neutrality; KIUC should consider all technologies, both renewable and non-renewable. KIUC should not provide subsidies to any technology unless KIUC’s ratepayers explicitly approve of being charged surtax for such. Decision-making should be based on rational economics.

2. Technology Risk; KIUC should not take any technology risk whatsoever associated with innovative technologies. We cannot afford it.

3. Economic Risk; while it might make sense for KIUC to incorporate some level of a “diversity premium to take into account the volatility of fuel prices, that premium

should be no greater than the price KIUC would have to pay to lock in the future price of fuel. We need to implement long-term fuel procurement strategies rather than relying on the spot market for fuel.

4. Transparency; KIUC’s economically-rational and unbiased acquisition of resources (including power purchase agreements) must be made through an open, public process. If KIUC’s decision-making process is truly sound, KIUC should have no reason for secrecy of a closed process.

Ken Stokes – I believe KIUC will need a new business model if it is to flourish in the rapidly changing energy business. I am concerned that, in the business-as-usual model, the prospect of members switching to renewables may be viewed as a competitive threat. I envision a hybrid business model that engages and serves all residential and commercial customers in the transition to a distributed, renewable energy system.

Dennis Esaki – In the short term, I would like to see more photovoltaic systems, solar water heaters, wind generators and upgrading our hydroelectric systems. But realizing that entitlements and permits take years, the definition of short term is subjective.