PUC to discuss KIUC’s standby rate, again

The Hawai‘i Public Utilities Commission on Wednesday will hear arguments to reconsider changes it made to Kaua‘i Island Utility Cooperative’s standby rate.

On June 24 the commission exempted renewable energy projects from KIUC’s $5 per-kilowatt-hour standby charge, but kept the rate in place for non-renewable projects until the co-op initiates its first rate case.

Two intervenors in the case, Kaua‘i Marriott and BluePoint Energy Inc., requested that the commission reconsider its June decision.

Since KIUC’s standby rate was set in 1984, it has been levied against primarily large commercial customers that use generators but stay connected to the grid for back-up power when their own systems go offline. The rate, common among utilities, is designed to offset the cost to KIUC of maintaining sufficient generation capacity and power lines to fill in when needed.

At the time of the PUC decision the co-op had two standby customers — hotels that capture heat from generators for other uses — but there is a potential for that number to increase as distributed generation practices become a more common way to conserve energy.

The commission said that exempting renewable projects from the rate would “promote the use of renewable energy resources on the island of Kaua‘i.”

While policy guides the commission to promote reliable, affordable distributed generation, it opted to keep KIUC’s standby rate for non-renewable projects because the co-op, in its relatively short history, has yet to reexamine its rates.

“There is no current cost study that the parties may meaningfully utilize in developing a standby service charge for KIUC,” the commission said.

Instead of altering just one price point, the co-op and commission both argued that there would be more parity if the issue were addressed during KIUC’s first general rate case.

The co-op is currently working with a consultant on a rate analysis, though there’s no finite timeline for when KIUC will bring a case to the PUC, said President and Chief Executive Randy Hee.

While KIUC had argued for keeping the rate for all standby customers, renewable or not, during the June hearing, the co-op has not taken a position going into next week’s meeting.

“The commission is the decision-making authority best equipped to view the information before it and render a decision,” said Tim Blume, KIUC’s regulatory affairs supervisor.

In contrast to its decision for Kaua‘i, the PUC in May deemed standby rates optional for customers of private utilities on Maui, Big Island and O‘ahu, so long as they install cogeneration, or other forms of distributed generation power systems.

The ruling remains in place throughout the state, with the exception of Kaua‘i, for 10 years.

Cogeneration includes combined heat and power systems, which capture heat from generators and use it to reduce the overall energy demand. It has been particularly popular among large commercial and industrial energy users such as hotels, hospitals, large retail stores and the like.

Cogeneration technology provider BluePoint Energy, a party to the Kaua‘i standby rate case, said the May decision was a win for Hawai‘i consumers who pursue such alternatives — and it also boded well for future business. BluePoint, an extension of El Dorado Hills-based Chapeau Inc., has partnered with Starwood Hotels and Resorts Worldwide Inc. to install such systems.

For more information on Wednesday’s hearing, visit www.puc.hawaii.gov or call (808) 586-2020.

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

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