LIHU‘E — Kaua‘i Island Utility Cooperative moved a step closer this week to lowering the cost of delivering electricity to island residents by signing a memorandum of agreement with hydropower developer Free Flow Power Corp. “This is the first step
LIHU‘E — Kaua‘i Island Utility Cooperative moved a step closer this week to lowering the cost of delivering electricity to island residents by signing a memorandum of agreement with hydropower developer Free Flow Power Corp.
“This is the first step in a lengthy public process to explore the viability of several hydroelectric projects,” KIUC CEO David Bissell said Wednesday. “Our members have long realized the hydroelectric potential on Kaua‘i, and we feel now we have the resources and the proven developer to move forward.”
Initial estimates are that hydroelectric power could cut KIUC’s cost of delivering electricity to as low as 12 to15 cents per kilowatt-hour, Bissell said. Petroleum-based energy generation is subject to the price of fossil fuel, and currently costs the co-op approximately 20 cents per kwh with the potential for much higher prices as the cost of oil increases.
In November, the co-op announced it secured a loan guarantee of $110 million from the Rural Utility Service, a federal loan program that provides funding for energy projects.
“Reducing reliance on imported fossil fuels that includes hydropower to reduce cost and greenhouse gas emissions is part of KIUC’s long-term plan. Kaua‘i has a long history of using hydropower, and KIUC recognizes that additional hydroelectric resources should lower our members’ electric rates,” he said.
Hydroelectric power uses the flow of existing streams and rivers to generate electricity. The kinetic energy of water is captured as it moves from a high elevation to a lower elevation by passing through a turbine. The amount of kinetic energy the turbine captures depends on the distance the water falls and the rate of flow.
Currently, KIUC has six hydroelectric power stations on Kaua‘i, but 90 percent of the energy the co-op produces is still petroleum-based.
Consumers’ electric rates are adjusted monthly to reflect fluctuations in the price of fuel oil.
For the month of January, the rate for residential customers is nearly 38 cents per kwh, up 3 cents compared to January 2010. Commercial rates range from 36 to 39 cents per hour, which is 2 to 3 cents higher than last year.
Free Flow Power is an experienced hydropower developer offering in-house expertise in engineering design, regulatory issues and finance, with more than 100 projects currently under development, a KIUC press release states.
As part of the process, FFP has filed four preliminary applications with the Federal Energy Regulatory Commission. If granted, these permits give KIUC and FFP the authority to further explore the viability of these projects, a process that KIUC says will take several years and require numerous reviews by a variety of regulatory agencies.
The co-op’s $110 million loan from RUS falls under the Rural Electrification Loans program and is classified as a FFB Guaranteed Loan, which is available to all electric borrowers.
The FFB is an agency within the U.S. Treasury that funds various loan programs. The loan is guaranteed by the USDA.
The maximum term of the loan is 35 years and the rate is fixed to the prevailing cost of money to the United States Treasury, plus an administrative fee of one-eighth of 1 percent.
KIUC’s loan guarantee includes nearly $73 million for hydroelectric plant improvements.
KIUC spokeswoman Anne Barnes said the co-op’s goal is to transition to 50 percent renewable energy by 2023.
