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LETTER: `Aina Koa Pono Explains Proposed Rate Hike

September 27, 2012, 3:25 PM HST
* Updated September 27, 4:10 PM
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‘Āina Koa Pono (AKP) plans an agriculture/biorefinery operation in Ka‘ū that will fuel 18% of Hawai‘i Island’s electricity needs and produce a transportation fuel.

AKP’s biofuels project will bring hundreds of jobs to Hawai‘i County, replace imported fossil fuel-based diesel at the Keāhole power plant, and add eight million gallons of transportation biodiesel a year. Importantly, it will not impede other renewable energy projects.

Hawai‘i’s reputation as a renewable energy incubator will be enhanced by the cutting-edge technology AKP has licensed. The microwave catalytic depolymerization (Micro Dee) takes biomass (in the case of the Ka‘ū facility, locally grown feedstock) and accelerates the natural process of converting it to oil to just over an hour.

The technology is safe and is not new—it’s been used in herbal extractions and pharmaceuticals for years. Using higher temperatures and a catalyst, it produces a biofuel. The 900-ton-a-day operation will be modular—each microwave handling 33 tons.  Once the first unit is tested and accepted, it will be set it up at Ka‘ū so it can run in place and give the community the opportunity to see its operation.

The acreage AKP has leased for crop production will enhance the island’s agriculture industry. A first step will be to clear invasive species and use them as feedstock.

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Building ‘Āina Koa Pono’s project will employ 400 and increase badly needed construction jobs by 13% on Hawai‘i Island. These jobs have been cut in half to 3,000 since 2007, Economist Leroy Laney, PhD reported in August for First Hawaiian Bank.

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When the facility is operational, there will be 200 permanent jobs, positively impacting Hawai‘i Island’s 8.8% unemployment rate, which in May was 2.5 points higher than the state’s average (6.3%).

AKP will generate nearly $200 million in general excise and payroll taxes over 22 years, compared to $2.2 million if the same fuel is imported.

Dollars paid for services and salaries will recirculate—buying groceries and school supplies instead of being sent to foreign oil producers. Once operating, AKP will contribute $250,000 a year to Hawai‘i Island in community benefits focused on education and the environment. An immediate contribution will help fund preservation of books at the Pahala library.

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Other renewable energy projects won’t be affected by AKP, which will replace imported fossil fuel at Hawaii Electric Light Company’s Keāhole power plant. It is fact, not opinion, that liquid fuel will be needed at Keāhole for many years to come.

Estimates are that additional geothermal power would take seven to 10 years to develop, as HELCO gears up to issue a request for proposals, probably next year.

In the meantime, AKP will supply virtually 100% of Keāhole’s needs with 16 million gallons of biodiesel a year. Should the utility no longer need it at Keāhole, it can transport the fuel to another plant, including on O‘ahu or use it for transportation.

The private investors who will put up approximately $450 million for the project assume the risk—not the utility.

An additional eight million gallons of biofuel produced annually will be distributed by Mansfield Oil Company, with preference to Hawai‘i. If sold here it would represent 16% of Hawai‘i’s transportation diesel demand based on the 2011 data of the Federal Highway Administration.

Mansfield is an industry leader in fuel handling and distribution and will handle all the fuel logistics from the Ka‘ū facility.

Yes, there is a cost—electric bills will be higher for a while—a dollar or less for a typical monthly 500 to 600 KWh user. That would change as the price of fossil climbs beyond the biodiesel. We cannot say how long that will be; we can say that since 2009 oil has trended upward, from about $40 to more than $116 a barrel. With worldwide demand growing and supplies at risk, it is likely that trend will continue.

AKP’s 20-year fixed-price contract with HELCO makes the cost of energy more stable and predictable. Sudden increases in oil prices will have less budgetary and economic impacts on business and government.

We invite you to investigate www.ainakoapono.com to learn more about ‘Āina Koa Pono. Contact us through the site if you have questions, which we will try our best to answer.  We believe AKP is a win/win/win for Hawai‘i—jobs, sustainability and community benefits.

Chris Eldridge is a partner and on the management team of ‘Āina Koa Pono. He has 20 years of entrepreneurial and start-up experience, founding four companies including America’s Mattress and PortaBox Storage. Eldridge serves on the Board of Kapi‘olani Medical Center for Women and Children and is a member of the Nature Conservancy of Hawaii’s Corporate Council for the Environment.

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