Business

Paniolo Power Will Withdraw from Utility Merger

July 16, 2015, 11:20 AM HST
* Updated July 17, 10:55 AM
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Paniolo Power Company, LLC has announced its plans to withdraw from the Hawaiian Electric Companies/NextEra Energy, Inc merger docket that’s in front of the Hawai’i Public Utilities Commission. The company, a subsidiary of Parker Ranch, Inc. plans to concentrate on the PUC’s pending Power Supply Improvement Plan docket, which is believed to be better suited to address transformational planning issues.

Parker Ranch Chief Executive Officer Neil “Dutch” Kuyper believes the decision is a strategic move. “The Ranch and our neighboring communities continue to be burdened with the highest electricity rates among the HECO companies. Our efforts need to be on lowering rates for the most people on the Big Island in the shortest timeframe.”

Paniolo Power General Manager Jose Dizon says under the new plan, all ownership models will be worked with, including two in addition to the merger docket: a municipal electric utility and a utility cooperative.

“The merger docket before the PUC is focused on the utility ownership model and NextEra’s capabilities,” said Dizon. “…We plan to promote the development of microgrids and community renewables regardless of who owns the utility.”

Kuyper says that promoting the development of microgrids and community renewables will look to current technologies and resources already known, helping to insulate the community from the uncertainty of the utility’s plans. “The PSIP docket deals with these issues, while the merger docket deals with the merger itself,” Kuyper explained.

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A 2013 evaluation by Siemens and Booz Allen Hamilton of Parker Ranch’s natural resources and the development of realistic alternatives to the utility’s Integrated Resource Plan led to the understanding that a regional microgrid would be optimal for the ranch and its surrounding community. The microgrids could also provide energy potential island-wide if the grid was decentralized into separate interconnected microgrids.

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According to Paniolo Power in April 2014, PUC rejected Hawaiian Electric’s IRP and gave the company 120 days to develop the PSIP with clear directives, including the prioritization of the customer, renewables, and lower rates. Shortly after, in August 2014, PUC opened the PSIP docket. Paniolo Power filed a motion, which is still pending, to intervene in the PSIP docket.

“The PSIP docket is the more appropriate venue to bring about transformative change within Hawai’i’s energy ecosystem on a statewide level,” said Kuyper. “When NextEra announced its planned acquisition of HEI and the PUC opened the merger docket, we felt it was necessary to intervene to protect our interests and the interests of our community. We also intervened because there was no action in the PSIP docket at that time. The PUC is handling an incredible workload in light of all that is happening in Hawai’i, but we are hopeful that there will be movement in the PSIP docket in the near future.”

Paniolo Power says they developed an alternative after analyzing the utility’s proposed PSIP. In its new plan, Paniolo Power would accelerate the retirement of fossil-fueled power plans, integrate more renewable energy, and add pumped storage to hydro to provide higher renewable penetration and improve the stability of the Big Island grid.

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“It has become clear that NextEra is not going to discuss its plans for Hawai’i’s energy future until it completes the merger with HECO,” said Dizon. “Paniolo Power filed a motion to consolidate the PSIP and merger dockets in order to address key planning issues in the merger docket. The PUC found that the issues are too complex to be handled effectively in a consolidated docket, and concluded that each docket must proceed to resolution on separate tracks. We completely understand that approach.

“It is best for the Ranch and our larger community to focus our resources on the PSIP docket so we can accelerate adopting more renewable energy for Hawai’i Island. We believe it is possible to reach 80 to 100 percent renewable for electricity generation within 10 years or less. We will continue our plans to promote renewable energy technologies that are triple bottom-line driven—good for people, environment and business. We need to reduce costs to ratepayers, speed up retirement of the utility’s oil-fired generation assets to reduce price volatility, and promote installation of storage solutions including pumped hydro projects to integrate more renewables.”

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