Lights flickering on energy reform
THE 2006 legislative session began as an enlightened one in terms of potential energy reform, but the lights dimmed as the session progressed. Measures were introduced with the goal of reducing our dependence on imported oil while strengthening our local economy and protecting our environment. A majority of the bills dealt with the development and use of renewable sources of energy. Unfortunately, these attempts to enact reform were diverted.
For decades Hawaii has endured an energy system that burdens residents with escalating energy costs and a self-destructive dependency on fossil fuels. No other state relies so heavily on oil; we stand alone in our staggering 77 percent usage of fossil fuel for energy production. For an isolated land mass, this is an extremely dangerous practice that leaves us vulnerable to international politics, fluctuating supply and escalating prices. Yet with our current policy supporting the fuel adjustment clause -- or energy costs adjustment clause (ECAC) -- we can hardly be surprised at our continued dependence on fossil fuels.
The ECAC permits energy utilities, such as Hawaiian Electric Co., to avoid any financial risk resulting from fluctuating oil prices by passing on all the risk and costs to the consumer. Because the utility and its shareholders assume none of the risk, HECO has no motivation to change its inordinate dependency on oil. Therefore, it is critical that the Public Utilities Commission significantly adjust the ECAC to force HECO to move toward a greater reliance on sustainable, local, renewable energy sources.
In recent Senate testimony, Ted Liu, director of the state Department of Business, Economic Development and Tourism, illustrated the ECAC's harsh impact on consumers, stating that it accounted for 33 percent of Oahu's and 50 percent of Maui's residential electricity costs in February 2006. Liu noted that in 2005, HECO's ECAC charge to the consumer increased by 81 percent (from 3.578 cents per kWh to 6.483 cents per kWh). If oil wasn't the main source of our energy, and if HECO assumed any of the risk and cost, this frightening increase wouldn't have such a severe effect on the consumer who pays the bill -- that's you and me. The 32 other states that have an ECAC are much less dependent on oil. In fact, according to Liu, the next highest oil dependency is Florida at 17 percent, with the majority of ECAC states using less than 1 percent of oil to meet their energy demands. When prices rise and the ECAC increases, the consumers in these states don't get hit as hard on their monthly bill as we do with our 77 percent oil usage.
We began the 2006 session with high hopes of creating significant change in this unhealthy dependence when Governor Lingle introduced an outstanding bill for energy reform. The Governor's Omnibus Package, House Bill 2308/Senate Bill 2271, presented a comprehensive approach that met with diverse support from legislators, environmental groups and state agencies. The Omnibus bill consisted of detailed, wide-reaching reforms to bring Hawaii out of the darkness of heavy reliance on fossil fuels and into the light of renewable energy use. Finally, we had an energy package that addressed growing community concerns, reflected a consensus among interested parties and took direct steps to move Hawaii away from fossil fuel reliance and into a sustainable future.
Unfortunately, the majority leadership did not let the bill see the light of day.
Containing 66 pages of environmental reform, the Omnibus bill promoted the local development and use of alternative fuels (such as biodiesel and ethanol), greater energy efficiency and increased diversity of energy sources. These reforms were to be met through the following provisions:
» authorizing the PUC to determine whether to adjust or eliminate the ECAC;
» encouraging the cultivation of "energy crops" to bolster our agriculture industry and provide a sustainable supply of biomass material;
» using tax credits for the purchase of energy-efficient appliances;
» retrofitting old state government buildings and implementing efficient design practices in new structures to achieve a 14 percent increase in energy efficiency;
» increasing tax credits for photovoltaic and solar systems;
» directing DBEDT to inventory potential renewable energy (biomass, wind, solar, ocean water/wave, hydro and hydrogen) production sites statewide (for this provision, I successfully proposed an amendment to include offshore areas in the inventory of state lands available for renewable energy);
» establishing Hawaii as a leader in the hydrogen fuel industry;
» setting a 20 percent renewable fuels standard by the year 2020;
» establishing a public benefits fund to support demand-side management and renewable energy programs;
» expanding the use of alternative-energy and hybrid state vehicles (this language was unfortunately removed during committee hearings); and
>>repealing the gasoline price cap and requiring stricter regulation of oil industry pricing (this language also was removed, but appears in another measure, HB 3115).
A separate bill, HB 3053 (which I co-sponsored), tightened the definition of renewable energy to exclude processes that rely on fossil fuel. However, Senate amendments deleted the language, replacing it with a call for the elimination or adjustment of the ECAC.
A timid attempt at addressing the ECAC issue also was made with SB 3185 HD1, which lets the PUC decide what to do, but falls short of setting policy to ensure that we reach 20 percent usage of renewable energy within a designated timeframe.
I also co-introduced legislation that would have held HECO more accountable to its consumers by allowing for better business practices in the form of healthy competition. HB 2619 guaranteed that electric utility companies have the opportunity to make a profit, rather than being guaranteed a profit (as they were given under past law). It was gutted by the Senate and replaced with language extending the general excise tax exemption for alcohol fuel sales.
Hawaii must rid itself of its self-destructive dependence on oil. Many hearts and heads were in the right place to achieve this goal in the 2006 session, but old habits and staunch partnerships got in the way of significant change. While we have been able to achieve some small improvements in energy reform, we missed a bright opportunity to shepherd Hawaii into a state of energy enlightenment.
Cynthia Thielen represents the 50th House District (Kailua/Kaneohe Bay).