Tuesday, February 3, 2015

Energy Dynamics - Blogging A New Chapter

Tuesday, January 20 was my last day as Chair of the Hawaii Public Utilities Commission.  The next day my transition into retirement was put on hold for a little while with the opening of the Hawaii State Legislature and a position as a policy advisor in the House Finance Chair office.  Of course, the question I get asked the most is,  "what are you going to do next?"  I have no plans but thought maybe I could make myself useful sharing what I have learned in my almost 19 years in politics and 17 years as a participant in the energy sector.

With advancing technologies, new business models and more customer choices, Hawaii's energy dynamics is not well understood.  I hope this statement I made recently will help to outline the challenges we face in achieving Hawaii's clean energy transformation:

Hawaii Energy Policy Forum – Legislative Briefing 
January 16, 2015 

The public announcement of my intent not to seek reappointment left me uncertain on how to prepare for today’s presentation.  This should have been an opportunity to meet the newly appointed Chair if the timing was right.  And, the Commissioners and staff at the PUC have been advised by our Chief Counsel not to comment on the most significant application to be filed and probably the most significant decision in the PUC’s history.  So what’s left to talk about? 

I hope my personal insights, three main points, can be taken to heart as we move forward in Hawaii’s energy transformation. 

First, the whole is greater than the sum of its parts.  I note that the last panel is titled:  Integration of Parts:  The Path Forward.  We have moved on from Clean Energy 1.0 – which I usually equate to project based and early adoption strategies to Clean Energy 2.0 or maybe even 3.0, taking on more complexity and a systems approach.  In transforming the energy ecosystem, we don’t want to end up with a Frankenstein, especially an immoral, soulless monster of a system.  In the integration of parts we are striving for the seamless delivery of electricity in a well-designed cooperative-competitive environment where each part has an obligation to achieve three objectives: 

#1 - Lower, more stable electric bills for all customers
Develop diverse portfolio of resources and technologies by encouraging prudent investments and optimization of all assets, whether utility or non-utility, centralized or decentralized, that will bring efficient and cost-effective benefits and value to the electric system to serve the public good 
#2 - Maintain reliable energy service in a rapidly changing system operating environment
Maximize the integration of cost-effective renewable energy resources while protecting the electrical system performance 
#3 - Expand customer energy options
Provide more options for customers to manage their electricity bills and to reduce costs by ensuring accessibility, fairness and the opportunity for all ratepayers to benefit from clean energy policies. 
My second point is the prodigious plodder will win out in the end.  Getting to 100% renewable is not a race – especially in a rapidly changing technological environment, we need to be mindful of who pays and bears the risk to ensure that the large, long-term capital investments are prudent and bring multiple benefits to the energy system.  On the other hand, we should not let falling oil prices detract us from our long-term clean energy strategy.  Let’s use falling oil prices to give relief to ratepayers while we keep our eye on the objectives to delink from global pricing and minimize supply disruption which are beyond our control.  Like the moral of the tortoise and the hare, steady progress wins the race, fits and starts will only create business uncertainty. 

Finally, Hawaii’s energy sector has been described as the postcard from the future.  We are recognized as the premier State developing the next set of practices – not merely adopting best practices.  But what makes us truly unique is our value of Aloha, Hawaii’s greatest renewable resource. 

As we begin the investigation of one of the most significant business transactions in this State’s history, I believe the answer we seek is whether NextEra, a Florida based company, can incorporate and will perpetuate in its corporate philosophy and structure Hawaii’s triple bottomline;  kuleana - taking responsibility, malama pono – to do what is right and just, and aloha – compassion and cooperation.  Only then, I believe, can NextEra establish a true partnership with Hawaii to be shared with the rest of the world in advancing clean energy. 

When the PUC issued its four big decisions last April a television news reporter asked me “What does this all mean?”, I didn’t return his call because I couldn’t reduce what I was thinking to a sound bite and could only sum it up into a paragraph: 
There is no one single action, one single person, one single agency or one single business that can cause Hawaii’s clean energy transformation.  Together we are redesigning our electric system to be clean, safe, reliable, affordable and sustainable to deliver abundance and prosperity to our communities.  But to be successful in the redesign and development of our energy ecosystem, it will require our Hawaii values to engage a cooperative and fair community of energy users, suppliers and the constant balancing to create a healthy functioning and reliable energy system.

Braddah Iz sums it up in four words, "make your kuleana pono."

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