I am concerned that those who are supporting a co-op are being fed only the positives and not the negatives of owning such a co-op. Everyone is citing Kauai Electric as a success story but what occurred in Kauai is
I am concerned that those who are supporting a co-op are being fed only the positives and not the negatives of owning such a co-op. Everyone is citing Kauai Electric as a success story but what occurred in Kauai is not translatable to the Big Island:
1. Kauai Island Utility Cooperative’s purchase of Kauai Electric form Citizen’s communication in 2002 came about because Citizen’s Communication wanted out. Even then KIUC paid $215 million. Thus, Kauai residents, who are members of the co-op, are paying one of the highest electrical rates in the country because they not only have to pay for the electricity being used, cost of operation but they also need to repay the federal loan used to buy the co-op. NextEra is paying $4.3 billion for Hawaiian Electric Industries. Assuming that HEI will allow HELCO to be spun off and sold for one quarter of that amount, that is still $1.1 billion that 85,000 Hawaii County households need to pay.
Still supporters believe that U.S. Department of Agriculture will finance that $1.1 billion. However, to qualify for the cheap, not free, USDA Federal Rural Development loan the community must be rural. Under USDA standards, all of Kauai is rural and thus, its purchase qualifies completely; however, Hilo and Kailua-Kona do not qualify as rural and thus, a purchase of HELCO would require finding funding other than USDA and thus, higher interest rate money than KIUC’s purchase.
What is unsaid but implied is that should the money not come from USDA is the supporters’ expectation that the state use its power of eminent domain to make the purchase. If eminent domain is the ultimate goal, expect the state to eventually find an out of state power company to run it like NextEra as it has done with Kaiser and Maui Memorial but with increased taxes/bonds to make the purchase. Frankly, the state cannot afford a $4.3 billion purchase required to even match NextEra’s offer.
Moreover, what is expected but not said is that the poor will pay for the $1.1 billion to $4.3 billion purchase because those who can afford to be completely off power, will as shown by the rise in photovoltaic power system sales whenever rates go up. Why do you think the photovoltaic sellers are the prime supporters of a co-op?
2. The benefit of lowered power rates occurs only after the loan is fully paid off. Kauai residents have been paying the highest power rates for at least 13 years and still have yet to pay off $90 million of the $215 million loan; expect higher monthly and longer period to pay off $1.1 billion especially with a higher interest rate. So our kupuna, who could least afford it, will pay for the next generation and new residents to have cheaper power. In Puna, where people budget how much money they need to pay for the gallon of gasoline to get into Hilo, will only the rich be able to afford power or is the state expected to step in and pay?
3. In the event of an emergency, like Tropical Storm Iselle befalling Puna, will the co-op have the skilled manpower to ensure that power is back on as soon as possible? HEI pulled in skilled workers from Oahu, Maui and other parts of the Big Island who worked 24/7 to put Puna power poles back up; and even then it took two weeks where people were without power and water (catchment requires pumps). Only the people who could afford generators and the diesel had power. I paid $250 for diesel for 10 days at four hours per day to power my neighbor and our household — which translates to over $1,000 per month in diesel for one-sixth of the power loss.
Kauai has not been hit with a hurricane since KIUC came into being. However, its model requires that the huge expenses in overtime and bringing in out-of-island skilled workers would require that these huge expenses be passed onto its residents — the smaller the pool of residents, the higher each resident pays for catastrophic expenses. The 15,000 lower Puna residents did not see a huge rate increase for the Iselle expenses because the entire HEI ratepayers were able to absorb the cost. Yes, FEMA may eventually pay back 75 percent of the catastrophic costs but it took FEMA almost one year to pay for Puna’s disasters and even then they refused to cover the individual expenses like the more than $1,000 per month in diesel a household with a generator would need to pay awaiting repair.
To be clear, I am not against a cooperative. I like the idea of control as our household is completely solar-powered and we are considering going off-grid completely, but few people can afford that. For the same reason, most people rent, not own, a house because mortgage and house upkeep are more than rent; most will not be able to afford the more than 20-year rate increase a cooperative requires. Since there are people who are now emotionally invested in a co-op, I expect to be attacked for this letter. However, people should know what they are supporting and not just accept what is being touted; and let us not push something that will eventually be laid upon the backs of those who could least afford it.
Joy San Buenaventura of Keaau is the state representative for District 4.
Viewpoint articles are the opinion of the writer and not necessarily the opinion of West Hawaii Today.
