Thursday, May 29, 2008

Musings: Spin On

The sun is now rising the earliest — 5:49 a.m. — it ever will this year, a schedule it will maintain until June 15 as it meanwhile sets a bit later each day. As a person who just naturally wakes at first light, I especially love this season because it seems possible to get all my work done, and still spend some serious time outside.

The air was completely still, and lightly perfumed — save for the eye-watering stench of dog pee on cement that briefly assailed my nostrils as I passed my neighbor’s yard —when Koko and I walked through our quiet neighborhood this morning.

Ran into farmer Jerry, who was expecting a pile of school kids to visit the CTAHR experimental station as part of “ag awareness day.” It sure beats the rocket-making sessions that are offered to students by high-tech companies that work at PMRF. It seems somehow disingenuous to get kids all excited about launching rockets without also explaining the implications of their military use.

Noticed that the good old boy KIUC Board, masters of cronyism that they are, chose to appoint two of their former members — Dee Crowell and Ron Paler — to fill two unexpected vacancies on the board, rather than runner-up candidates from the last election.

The Garden Island reports Paler as saying:

Paler said yesterday he’s honored to fill in for the remaining 10 months at the “will of the board,” as his past experience will save KIUC thousands of dollars in training and lessen the learning curve.

“We haven’t been away that long,” Paler said of himself and Crowell.

Shoots. Why bother with elections at all?

The article also reports:

According to Board Policy No. 20, it is considered “efficient” for the group to look to former members to fill vacancies, so long as it avoids the appearance of favoritism.

So actual favoritism is OK, it’s just the appearance of favoritism that’s to be avoided?

It was interesting to hear Ken Stokes, who has yet to secure a seat on the Board, talking about KIUC on the radio the other day. Ken actively supported acquisition of the utility, but acknowledged on the radio that things didn’t turn out quite like he expected.

They turned out exactly as I expected, given that sleaze master Greg Gardiner was one of the architects of the deal, and we ended up paying worth more than it was worth. And now we have some of the highest electric rates in the nation.

A friend on Oahu asked the other day, so what, is your energy surcharge about 20 percent of your electric use? I said no, the surcharge last month was actually $15 higher than my kwh use. He was absolutely astounded, but that’s just business as usual on Kauai.

He made a good point, though, when he said that so long as the utilities can pass the energy surcharges along to the consumer, they have no incentive to wean themselves from oil.

Much hay, meanwhile, was made in a fawning puff piece inThe Advertiser yesterday about the growing passenger count on Hawaii Superferry, which has yet to hit customers with the full cost of its own oil consumption. It’s still offering low subsidized rates, even as the Associated Press is reporting that the two Maui ferries, which serve Molokai and Lanai, are seeking rate increases from the Public Utilities Commission.

The Advertiser, which is increasingly coming across as a shill for HSF, reported:

The interisland ferry carried more than 5,500 passengers and 1,500 vehicles between Maui and O'ahu over the four-day holiday period. That's an average of 393 people and 107 vehicles per one-way sailing.

Brad Parsons, who follows the numbers closely, puts them in a bit more perspective:

First, that means nearly a quarter of all of their traffic for May happened during the 4 days of the Memorial Day weekend.

Second, there were 14 one-way trips over that weekend, so they averaged: 393 people per one-way trip and 107 vehicles per one-way which is enough to cover just their fuel costs for those 4 days, NOT the rest of their expenses. This is noticeably a higher ratio of people to cars than HSF has been averaging...onboard live blogging pictures on the web over the Memorial Day weekend indicated increased foreign visitor group travel onboard which would account for the blip of passengers and not so much cars over the weekend.

Third, they will have had 96 one-way trips for the month of May, so they would average: 219 people per one-way trip and
60 vehicles per one-way which is NOT Enough on average to cover just their fuel costs for the month of May. Furthermore, those trip averages for the Month of May are actually lower than the trip averages they were having in the latter part of April.

Spin on, Hawaii Superferry. Spin on.


Mauibrad said...

Little correction:

They will have had *88 one-way trips* for the month of May, so they would average:
*239 people per one-way trip* and
*66 vehicles per one-way* which is
NOT Enough on average to cover just their fuel costs for the month of May. Furthermore, those trip averages for the Month of May are actually lower than the trip averages they were having in the latter part of April.

Aloha, Brad

Anonymous said...

In addition to the financial matters, can we get a report on the destruction of Maui by these Superferry trips?

Oh, I see.
There isn't any.

Anonymous said...

Haha! I saw you over there Brad in the comments to the Advertiser piece, giving your side an unearned 10 point bump in the GI online poll!

Anonymous said...

The jury is still out on damage to Maui. The boats not operating at full capacity and it can take a while to notice new invasive species.

Andy Parx said...

I’m surprised to hear Ken say he supported the purchase of KE by KIUC. If things didn’t “turn out as he expected” he must not have been paying attention to the right people because it has turned out EXACTLY as many of us predicted and were screaming from the roof tops at the time. And we haven’t even started to think about how much it will cost to clean up the toxic waste dump under the `Ele’ele power plant which we over-paid for even though we knew it was a debit on the ledger. And although everyone should have known by knowing Gardiner was in charge, having people like JoAnn Yukimura actually actively covering-up the problems- including the potential Superfund cleanup of the plant- didn’t help.

Anonymous said...

a post hoc fallacy:

"we ended up paying worth more than it was worth. And now we have some of the highest electric rates in the nation."

The rates are exactly what they would have been anyway since KIUC uses KE's tariff. Might be higher as an IOU would have gone in for a rate case by now.

The only reason KIUC isn't losing money is that the Energy surcharge has a 10% rake off built into it. Without that, the base rates don't cover the increases in labor rates etc due to inflation since 1993(?) which was the last rate case.

Anyone who thinks we could have kept rates constant with oil going from $20/bbl to $125 is not math literate. Anyone that believes our County government could have done a better job isn't even sane. Your point that they have no motivation to move to wind, wave, hydro or sun is 100% correct though.

This KIUC board would rather keep A&B, Grove Farm, G&R or any other big landowner sweet than actually move toward alternatives. The #1 priority is pork barrel charity and REDLG funds distribution.

Too bad our Apollo group is so weak. They have Barnes in the middle of their mix keeping the dreamers off of anything meaningful.

Gardiner/Barnes were deep in the mix of designing a system (with their lawyer bud Proudfoot) making sure once they were in charge that it would take dynamite to get them out. That paranoia, coupled with block voting for elderly plantation lunas has us where we are.

Anonymous said...

For about $15,000, if you live in commercial zoned or ag zoned property, you can buy a windmill from Kevin at Business Support Services. 822-5504
It will generally power a house. Pays for itself in about 3-5 years, given today's rates.

Anonymous said...

Might want to re-check your math.

Those units don't produce much at all at typical 15 MPH wind speeds. Might be great on a ridge in Kalaheo, but most of us don't have 20 MPH+ winds all that often.

3-5 year payout? ho ho ho.

Anonymous said...

"The jury is still out on damage to Maui."

There is no jury...only executioners who already know it all.

Andy Parx said...

If we paid what it was worth- remember the ‘nitpickers”saved the people, what, $70 million? in the first price reduction, which was estimated to be a little less that $150m instead of 215m?- that extra $65m wouldn’t have to be paid back (nor the interest on the loan on it) and that would be what they are now calling “patronage capitol” and is being “paid back” to the members lowering actual billed amounts. Also there were calls to do what the smart thing would have been- buy the grid, which is the thing that has value- and not the `Ele`ele plant which was and is a liability. Then we could have accommodated all comers including as much alternative as people could shove into the grid. And we wouldn’t have to constantly worry that big users were going to self generate- which as we predicted is happening today.

As long as the business model is “we sell you our electricity” we will be screwed.

Anonymous said...

I guess it starts with the question :
Why should Kauai residents pay three times the national average per kwh before they get slapped by a 40%, 50% or greater fuel surcharge ?

Municipally owned/ independently operated utility would have allowed Kauai County to incentivize low cost delivery/kwh to consumers, stability of grid and %kwh generated by alternative sources.

The co-op model is generally better for rural areas than a privately owned utility, but merely assuming the privately owned utility's tariff kept the co-op on the same course with a large mortgage to amortize within a fixed time (=certainty of rate increases) and a guaranteed screw job on the consumers.

The good news is that Oahu is getting jammed nearly as hard with less potential for impact on management.

I wonder how long we will put up with it?

Oahu Friend

Andy Parx said...

Our rates are what they are because we are paying for completely rebuilding the grid- at premium emergency prices- after Iniki- and the PUC stuck us for the entire cost.

Anonymous said...

Some really whack analysis here.

Parx, for once, is correct in saying the PUC declinged to spread the cost of Iniki across the state. That gave us a very high base rate back in the mid 90's to cover the costs of the repairs.

The "nit pickers" can't claim full credit for stopping the original purchase. Andy's least favorite Mayor -Kusaka- and many, many others spoke out against the high sales price to the PUC. The PUC rejected the deal. Makes them 1 for 2. There were some serious people pushing against the sale. Not just the council chamber cling-ons.

The $150 million is a fantasy. Even the County's RWBeck study estimated a value close to $200 million. A utility with the right to make 9.25% on $190 millionish of book value in an interest rate environment <6% is simply worth more than book value. Flap all you want but the price was pretty fair. We'd have not done much better in condemnation.

The grid was not for sale as a separate piece. Nice suggestion, but it's not reality. Also, since Eleele is producing over half our power, has 75% of our installed generation capacity (100 MW of the 130 MW total) and no alternatives have sprung up in the meantime, just how would we do without Eleele? If sold to an independent, they could have easily just jacked up power cost to reflect the price of fixing the place up with the PUC blessing it as critical to keeping our lights on. Naive as alway Parx.

Oahu friend is also math challenged.

Our base rates from the 90's are something like 3-4 cts/KWHr for the generation cost and about a dime for the rest. The 10-11cts for operation, return on capital etc is high but that's the hurricane cost which the PUC declined to spread over the state and left us to pay. No way around it. Citizens could have just walked away if they couldn't recoup their repair costs.

We now pay 40+cts/kwHr. The 10-11 cts has not changed with inflation as is would have had an IOU gone in for a rate case. The increase is 90% oil cost related. Untaxed diesel was <50cts/gallon in 1994. It's now $4.00.

KIUC gets to charge us for the difference in oil price at approx 11,200 BTU per KWHr. Since they only use about 9800, they get to charge an extra 15% of the price increase. That's the only obvious rippoff. Citizens was allowed to keep this efficiency bonus when Kapaia was finished in lieu of a rate case. The PUC guys in the State building have all the docs if you want to go dig through them. They're dull but it's clear how it all came down.

What we have is basically a municipally owned system. The same people that own KIUC are also the voters that elect our mayor and seven dwarves.

The KIUC board is not doing a good job IMO. They are pitiful at making meaningful change to cheaper alternatives. But compared to a Country that can't even get a parking lot graded to shed water or that takes 6 months to fight over 2-3 picnic table shelters, and hasn't sited a new landfill after 15 years of fighting, they don't look quite as bad.

Our costs are 75% oil related. Another big chuck is labor and other operating costs. We've also had $30-40 million in rebates handed out.

Anyone who thinks it would be better with our dysfunctional government in charge needs to go look at how f--ed up the water department is. Not to mention math challenged.

Anonymous said...

also dumb like stump

"And we wouldn’t have to constantly worry that big users were going to self generate- which as we predicted is happening today. "

Had big users been able to buy power directly from an independent producer plus pay KIUC for wheeling it through the grid, the cost would still be way above their cost of self generation with no grid charge....Duh.

They already have a cheaper rate as the cost of providing service to big users is lower. This is one of KIUC's fears from a rate case. Rates to homeowners will likely rise while big users will see theirs drop.