Kaua`i Utility Bursts Pipe Dream Of Independent Hydropower Firm

posted in: April 2012 | 0

Linda Rosehill could not have been more emphatic: The Kaua`i Island Utility Cooperative (KIUC) is not interested in buying electricity from Pacific Light and Power (PLP), its partner, Palo Alto-based Orenco Hydropower, or its slated power purchaser, the Kekaha Agriculture Association (KAA).

At the state Agribusiness Development Corporation’s meeting on March 15, representatives of PLP and Orenco suggested that KIUC would buy excess power generated by PLP’s proposed hydropower plants and sold to the KAA. They also suggested that KIUC would assist them in acquiring cheap financing for their hydropower generators, which would use water from irrigation ditches on the ADC’s Kekaha lands, on leeward Kaua`i.

For the past year, PLP had been in head-to-head competition with KIUC over the use of those ditches. PLP has a lease with the ADC for lands in Kekaha and an agreement to sell power to the KAA, which manages the irrigation infrastructure for the ADC; KIUC does not. Even so, KIUC applied to the Federal Energy Regulatory Commission for a permit, hoping to gain a priority position over PLP. But a decision earlier this year by FERC to let the state settle the matter has cast a new light on the process. PLP, for one, has taken it as an opportunity to seek collaboration.

“The solution is an effective, low-cost project,” Orenco’s Carl Spetzler told the ADC. “KIUC brings a lot to the party. We need the time and the runway to get that accomplished. So far it’s been direct competition with KIUC. … We have to get KIUC to the table on this.”

Given the history, some ADC board members remained skeptical. ADC board member Mary Alice Evans, deputy director of the state Department of Business, Economic Development and Tourism, asked why PLP’s project would be cheaper than KIUC’s. Spetzler responded that KIUC is using a hydropower developer who “hasn’t done this before” and that his company can get the best equipment.

Even if KAA cannot negotiate a new power purchase agreement with KIUC, PLP’s project would still go forward, PLP director Palo Luckett said.

“We would assume a competitive posture before the PUC [public utilities commission],” he said.

The utility’s Rosehill testified that it had already informed PLP that it is not interested in negotiating a new agreement with KAA to buy the excess power generated by PLP’s hydros. (KIUC already has such an agreement with the co-op to buy power from existing hydropower plants on ADC’s property.) KIUC still intends to pursue its own hydropower project, she said.

“We have a team with expertise. … I want to be clear: It’s not our intent to enter into a power purchase agreement with PLP or Orenco,” she said. “We are a little perturbed that representations are being made that negotiations are ongoing.”

She did, however, state that KIUC is “ready to accommodate KAA’s needs.”

ADC board member David Rietow reminded the board that promoting agriculture is the ADC’s primary role.

“One of the ways we help our tenants is to reduce operating costs,” and that includes enclosing ditches, he said.

KAA member Landis Ignacio echoed Rietow’s remarks and noted that PLP’s project — which includes enclosing ditches, growing biofuels, and building a biodigester to manage animal waste — is, first and foremost, an irrigation project and that PLP is also an agricultural tenant. The hydropower component merely makes the infrastructure improvements more affordable, he said.

“When we reduce our water needs, we can restore stream flows … and reduce discharge off the property,” Ignacio said.

It will cost $20 million to install a pressurized irrigation system at Kekaha, he continued. “Hydropower allows us to capture some revenue. This project is so desperately needed,” he said.

Ignacio added that the ADC rejected a hydropower proposal from KIUC in 2010 because it didn’t benefit agriculture.

A No-Show

While the utility and PLP continue to compete for ADC resources, it appears that biofuels company Pacific West Energy, LLC, has dropped out of the running. Last year, after Pac West objected to a proposal to award PLP all of the ADC’s available lands in Kekaha, the ADC decided to consider leasing 750 acres to Pac West. Recent changes in the location of Pac West’s 20 megawatt biomass plant and feedstock sources, however, caused KIUC to rethink its agreement to purchase power from the company. At the ADC’s March 15 meeting, no one from Pac West attended, and ADC executive director James Nakatani noted that the company had not responded to his request for a status update.

***

ADC Supports Concept

Of Landfill at Kalepa

After searching for more than a decade for a new landfill site, the county of Kaua`i appears to have settled on roughly 200 acres in Kalepa controlled by the the state Agribusiness Development Corporation (ADC). But it’s far from a done deal.

The ADC has not consented to have the landfill on its property, but its members and staff have negotiated an informal agreement: the county may site a landfill at Kalepa if it also builds a pipeline that will provide pressurized water to the ADC’s surrounding 6,500 acres.

On March 15, the ADC formally consented to a right-of-entry to allow the county to have access to the proposed landfill site and proceed with an environmental impact statement.

“Siting a landfill, as you can imagine, is no easy thing,” county engineer Larry Dill told the ADC board at its meeting last month.

Between 2001 and 2003, the county had identified eight potential sites, all on agricultural lands, but was unable to proceed with a preferred site in Kalepa because of community opposition and environmental justice issues (the site was in a low-income area that was already going to host a power plant). In 2009, the county had identified a potential site in Umi, but landowner Alexander & Baldwin, which farmed coffee on the land, refused to sell.

Then in 2010, the county set its sights on lands in Kalepa owned by the ADC.

During the ADC’s meeting last month, board member Mary Alice Evans asked whether the county had any agricultural lands to exchange for the proposed landfill site.

“The loss of 150 acres diminishes the ADC’s opportunities,” she said.

Dill said the county does not have any lands to exchange and that it has not even explored the idea.

Board member David Rietow then clarified that before many of the ADC’s new members, including Evans, joined the board, he and other board members had met with the mayor and agreed that irrigation mitigation would make up for any loss of land or displacement of farmers.

With pressurized water, “the agricultural land now has a higher and better use. Right now, it’s too dry even for cattle. That was the logic [behind the agreement] and we’re holding the county hostage to that pipeline,” he said.

The county is in the process of securing a consultant to conduct irrigation studies and provide engineering and cost estimates for the pipeline, Dill said.

Should the ADC board consent to the landfill, the county expects it would take about eight years to complete construction. With vertical and lateral expansions, the current landfill in west Kaua`i could last another eight to ten years.

Dill says a landfill at Kalepa would be the last one Kaua`i would ever need. It’s anticipated lifetime is 271 years, effectively “forever,” he said, adding that the county aims to divert 70 percent of its waste by 2023.

— Teresa Dawson

Volume 22, Number 10 April 2012

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