Kaua`i Hydropower Company Seeks Accord with Agribusiness Development Corporation

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The Kaua`i Island Utility Cooperative has lost its “priority position” to generate hydropower using irrigation systems and land in west Kaua`i managed by the state Agribusiness Development Corporation.

Last month, the Federal Energy Regulatory Commission issued an order dismissing the competing applications of KIUC and another company, Kekaha Ditch Hydro, LLC, for preliminary permits to study the feasibility of constructing a hydropower facility along the ADC’s Kekaha Ditch.

In its October 20 order, FERC stated that it was establishing “a general policy of not issuing permits for projects” in those cases where there is no mandatory federal jurisdiction and where there is the “potential to interfere with Hawai`i’s state hydropower authorization process.”

William Tam, the deputy director of the Department of Land and Natural Resources for water issues, was pleased with the decision. “It’s a good thing,” he told Environment Hawai`i. “We don’t like stream decisions being made in Washington, D.C., where there’s no expertise and local knowledge.”

Other applications are pending, he noted, but given FERC’s latest order, the commissioners “will dismiss those as well.”

FERC has already granted two applications for hydropower in East Kaua`i. “I don’t think they’re going to revisit those,” Tam said. “The ones issued already will run their course, but they’re not inclined to issue more.”

“Now it’s up to the landowners and the applicants to make the decision, based on the merits and state law,” he added. The FERC decision “simplifies things. People can’t use [FERC] anymore as a bludgeon against others.”

With FERC now out of the picture, KIUC and its agent, Free Flow Power, LLC, more than ever needs to make nice with the ADC, which owns irrigation systems and lands that KIUC wants to use for hydropower facilities, including a 7.7 megawatt facility along the Koke`e Ditch, a 1.5 MW facility along the Kekaha Ditch, and a 2 MW facility using the Wailua reservoir. Althouh the DLNR owns the reservoir, the ADC owns some of the surrounding land that KIUC wants to use for a pipeline and power house.

Earlier this year, to ensure its tenants continue to have ample water for their crops, the ADC filed motions to intervene in the FERC dockets for preliminary permits for the projects.

In June, the FERC granted a preliminary permit for the Wailua facility.

Recognizing the need for coordination, representatives from KIUC and Free Flow met with the ADC board this past summer on Kaua`i, wrote a letter reaching out to the agency, and made a brief presentation at the ADC’s September board meeting in Honolulu.

Jason Hines of Free Flow explained that the layout for the Wailua facility has not been finalized and that his company is trying to tailor that project to complement current agricultural uses. As a result, the facility would likely end up producing no more than 500 kilowatts, rather than 2 MW, he said.

Because the facility would use the same water resources and lands that ADC’s tenants use, Hines said he wanted to “see if there were opportunities for shared infrastructure, something that was more integrated with these three potential areas … a combo hydro-irrigation project.” 

Specifically, the utility and Free Flow asked that the ADC, in addition to informally discussing the project, enter into a memorandum of agreement with them to cooperatively investigate the potential for the hydropower on ADC lands. 

They also asked for a right of entry onto the ADC’s Kalepa lands, which surround the reservoir, to get a better understanding of the ditches involved. 

When asked by ADC board member David Rietow how much water the Wailua reservoir facility was expected to use, Hines said that the 2 MW plant originally proposed would have taken all of the diverted water, more than 40 million gallons a day.

“Since then, just understanding what the irrigation needs are, it would be less than that. The amount is still to be determined,” he said, adding that the plant may only take five to ten percent of the maximum flow. 

Even then, Rietow noted that under the current design, the water diverted through the plant would bypass all of the agricultural tenants and be “useless for anyone else,” since it would be dumped directly into the ocean.

But that could also change, Hines said. The hydro turbine could be located at a higher elevation to allow the used water to be used for irrigation at lower elevations. 

“Really, at this point, it’s trying to fully understand the pieces,” he said. “What we’re trying to do is get everyone around the table. … as opposed to trying to guess how best to do it.”

The board took no action on KIUC’s requests.

At an ADC planning subcommittee meeting held a few weeks later, Tam said the roles of all of the agencies potentially affected by the hydropower — the ADC, the DLNR, state Department of Agriculture, and the Department of Hawaiian Home Lands (another potential water user) — need to be sorted out at the administration level.

“There are implications for ADC lands, DHHL lands, stream flow. It can’t be decided at random – [according to] whoever files [for a permit] first. That’s dumb. The ADC has got to be clear what its interest is. Hydros are a great idea, but it’s not being coordinated so everyone is not at each other’s throats,” he said.

* * *

Obstacles Plague Biomass Company

Plans for Pacific West Energy, LLC’s big biomass plant continue to change as the company encounters one obstacle after another.

In late September, Pac West updated the ADC on its progress toward securing feedstock lands, as well as a site for its proposed 20 megawatt power plant. Earlier this year, the ADC promised to consider leasing 750 acres of its Kekaha lands to Pac West. The company originally sought more than a thousand acres, but the ADC chose to lease most of its available land to Pacific Light and Power, LLC, a Kaua`i company that proposed to generate electricity for Kekaha tenants using hydropower, biomass, and a gasification plant.

At the ADC meeting, Pac West president William Maloney reported that the company, which had tried to construct its power plant at the former Kekaha sugar mill, has decided to relocate its power plant back to Gay & Robinson lands. 

Community resistance and permitting issues had forced the relocation, Maloney said. 

The size of the plant has also changed. Depending on the fuel supply, the plant might also produce as little as 12 MW, he said.

Securing an adequate fuel supply has been a problem for Pac West. For years, the company had been negotiating with the Department of Hawaiian Home Lands to lease thousands of acres in Kekaha. But that fell through, also as a result of community resistance. 

However, Maloney said, the company is now looking at leasing DHHL lands in Anahola, on the opposite side of the island. Of the 4,000 acres available in Anahola, about 1,250 are usable, he said.

To power a 20 MW plant, he would need less than 5,000 acres, he told the board, adding that feedstock would likely come from lands owned by Dow, Gay & Robinson, other private landowners, and possibly the ADC.

Although having to truck crops across the island is not ideal, it “doesn’t blow the economics of the project,” Maloney said.

When ADC board chair Scott Enright noted that Pac West had reportedly planned to use eucalyptus from the Big Island as feedstock, Maloney admitted that was his company’s least-economic feedstock option. Even so, he said, “from an economic standpoint, the higher cost of bringing those over … fits the model.”

Despite Maloney’s assurances, Brad Rockwell, production manager for the Kaua`i Island Utility Cooperative, said the utility was “not close to understanding” whether the Pac West would produce power at a cost it would be willing
to pay.

“I can’t comment on that. We don’t have anything being proposed at this point,” he said. 

Maloney said that because the company relocated its plant, it has had to restart negotiations with the utility. 

“As they’re looking at their hydro and solar options, we’ve got to fit into that mix,” he said, adding that KIUC president Dave Bissel has suggested that the plant should be smaller.

* * *

Galbraith Lands Nearly Secure

After five years of negotiation, the purchase of some 1,200 acres of prime agricultural land in central O`ahu is nearing completion. Public funding for the project has been secured, according to Hawai`i Trust for Public Land director Leah Hong, who gave a status report at the ADC’s board meeting in September.

The lands, which will eventually be managed by the ADC, will cost $18 million, $13 million of which will come from a state general obligation bond. The U.S. Army is kicking in $3 million, and the TPL has secured $2 million from the City and County of Honolulu.

Hong said she is finalizing the payment with Bank of Hawai`i, which is the trustee for the Galbraith Estate, owner of the land. 

ADC director Alfredo Lee said the state bond will likely be posted in April.

Once the ADC acquires the lands, it will need to prepare a master plan.

“We’d better. The state invested $13 million,” said board member and Department of Agriculture deputy director James Nakatani at a planning subcommittee meeting last month.

The TPL is also partnering with the Office of Hawaiian Affairs to purchase more than 500 acres of Galbraith land in the same area that contain an archaeological feature known as the Kukaniloko birthing stones.

* * *

ADC Attempts to Draft Administrative Rules

“One of the advantages we have is, maybe we shoot from the hip, but we move,” ADC board member David Rietow said at its September meeting.

Since its inception more than a decade ago, the ADC, graced by the state Legislature with some enviable exceptions to state procurement and land disposition laws, has managed its lands and infrastructure with relative ease.

And Rietow and his fellow board members want things to stay that way. 

After more than a decade in existence, the agency is only now beginning to attempt to draft rules, in part because its goals have expanded beyond facilitating a transition from a sugar plantation-dominated ag industry to a more diversified one.

The ADC has been taking on more projects, including renewable energy generation, and new lands, such as those at Kalepa, Kaua`i. What’s more, the public is also becoming more aware of its activities, ADC staff told the board.

Although staff said that administrative rules might reduce the agency’s flexibility, board member James Nakatani didn’t buy it, since the board can craft the rules to allow the agency to take full advantage of its enabling statutes. 

* * *

Contamination Prevents Generator Installation

The state Department of Health won’t allow the ADC to install backup generators, purchased years ago, until contamination at the site — a former pesticide mixing facility operated by the Kekaha Sugar Co. — is mitigated.

The generators are intended to provide emergency power in the event that one or both of the hydropower plants that power irrigation pumps in the area fail. The ADC plans to install them across the street from the privately owned Kekaha Sugar Mill, which is the subject of a separate DOH investigation. 

Although soil tests on the ADC site found low to moderate dioxin and arsenic contamination, the DOH has required the ADC to draft a remedial action work plan before installing the generators. The plan, released in September, recommends signage and security monitoring, placing boulders and installing a cattle fence around the site, and placing three to four inches of gravel on access roads to cap contaminants, deter runoff, and suppress dust.

Teresa Dawson

Volume 22, Number 5 — November 2011

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