The Department of Business, Economic Development, and Tourism (DBEDT) has issued its first “true-up” for the Green Energy Market Securitization (GEMS) bonds. The true-up, a required element of the program approved by the Public Utilities Commission, is a periodic accounting of funds received from the Green Infrastructure Fee, or GIF.
Those collections, which are paid by customers of Hawaiian Electric utilities on O`ahu, Maui and the Big Island, are weighed against the payments due on the $150 million bond DBEDT took out last November to finance the GEMS program. As Environment Hawai`i reported in March, GEMS is intended primarily to help underserved utility customers reap the benefits of solar energy and other green energy technologies.
According to the May 29 report, the utilities’ daily payments to the fund trustee amount to more than $61,000. Collections from last December, when the fee began to appear on utility bills, through the end of June were expected to total around $7.4 million.
The bond payment, due July 1, is around $7.1 million. The excess amount collected is to be applied to the next periodic payment, with the GIF that is to be levied on ratepayers adjusted to reflect that excess.
In addition to the bond payments, DBEDT lists additional charges to be paid by GIF revenue. These ongoing “financing costs” include “trustee fees and expenses” of around $32,000 every six months; “department legal, consulting, and accounting fees” of more than $6,000; “service provider legal and accounting fees” of around $17,000; rating agency fees of nearly $29,000; service provider fees of over $5,000; and “miscellaneous” charges of more than $11,000.
Offsetting this is interest earned on the more than $140 million held by Bank of New York Mellon. For the first seven months of the program, that amounted to $113.
If the GEMS program worked as it was apparently anticipated to, the GIF paid by utility customers would be reduced by payments from residential and nonprofit users who had obtained loans from the bond funds to install solar panels on their homes and offices.
However, as of mid-June, no loans had been approved.
When DBEDT applied to the Public Utilities Commission for its approval of GEMS in June 2014, it attached several studies to the application, including four that were not made public.
Environment Hawai`i has filed requests for those reports, which are, as described in the PUC filing, a study on anticipated benefits and impacts of the program; an analysis of “Break-Even Program Repayment Cash Flows;” “GEMS Product Guidelines;” and “Perspectives of GEMS Financing Products.”
Last month, DBEDT released one of the four requested studies – that of anticipated benefits and impacts – but withheld the remaining three. According to Alan Yonan, the public information officer for DBEDT’s Energy Office, “there is sensitive information in [the remaining studies] that still needs to be kept confidential.”
The “Perspectives of GEMS Financing Products,” Yonan said, “identifies structural limitations of available financing structures in which GEMS financing may participate. If made public, such information could prevent the Hawai`i Green Infrastructure Authority (HGIA) from obtaining favorable loan terms on the state’s behalf.” The HGIA is the body set up by law to oversee the GEMS program.
The “GEMS Product Guidelines” report, he continued, “includes details that, if made public, could erode HGIA’s negotiating with potential developers, installers, and financial service providers.”
Finally, the “Break Even Program Repayment Cash Flows,” he said, “contains certain portfolio assumptions that, if made public, could put HGIA at a disadvantage for program repayment.”
As for the “Anticipated Program Benefits and Impacts,” a three-page study prepared by GEMS contractor Renewable Funding, it states that by combining the net proceeds from the GEMS bond float ($143 million) with private capital, “more than 92 gigawatt-hours of solar energy maybe produced annually,” an amount representing less than 1 percent of the state’s annual electricity consumption. The 7,400-plus photovoltaic projects that GEMS loans could support would reduce petroleum consumption “by over 7 million gallons, or 169,000 barrels annually,” the report states.
Under the heading “Market Expansion Impact Metrics,” the study says GEMS “will expand the availability of financing for underserved markets to invest in clean energy installations for over 40,000 households that currently have limited or no financing options.
“GEMS aims to enable ‘the democratization of clean energy,’ and the program will report on its success in expanding the eligible market, especially in the underserved markets, including such things as expansion of credit underwriting criteria, use of alternate underwriting metrics, and use of alternative repayment mechanisms.”
A table that lays out the “calculation of anticipated benefits and metrics” indicates that GEMS is expected to support development of 14 megawatts (MW) of rooftop solar financed through consumer loans to 4,000 utility customers; another 9 MW will be placed onto the roofs of 2,572 customers who lease their PV systems through third-party providers; 44 MW is to be installed using “hybrid levered debt” onto 988 buildings owned or leased by nonprofit organizations that have entered into power purchase agreements with third party providers.
These 7,500 installations, the study says, account for all $143 million of the GEMS bond proceeds.
Estimated savings per year on the utility bills of these customers is $9,866,894 million.
— Patricia Tummons