Kaua`i Utility Wins Conditional Lease For Hydroelectric Project in Kekaha

posted in: December 2016 | 0

Hoping to spur a resolution of a years- long dispute over stream water in West Kaua‘i, the state Agribusiness Development Corporation (ADC) approved a five-year lease to the Kaua‘i Island Utility Cooperative (KIUC) for its Pu‘u Opae hydropower project. The lease is subject to any conditions that may result from the dispute resolution process and must be issued no later than December 30.

The decision, made at the ADC board’s November 16 meeting, brings KIUC a little closer to securing control over the land and water resources needed for its pumped storage hydropower project that utility representatives say may one day supply ten percent of the island’s electricity. The lease covers the upper portion of the Koke‘e Ditch, which along with the Kekaha Ditch feeds ADC’s 12,500 acres of agricultural lands in Kekaha. The lease also covers four stream intakes — Waikoali, Kawaikoi, Kauaikinana, and Koke‘e — and the Mana reservoir and also gives the utility the option of extending the lease to 65 years.

But securing the lease by the December 30 deadline will be a tall order. The ADC and its tenant co-op, the Kekaha Agriculture Association (KAA), are in the midst of a fight over the stream water diverted by the two ditch systems. In July 2013, a community group represented by Earthjustice filed a petition and complaint with the state Commission on Water Resource Management calling for the end of water waste by the ADC and KAA, as well as amendments to the interim instream flow standards of Waimea River and its tributaries. The group argued that the ADC’s Kekaha tenants required much less stream water than the former Kekaha Sugar Company and that they were simply dumping the excess rather than returning it to its streams of origin.

Parties to the case, including petitioner Poai Wai Ola: the West Kaua‘i Watershed Alliance, the ADC, the KAA, KIUC, and the Department of Hawaiian Home Lands (DHHL) have been in mediation for more than a year, hoping to avoid a long, drawn-out, and expensive contested case hearing. In the meantime, the petition has suspended KIUC’s plans for the Pu‘u Opae project, which proponents say will not only bring the state closer to its goal of generating 100 percent of its electricity with renewable sources by 2045, but will also improve and maintain valuable irrigation infrastructure at no cost to the state and bring much-needed water to land the DHHL wants to see cultivated and developed.

KIUC says it will need 11 million gallons of water a day from the Koke‘e Ditch for its project. With the petition and complaint still unresolved more than three years after being filed, “we had to pull the trigger to force the parties to really come together,” said deputy attorney general Myra Kaichi at the ADC’s board meeting last month. “If [the petition] goes into contested case, we’ll be in it for 20 more years. We can’t afford that. Everyone has to come to an agreement. Everybody has to give up a little.”

Earthustice attorney David Henkin questioned the utility’s claimed need of such a large amount of water (especially for a project that simply shuffles water back and forth between two reservoirs), but told Environment Hawai‘i that he would welcome a 21st century hydropower project that has a minimal impact on the environment.

“We think there’s enough water for justified offsteam use, but don’t want wasteful technology to generate power and not food,” he said.

He added that while he and his client would like to resolve the water dispute sooner than later, they’re not going to allow an artificial deadline to force an agreement.

“Whatever moves forward has to address the needs of the river and the needs of the local community,” he said.

Contingencies

Once it completes its repairs to the irrigation infrastructure and builds powerhouses at the Pu‘u Opae and Mana reservoirs, KIUC plans to use solar power to pump water from the Mana reservoir on ADC lands to the DHHL’s high-elevation Pu‘u Opae reservoir during the day. During

peak demand hours at night, it would then release the pumped water downhill through the powerhouse to generate electricity. In addition, KIUC has committed to delivering irrigation water to the ADC’s tenants, the DHHL, and taro farmers fed by one of the smaller ditches.

“The actual amount to be delivered will be subject to the water needs of DHHL tenants, above, once DHHL issues leases to … beneficiaries. More than sufficient water for the ADC Mana plain tenants will be stored in the Mana reservoir for irrigation purposes at all times. A separate irrigation pumping station will be installed that will allow the ADC and the [KAA] to control irrigation releases independent of the project operations and based on irrigation needs,” states an ADC staff report to the board.

Before any of that can happen, several obstacles — in addition to the mediation resolution — must be cleared first. Foremost among them is the fact that the KAA, which has managed all of the ADC’s infrastructure in the area for nearly a decade, has 11 years remaining on its license to operate and maintain the Koke‘e Ditch and Mana reservoir. Before the lease to KIUC can be issued, the ADC must renegotiate its memorandum of agreement with the KAA that spells out the terms under which the co-op maintains and operates the irrigation infrastructure. Because the Mana reservoir sits on lands currently included in Syngenta’s license, the ADC must also work with the company to remove the reservoir and some surrounding lands from its license.

In renegotiating the agreement with the KAA, Kaichi said, “that again is also a delicate balance. We have to make sure KAA tenants … have benefits and use of that project and the KIUC project can still function.” She hinted that should KIUC earn a profit from the pumped storage project, royalties could be directed to the KAA to fund infrastructure improvements on those parts of the ditch system it still controls or be used to purchase electricity from KIUC. In addition, she said, the KAA is already negotiating a new power purchase agreement with KIUC for the two hydroelectric plants on the Kekaha Ditch to ensure that it can afford to run all of the pumps that keep the Mana plain — which is also home to the Pacific Missile Range Facility — from flooding.

The right to divert water from the streams feeding the Koke‘e Ditch must also be transferred from the ADC to KIUC. To achieve that, the utility must obtain a water lease from the state Board of Land and Natural Resources. Although Kaichi said that the Department of Land and Natural Resources seems to support the idea, it’s not guaranteed that KIUC would succeed in securing a water lease, since such leases are generally awarded via a public auction. And in the case of East Maui, the lease applicant has been tasked with conducting a full environmental impact statement.

The ADC board ultimately approved the issuance of a lease and related easements — no later than December 30 — subject to the outcome of the mediation over water, as well as a renegotiated agreement with the KAA, among other things. (It appears that some water may continue to be dumped, as one of the conditions of the lease is that the KIUC must obtain a discharge permit for water that is not used by ADC tenants.)

Although the ADC determined that no environmental assessment or impact statement was required before the land lease could be issued, since the lease will merely continue existing diversions, KIUC must conduct an environmental review of the electric generation facilities it plans to add to the system. Should the utility fail to complete that process, the ADC may cancel the lease.

Reservations

Before voting on the matter, ADC board member and Kaua‘i resident Sandi Kato Klutke stressed that the renewable energy portion of the project should be secondary to the agriculture irrigation part.

“The land out there is specifically for agriculture. It is not for a power plant. Unless you are going to give our ag people abenefit…Ithinkweneedtolookatit a little closer,” she said.

KIUC president David Bissell assured her that his organization’s management of some of the irrigation infrastructure will benefit the farmers.

“The utility will be there, arguably, forever, taking care of the ditch so there’s more capacity … It’s long-term agriculture security of Kaua‘i,” he said.

Board member Margarita Hopkins expressed her concern that once KIUC takes over control of the water in the Koke‘e Ditch, it might one day charge the Kekaha farmers a lot of money to deliver it.

“I know it is very, very hard to farm with no water or not affordable water. Is there any chance as time goes by the rate of the water is going to go up to the point where it’s not going to be affordable for farmers to farm?” she asked.

Bissell replied that that will depend on the final cost of the project, but preliminary modeling of costs shows that “it looks like it’s going to be good,” he said.

Syngenta station manager Josh Uyehara, representing the KAA, offered his tentative support of the project.

“We have water, we have land, we have willing partners. It would be a shame if we can’t come to agreement on a project like this,” he said. However, he seemed concerned about how water allocations will be dealt with given that a number of parties have “overlapping claims to water.”

With the Water Commission poised to amend interim instream flow standards so that some of the diverted water is returned to streams, Uyehara said, “We won’t know what water will be available to parts of the system,” adding that the amount flowing through two hydroelectric plants on the Kekaha ditch that the KAA controls will likely be reduced.

Given the various challenges the KAA is expected to face with the amended IIFS and the Pu‘u Opae project, Uyehara said the KAA is exploring what kind of assistance it can get to meet those challenges.

“There’s no way we can settle those issues right now but we don’t want to hold up the process. We’re operating on the basis of trust with the state and various stakeholders,” he said.

He assured the board that despite the recent loss or downsizing of seed companies in the area, the current tenant mix at Kekaha supplied enough funds to maintain the agricultural infrastructure under the KAA’s control.

“I don’t see in the near future that situation would change,” he said. Still, he added, “We are taking another look at our structure as an organization, looking at the longer term picture of how do you make partnerships more sustainable to withstand ups and downs.”

“We know the amount of water that could be diverted will be reduced as a part of the [IIFS] process. There’s nothing we can do about that,” he said. “We no longer will have so much leeway that we could guarantee [adequate water] without thinking about it. … Now we have to be a little more careful [and] can’t take for granted that there will always be water for every part of the land,” he said.

— Teresa Dawson

For Further Reading

Environment Hawai‘i has published many articles over the years providing additional background on the subject. All are available on our website, http://www.environment-hawaii.org.

• “Water Commission Gives Parties One Month To Mediate West Kaua‘i Waste Complaint,” and “Agricultural Tenants in Kekaha Object to Basic Questions About Water Use,” September 2015;

• “Mediation Over West Kaua‘i Stream Diversions May Hinge on Response to Information Request,” July 2015;

• “Early Findings on Claims of Kaua‘i Water Waste,” March 2015; • “Kaua‘i Pumped Storage Project Wins Preliminary Approval of Land Lease,” December 2014;

• “KIUC Advisor Outlines Potential Impacts of Pumped Storage Projects in West Kaua‘i,” October 2014.

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