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Tuesday, July 29, 2014         

THINK TECH


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CBPs, if done correctly, will improve isles' energy

By Jay Fidell

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Increasingly, community benefits packages have enabled big projects in Hawaii. CBPs are also emerging as a way to enable energy projects. Many people think that benefits paid for a promise not to oppose a project are a payoff, but in the face of NIMBY you can hardly do big projects without them. Like them or hate them, they're here to stay.

Although CBPs are not legally required, they do have political moment and can cast a long shadow on the approvals and prospects of a given project. It is in everyone's interest that developers cut deals for the CBPs necessary to do their projects. If they cannot, we should consider jawboning or legislation to facilitate the process.

Without CBPs, either projects will stall and fail because of delay, or developers will go ahead without them, leaving communities without benefits. The state would presumably like to see investment and progress, so it also has an interest in seeing these deals made.

The range of benefits is still evolving. Direct cash payments are troublesome, but reduced utility rates, recreational and educational facilities, jobs and training programs, scholarship funds, and preservation and restoration of the environment are all good. A requirement that developers leave the land the way they found it is entirely appropriate. There's more, of course — people are thinking up new benefits in every deal.

Two things are clear in any energy CBP. First, all the people in the state, not just those in a single CBP community, own the energy resources. Second, no benefit should go to any one individual, community leader or not. The benefits should be to improve that community in general for losses and inconveniences its members may suffer because of the project, and for nothing else.

To make a CBP, you need a community. But identifiable communities aren't so easy to find. Is it a political subdivision, a nonprofit entity, or a group of neighbors? We need to find out who the silent majority is, and to what extent those who claim to speak for them really do. And what if competing organizations claim to represent the same members?

As we go forward, new questions will certainly arise. For example, should benefits for a community five miles away from a project be as generous as those for a community across the street? Should benefits be calculated on distance or effect, and at what distance or effect should they cease altogether?

Should benefits continue forever, for a term of years, for the term of the developer's lease or power purchase agreement, or perhaps for the useful life of the project? All of this is open to negotiation. The more experience we gain, the easier it will be to settle on the next deal. But we need to avoid knee-jerk "inflation" that would keep upping the ante.

In the long term, greed won't work. If the benefits are excessive, the project, along with the benefits themselves, will fail. So going for a win-win is far better than a feeding frenzy that kills the goose. Everyone knows that.

The CBP that Hawaiian Electric Co. struck with Castle & Cooke was intended to resolve the community issues on Lanai, but it remains to be seen whether the Friends of Lanai or any other organization claiming to represent the people of Lanai will agree or will or should be a party.

CBPs could bring Hawaii together for an age of energy enlightenment. Those who opposed all projects in the past are now recognizing that CBPs can serve both majority and minority interests and make more projects possible. In short, they've become important to the greater good, so we might as well do them right.

But it's not a free lunch. Whatever we do, we need to remember that some or all of the costs of these benefits will be passed on to the ratepayers and taxpayers of our state, you and me.

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Jay Fidell, a longtime business lawyer, founded ThinkTech Hawaii, a digital media company that reports on Hawaii's tech and energy sectors of the economy. He can be reached at fidell@lava.net.





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