HNEI study offers utility options but no direction

Hawaii Natural Energy Institute, a research unit at the University of Hawaii at Manoa, released a study Tuesday outlining the different steps Hawaii could take to change the ownership model of the state’s electric utility.

Prepared by Denver-based Filsinger Energy Partners, the study outlined several models — investor-owned, such as Hawaiian Electric Industries; cooperatives similar to the ratepayer-owned utility on Kauai; and those owned by municipalities. The report said cooperatives and utilities owned by municipalities face more challenges because they need to find a willing seller, and face an unsuccessful history of eminent domain if they can’t find one. tric utilities if the seller isn’t willin

“Very few attempts by municipalities and public entities to condemn and acquire utility assets have been successful,” the study said. “Additionally, transactions of utility assets by cooperatives are essentially limited to friendly acquisitions, because condemnation via eminent domain is typically not an option.”

Eminent domain occurs when the state condemns the property for the benefit of public use or through an agreement to buy the property from a willing seller.

The study did not say which option would be best for Hawaii. John Cole, assistant specialist at HNEI, said the purpose of the study was to show the options, not recommend which path the state should take.

“It is meant to be a high-level look at the options and what they entail,” Cole said. “Try to put a focus on, if one of those things were to be pursued, what steps should be taken. … It is very high level, a lot more would need to be looked at further.”

The study highlighted possible next steps the state could consider if Hawaii decided to move forward in changing its electric utility ownership model, including forming and incorporating an electric utility, negotiating with the incumbent utilities and embarking on legal reviews and eminent domain.

Henry Curtis, executive director of the environmental group Life of the Land, said the study was not useful because it didn’t provide any costs or ratepayer impacts.

“I think a lot was left out,” Curtis said.

“We didn’t want to estimate customer rate impacts. … You have to make a lot of assumptions,” Cole said. “The initial plan was to get it done a little sooner to appropriate money at the Legislature to use it as a guide if they decided to pursue it further.”

The report did not include HEI’s subsidiary, Maui Electric Co.

Cole said the study was meant to be a first step.

The study had a budget of $100,000 and was funded in part by a U.S. Department of Energy grant.

Cole said HNEI took on the study after state Rep. Chris Lee (D-Kailua, Waimanalo) and City Council Chairman Ernie Martin requested the research center provide a high-level look at municipal and cooperative utility structures.

Lee and Martin joined other state and county leaders at the Capitol in September to call for an examination of public ownership of electric utilities in light of NextEra Energy Inc.’s proposed purchase of HEI. They said it was in the best interest of the public to consider other utility ownership models.