HIEC is Granted 501(c)(12) Non-Profit Status by IRS

Hilo, Hawaii – 12/19/16

Hawaii Island Energy Cooperative has been granted tax exempt 501(c)(12) non-profit status by the Internal Revenue Service. HIEC joins 900-plus member-owned, community-based businesses serving 42 million energy consumers across the U.S. from Acadia, Maine to Kauai.

“Receiving this official approval is fantastic news,” stated Marco Mangelsdorf, HIEC director and spokesperson. “This sets the stage for HIEC to be an operating non-profit utility serving the Big Island. This is particularly important as both HELCO and HECO roll out new electric rate increases. Cost control and efficiency are core to a cooperative, not shareholder profits. As the holidays approach we at HIEC remain committed to helping Hawaii Island residents and pledge that, given the opportunity, we would do all we can to keep rates as low as possible.”

This is a singularly important time for Hawaii Island residents in light of the Hawaii Public Utilities Commission July 2016 decision to not approve the acquisition of Hawaiian Electric Industries and its subsidiaries HECO, HELCO and MECO. When combined with the imminent submission by the Hawaiian Electric Companies of their Power Supply Improvement Plans and pending rate increases, the consideration of the cooperative ownership structure is timely, relevant and presents an opportunity to make critically important decisions about how Hawaii Island will meet our state’s clean energy objectives in the most cost effective way possible.

“We first sought to get a seat at the table in early 2015 as the docket on the HEI-NextEra was opened,” noted HIEC president Richard Ha. “Those of us who founded HIEC were convinced that the tumblers had fallen into place for us to do all that we could to try and replicate the success that Kauai Island Utility Cooperative has been achieving on the Garden Island. We got our seat and are excited about the future.”

Governor David Ige Signs HB 2231

Hilo, Hawaii – 6/24/16

With Hawaii Governor David Ige's signature on June 21, Act 98 will take effect July 1, 2016.

Sponsored by HB 2231's principal supporter, West Hawaii Representative Nicole Lowen, this act allows for the use of state special purpose revenue bonds to be used to finance publicly owned energy cooperatives.

"We are very pleased and appreciative of the support of both the legislature and governor for HIEC's efforts to bring the coop model to the Big Island," noted HIEC director Marco Mangelsdorf. "Having the backing of the people’s body and the state's chief executive is truly humbling," added Mangelsdorf

Hawaii Island Energy Cooperative proposes Alternative Power Generation Plan for Big Island

Hilo, Hawaii – 2/9/16

Hawaii Island Energy Cooperative (HIEC) today released its alternative power generation plan that would move the Big Island faster and cheaper toward cost-effective clean energies and reach close to 100 percent renewable years before the state’s 2045 target date.

The HIEC plan, based on a new analysis of the island’s existing resources and estimates of potential new solar, wind and energy storage resources, presents a less expensive and cleaner alternative to previous plans.

"We are very excited to be able to propose a compelling, practical and doable plan that would accelerate our island’s clean energy transformation in a way that would yield significant benefits for the more than 83,000 electric customers here," noted HIEC director and spokesperson Marco Mangelsdorf.

According to Mangelsdorf, "By building on the successes achieved by Kauai Island Utility Cooperative to integrate high levels of cost-effective solar PV into the grid while adding just the right amount of storage to ensure system stability and reliability, HIEC would be better able to ensure a lower-cost, more balanced power supply portfolio."

Through its analysis HIEC has developed a plan that includes:

  • No new fossil fuel generation
    • With the abundant availability of cost-effective renewable energy resources, there’s no need for any additional petroleum-based generation.
    • Any fossil fuel substitutions would be based on near-term cost advantages without requiring costly infrastructure improvements.
  • No liquefied natural gas infrastructure or long-term reliance on fossil generation
    • Alternative plan does not use LNG.
    • Opportunity fuels such as propane used for lower short-term cost savings with low conversion investments and quick paybacks.
  • Continued expansion of roof-top solar
    • Investment in battery and pumped storage would allow for additional roof-top solar with fewer technical concerns about system reliability.
    • Utility scale storage would avoid daytime curtailment and move excess roof-top generation to night time peaks.
  • Competitively priced, cost-effective utility-scale solar PV and wind
    • Utility-scale renewable generation, using Hawaii Island’s abundant solar and wind resources, would replace continued reliance on fossil generation.
    • Early retirement of fossil generation would occur as new renewables come on line.
  • Capital expenditures would be less compared to the current or future investor-owned utility model
    • Lower cost of capital due to non-profit status.
  • Lower cost solar and wind resources would replace LNG conversion costs. Greater efficiencies in overall operations
    • Coordinated quick response dispatch would back utility and roof-top solar generation with fossil units, thereby firming variable output for system stability.
    • Ability to integrate new low cost renewables as technologies and appropriate smart grid investments improve efficiencies.
  • Whether, where and when more geothermal energy will be brought on line to be left to the membership and democratically-elected board of the fully operational cooperative
In the Hawaiian Electric Industries-NextEra Energy merger proceedings now being held by the Hawaii Public Utilities Commission, NextEra has asserted that the primary question the Commission should ask itself is whether Hawaiian Electric ratepayers and the State of Hawaii would be better off with or without the sale going through.

HIEC has argued that the Commission should consider the merits of the cooperative ownership model for Hawaii Island.

Noted HIEC president Richard Ha, "Credibility, purpose and a focus on how to best serve and benefit the island’s 195,000 residents is what this cooperative is all about. HIEC’s alternative power generation plan provides an important basis to establish that a cooperative does what its members want, not what is in the best interest of shareholders. We are committed to a path to the island’s renewable energy future that will get us faster and cheaper to where we all want to go—an economy based on more affordable electricity and an environment that’s cared for."

Hawaii Island Energy Cooperative would deliver transformation better, faster and cheaper

Hilo, Hawaii – 12/10/15
Conversion of the electric utility on Hawaii Island to a nonprofit cooperative is expected to deliver greater savings than those promised with the proposed sale of the Hawaiian Electric companies to NextEra Energy of Juno Beach, Florida.

Hawaii Island Energy Cooperative (HIEC) analyzed financial information filed by the Hawaiian Electric companies (HE) and NextEra Energy (NEE) with the Hawaii Public Utilities Commission (HPUC).

By lowering the cost of capital, eliminating federal income taxes and the profit margin built into Hawaii Electric Light Company’s rates, the financial analysis found that Big Island customers could save as much as $113 million on the existing HELCO rate base and up to $234 million including investments to modernize the grid over a four-year period. This compares to $60 million in savings estimated by NEE for customers on all five islands served by HE over a four-year period.

In proceedings now being held on the proposed sale by the HPUC, NEE has asserted that the primary question the Commission should ask itself is whether the customers of HE and the State of Hawaii are better off with or without the sale going through.

HIEC has argued that the Commission should also consider the merits of the cooperative ownership model for Hawaii Island.

In addition, HIEC makes the case that a cooperative has the ability to accelerate the island’s clean energy transformation faster and with more focus than a mainland-based investor-owned utility.

"For Hawaii Island, the reality is that the 190,000+ residents of the island would be better served by a cooperative. Beyond the lower cost of capital and the lower electric bills that follow, the benefits of a coop include local, democratic ownership and control of one of the most important infrastructures on the island", said Marco Mangelsdorf, HIEC director and spokesperson.

Other advantages of the cooperative business model include:

  • HIEC would be able to access low-cost debt capital.
    • Traditional cooperative lenders include the U.S. Department of Agriculture, Rural Utilities Service, National Rural Utilities Cooperative Finance Corporation (CFC), and CoBank.
    • The combined borrowings of electric cooperatives from these sources is over $85 billion.
  • The cooperative network of 900 utilities has equivalent, and perhaps better, buying power and economies of scale for technology, administration, pensions and insurance. Many companies that support the cooperative program, including CFC and CoBank, are owned by their electric cooperative customers.
    • National Rural Electric Cooperative Association provides a multi-employer pension plan on behalf of electric cooperative employees that is fully funded.
    • Through national programs the electric cooperative network has led the utility industry in the deployment of smart grid technologies.
  • Cooperatives can be more nimble and quick in integrating more and cost-effective renewable energies.  Emulating the example of Kauai Island Utility Cooperative (KIUC), HIEC should be able to move faster to provide the advantages of renewable energies to Hawaii Island consumers.
    • KIUC has gone from approximately 10 percent renewable in 2011 to almost 90 percent during prime sun hours today through a portfolio of utility-scale solar, biomass generation, distributed solar and legacy hydropower.
    • KIUC’s smart grid initiative, which enables more customer choice and is a key to the efficient integration of renewable energy, was completed nearly two years ago.
    • Over the past two years, KIUC has built the two largest solar arrays in Hawaii, generating electricity cheaper than similar arrays proposed on Oahu.  As well, KIUC is in the approval process for the nation’s first utility-scale solar array with dispatchable energy storage, moving solar energy to the nighttime hours and displacing millions of gallons of oil.
Noted HIEC president Richard Ha, "HIEC is able to focus on only our Hawaii Island and its unique needs, desires and resources. The single island focus and urgency created by a customer-elected board of directors to set the strategy is KIUC’s greatest strength and the reason they have been so successful in the transformation of their island’s utility system."

Hilo, Hawaii – 7/20/15
One of the co-founders of the Hawaii Island Energy Cooperative (HIEC) urged state regulators to give serious consideration to the cooperative business model as an alternative to selling the island’s electric utility to NextEra Energy.

"HIEC believes that there is a once-in-many-lifetimes opportunity to achieve something truly transformational on Hawaii Island. The energy cooperative model versus investor-owned model is a unique and appropriate discussion worth having at this critical juncture," HIEC co-founder and spokesman Marco Mangelsdorf wrote in testimony submitted to the Hawaii Public Utilities Commission today.

HIEC, which was founded earlier this year to explore the possibility of cooperative utility ownership, is an intervenor in the Public Utilities Commission proceeding reviewing the proposed sale of Hawaiian Electric Co. and its utilities, including Hawaii Electric Light Co. (HELCO), to NextEra Energy of Juno Beach, Fla.

Mangelsdorf stressed that HIEC does not oppose the sale to NextEra and acknowledged that HEI has said HELCO is not separately for sale. But he urged the PUC to consider the benefits of not-for-profit cooperative ownership as part of its decision-making process.

Among the cooperative benefits Mangelsdorf described are:

  • Potential to lower rates over time
  • Shifting from a shareholder focus to a member focus
  • Local control over the island’s energy future
  • Greater emphasis on renewables and energy storage technologies
  • Potential to share services with Kauai Island Utility Cooperative (KIUC), the state’s only electric cooperative, a "win/win" that could financially benefit members on both islands
Noted HIEC president Richard Ha, "HIEC is able to focus on only our Hawaii Island and its unique needs, desires and resources. The single island focus and urgency created by a customer-elected board of directors to set the strategy is KIUC’s greatest strength and the reason they have been so successful in the transformation of their island’s utility system."

Hilo, Hawaii – 2/17/15
The Hawaii Island Energy Cooperative (HIEC) announces that it has filed a motion to intervene in the Hawaii Public Utilities Commission Docket 2015-0022, the proposed merger of Hawaiian Electric Industries, Hawaiian Electric Company, Maui Electric Company, Hawaii Electric Light Company and NextEra Energy.

HIEC is a non-profit cooperative association formed by community and business leaders on Hawaii Island to explore the potential merits of a community-based, cooperative ownership structure for electric utility service on the island, including such potential benefits as:
  • Local, democratic control over the island’s energy infrastructure, providing greater benefits and retaining any excess over the cost of operations for island residents.
  • Community-based and community-chosen strategic priorities under which the cooperative operates for the sustainable development of the island.
  • Potentially lower electric costs through tax exempt status, lower cost of capital and no shareholder profits, greater efforts to develop less expensive island-based power sources, promotion of education, markedly improved energy efficiency, and the accelerated adoption of appropriate advanced technologies.
  • Greater overall energy independence, higher renewable energy generation, and enhanced sustainability through a comprehensive and integrated approach to all energy-consuming sectors on the island.
  • Developing and emphasizing island-produced fuels to provide an energy source for both electric generation and transportation sectors.
In seeking to intervene in the PUC Docket, HIEC is not taking a position in favor of or opposition to the proposed merger at this time. Rather, HIEC seeks to bring to the proceedings its specific focus on the energy needs of Hawaii Island and its unique perspective on potential cooperative ownership structures.

“We seek to participate in the discussion of the unique perspective of the residents of our island, and if appropriate, explore an option that would make for a fundamental change in the landscape of energy production and consumption on Hawaii Island,” explained HIEC director and spokesman Marco Mangelsdorf. “Being able to have more direct control over Hawaii Island’s present and future energy profile would provide us with an extraordinary opportunity to showcase what can be done on our island on many different and innovative levels,” said Mangelsdorf.

Media contact: Marco Mangelsdorf

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