If at first you don\u2019t succeed\u2026<\/p>\n
With the Hawai`i Green Infrastructure Authority (HGIA) having failed to win the Legislature\u2019s approval of a bill to relieve it of Public Utility Commission oversight, it is now trying to get the PUC to bow out on its own accord.<\/p>\n
The HGIA is the state authority charged with lending out Green Energy Market Securitization (GEMS) funds secured by surcharges on bills sent to Hawai`i Electric customers. As Environment Hawai`i <\/i>has documented over the last two years, the authority has faced a series of challenges in carrying out its charge, with the result that only a few million of the $146 million originally available to lend out to people wanting to install energy-saving technology has actually been distributed. And of that, much has gone not to households who have had difficulty obtaining conventional financing, as the Legislature intended when it set up this program, but rather to large commercial property owners.<\/p>\n
On July 21, HGIA filed a motion with the PUC seeking to modify the PUC\u2019s order of September 30, 2014, that set out the framework for HGIA\u2019s operation. Whenever HGIA seeks to add a \u201cproduct\u201d (a category of loan addressing a particular type of technology or customer), it needs to file a \u201cproject notification\u201d with the PUC.\u00a0 So far, it has filed 11 project notifications. Whenever HGIA might want to modify the structure of the program beyond the scope of the original order, it would need to file a \u201cprogram modification\u201d request. The July 21 motion is the first program modification HGIA has sought.<\/p>\n
In both cases, the PUC is able to veto the change sought. The state Consumer Advocate, as a necessary party to the proceeding, is required to weigh in on the proposals, and the original parties to the proceeding are also invited to comment. These are Hawaiian Electric utilities, Life of the Land, Blue Planet Foundation, Hawai`i Solar Energy Association, and the Hawai`i Renewable Energy Alliance. (That last organization has recently disbanded.) Public comment can also be submitted, but that rarely occurs.<\/p>\n
Now HGIA is asking the PUC to eliminate provisions requiring both program notifications and program approvals.<\/p>\n
During the 2017 legislative session, the HGIA lobbied hard for a bill that, among other things, would have removed most of the PUC\u2019s oversight of the agency. (For details, see the cover story in our May 2017 issue.) The bill made it to a conference committee, but in the end didn\u2019t pass out.<\/p>\n
At the same time as the bill was being heard, Gwen Yamamoto Lau, HGIA\u2019s executive director, filed an annual plan for fiscal year 2018 in which she voiced at some length her dissatisfaction with the need to report to the PUC and obtain its blessing for program changes. Indeed, she laid much of the blame for HGIA\u2019s dismal progress in distributing GEMS funds at the PUC\u2019s doorstep.<\/p>\n
The motion filed in July with the PUC recaps many of the gripes that Yamamoto Lau expressed in the annual plan.<\/p>\n
The requirement for program notification, HGIA states in its July motion, \u201cwas envisioned as a communication tool to provide updates and inform the commission prior to implementation of any key program component \u2026 and to report and certify information on implementation of key program components.\u201d Instead, by having to wait for PUC approval of the notifications, the HGIA is unable to \u201cnimbly\u201d respond to changes in the energy-efficiency market.<\/p>\n
\u201c[T]he models and programs originally contemplated in the initial Program Order \u2026 are no longer sufficient to achieve the projected GEMS program impact\u2026,\u201d according to the July motion drafted by HGIA deputy attorney general Gregg Kinkley. \u201cAccordingly, the authority is requesting a modification to [the 2014 order] to eliminate the Notification\/Modification Process and instead empower HGIA\u2019s Board to govern the Authority\u2019s loan program, enabling it to react in a nimble and timely manner to market changes and demands.\u201d<\/p>\n
The motion paints HGIA staff (all employees of the Department of Business, Economic Development, and Tourism) as plucky survivors as the bombs fall around them: \u201cAccording to Winston Churchill, \u2018Success consists of going from failure to failure without loss of enthusiasm.\u2019 Perhaps a benefit of having a high (employee) turnover is that new employees bring new enthusiasm and perspectives to a struggling program.\u201d Elsewhere, the motion describes the turnover: \u201cHGIA, which has only 5.5 authorized positions (3 for programs and 2.5 support staff) has had significant employee turnover (3.1x) during its 33 month history\u2026. (program: 4 executive directors and 9 program officers; support: 1 administrative services coordinator and 3 executive assistants).\u201d<\/p>\n
One of the struggles that those employees are said to face is \u201cthe risk of being \u2018raided\u2019 and disbanded during every legislative session\u201d and working for what has been labeled a \u201cfailed loan program.\u201d Whatever else HGIA is, its funding is hardly at risk of being raided by the Legislature, inasmuch as it is not a government fund at all; in addition, HGIA\u2019s own operating budget comes not from general funds but from GEMS. As for being disbanded, that, too, isn\u2019t going to happen: the bonds that were issued to fund GEMS aren\u2019t going to be paid off for another generation.<\/p>\n
In any case, the motion says, \u201ca concerted effort has been made to fill vacant positions with seasoned bankers with demonstrated business development and customer service skills and the technical expertise required to understand the complexities and risks of administering a loan fund.\u201d<\/p>\n
The Response<\/i><\/b><\/p>\n
The Blue Planet Foundation, whose executive director, Jeff Mikulina, sits on HGIA\u2019s board, filed comments supportive of HGIA\u2019s motion. The ability of HGIA \u201cto nimbly\u201d \u2013 there\u2019s that word again \u2013 navigate around challenges is \u201cfrustrated by the dual system of regulatory oversight,\u201d referring apparently both to the PUC and to the HGIA board. (Never mind that self-regulation is not really oversight.) It concurs with the claim of HGIA that PUC oversight has erected \u201cbarriers that have slowed effective deployment of loans.\u201d The Hawai`i Solar Energy Association also supported the move. (Life of the Land did not submit comments.)<\/p>\n
The Hawaiian Electric utilities were much more cautious, noting that while the companies \u201csupport the continued success of the GEMS program, \u2026 there may be unintended consequences in eliminating the program notification\/modification process.\u201d<\/p>\n
\u201cIn particular, it is unclear whether HGIA\u2019s requested elimination of the program notification and modification process can be accomplished given statutory requirements, particularly where financing products have the potential to have significant impact on the companies\u2019 customers and electric grid,\u201d Hawaiian Electric stated.<\/p>\n
It went on to note that the statute authorizing the GEMS program \u201crequires the authority to submit an application to the commission for approval of any proposed loan program. \u2026 Commission oversight of the GEMS program is therefore a foundational aspect of the GEMS statute, especially since the green infrastructure fund is funded through the green infrastructure fee assessed on all customers.\u201d<\/p>\n
The Division of Consumer Advocacy also weighed in, noting that the 2014 PUC order \u201cwas based on a framework that was meant to provide the commission the ability to exercise its fiduciary responsibilities to ratepayers while allowing HGIA to be responsive to market factors.\u201d<\/p>\n
\u201cNotwithstanding the Legislature\u2019s recognition that the state would be best served by a program that [is] subject to regulatory guidelines and approval and the commission\u2019s clear statement that a governance structure allowing the commission to exercise its fiduciary duties to utility ratepayers would be reasonable, HGIA, through its motion, seeks the elimination of the notification\/modification process, but does not offer any alternative nor narrative as to how ratepayer interest would be protected. The consumer advocate is concerned that, if the motion is granted as is, the interests of the customers and ratepayers of the Hawaiian Electric Companies will not be adequately served.\u201d<\/p>\n
Instead of filing a formal response to the HGIA proposal, the consumer advocate proposed that the PUC suspend action on the motion to give interested parties time to see if a compromise could be worked out, with a suggested deadline of August 31.<\/p>\n
HGIA agreed to this, but objected to the consumer advocate\u2019s characterization of its proposal. \u201cWhile HGIA is requesting the elimination of the notification\/modification process, it is not requesting the removal of the PUC\u2019s regulatory oversight,\u201d the HGIA stated. The existing reporting requirements \u201cwould remain intact,\u201d it said.<\/p>\n
Speaking of Reports\u2026<\/i><\/b><\/p>\n
Whether reporting requirements are the equivalent of oversight is debatable, but in any case, on July 31, the HGIA submitted its required (for now) quarterly report to the PUC, for the period ending June 30. As with previous reports, the numbers of loans and their value appear to be fudged somewhat.<\/p>\n
For example, in a grid reporting data on residential loans, the number of applications received (328) is nowhere near the number of loans \u201ccommitted\u201d (1,222).\u00a0 How could the number of loans possibly exceed the number of applications, Yamamoto Lau was asked in an email.<\/p>\n
<\/p>\n
\u201cAfter looking at it again,\u201d she replied, \u201cthe chart could be confusing, even with the related footnotes.\u201d The total amount given for all residential loans is $10.28 million, which, she added, \u201cincludes 22 loans that have been approved and committed with executed loan documents and solar systems in the process of being installed aggregating $683,615.\u201d<\/p>\n
So how can the larger figure be explained?<\/p>\n
\u201cIt also includes $9.6 million in GEMS funds committed to install up to 1,200 solar hot water systems on Moloka`i rooftops, in which we anticipate receiving an estimated 1,200 applications,\u201d Yamamoto Lau replied.<\/p>\n
\u201cWe are not able to start accepting loan applications until we receive PUC approval of HGIA\u2019s on-bill product as well as approval to finance residential energy efficiency,\u201d Yamamoto Lau explained. Approval of on-bill repayment (the \u201con-bill product\u201d) has not yet been sought, but HGIA says it is working on it. \u201cOn-bill repayment (OBR) is a critical tool to enable green infrastructure financing for the underserved (i.e., renters and low to moderate income households) to truly democratize green energy,\u201d the report states. \u201cThe authority\u201d \u2013 HGIA \u2013 \u201cplans to submit a manual for its Green Energy Money $aver (GEM$) on-bill program during the current quarter.\u201d The PUC also has yet to approve GEMS loans being used to finance energy efficiency measures (such as solar water heaters, the subject of the proposed Moloka`i financing).<\/p>\n
When you get right down to brass tacks and set aside the projected \u201ccommitments,\u201d in the two and a half years since HGIA started up shop, the number of residential loans closed on is 69, with a face value of $2,269,422. (Of those, as of June 31, three were in arrears.)<\/p>\n
Commercial loans for photovoltaic systems number just six, but have a face value ($2,798,141) greater than that of the 69 residential loans.<\/p>\n
Altogether, the GEMS funds released for residential and commercial loans as of June 30 come to around $5.07 million. HGIA administrative and program costs since the program\u2019s inception are an additional $2.77 million (or 35 percent of the loan value).<\/p>\n
But, according to the report, the really big loan that HGIA is getting ready to disburse is to the state Department of Education, which, thanks to Act 57 of the Legislature, is to receive $46.4 million in an interest-free loan to finance energy-efficiency measures at public schools in the Hawaiian Electric service area (O`ahu, Maui County, and Hawai`i island). According to the quarterly report, \u201cthe loan is currently being documented.\u201d<\/p>\n
Yamamoto Lau was asked how much interest will be foregone as a result of the DOE loan. So far, HGIA appears to be receiving around three-tenths of a percent interest (.345 percent, or $471,932) on the $136.7 million it has in the bank, so perhaps foregone interest on the DOE loan is not a consideration.<\/p>\n
She replied that foregone interest was not an issue, \u201cas the funds won\u2019t be released in bulk.\u201d Instead, \u201cHGIA will be paying the DOE\u2019s contractors directly for milestones achieved and\/or work completed based on their contract with the DOE.\u201d<\/p>\n
— Patricia Tummons<\/i><\/b><\/p>\n","protected":false},"excerpt":{"rendered":"
If at first you don’t succeed… With the Hawai`i Green Infrastructure Authority (HGIA) having failed to win the Legislature’s approval of a bill to relieve it of Public Utility Commission oversight, it is now trying to get the PUC to … Continued<\/a><\/p>\n","protected":false},"author":1,"featured_media":9666,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[426],"tags":[7],"class_list":["post-9884","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-september-2017","tag-patricia-tummons"],"_links":{"self":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts\/9884","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9884"}],"version-history":[{"count":0,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts\/9884\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/media\/9666"}],"wp:attachment":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9884"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9884"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9884"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}