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Monday, December 11, 2017

Spoof: Hawai`i can cost-effectively use 100% renewable energy by 2020

Outdoor Coal Pile in Campbell Industrial Park, O`ahu

This spoof has two initial scientific statements.

(1) Einstein wrote e=mc2. The law of mass–energy equivalence states that anything having mass has an equivalent amount of energy and vice versa.

(2) The first law of thermodynamics, also known as Law of Conservation of Energy, states that energy can neither be created nor destroyed; energy can only be transferred or changed from one form to another.

QUESTIONIf energy cannot be created nor destroyed, what is renewable energy, and how can we achieve 100% renewable energy?

FACTS: Renewable energy is a politically defined term, a political football. Governments across the US have a 1000 different definitions.

Hawaii has several very different definitions of renewable energy since 2000. At one point just a few years ago, Hawai`i considered that energy demand displaced by energy efficiency devices was renewable energy.

Destroying third world rainforests to grow genetically engineered bioenergy crops for HECO, MECO & HELCO generators is considered by Hawai`i to be renewable energy. Ethanol is also defined to be renewable energy.

There is also the difference between law and practice. Coal isn`t defined as renewable energy, but it is counted as renewable if it is burned at Honolulu`s H-Power garbage-to-energy plant.

SPOOF SOLUTION 1: The simple, cost-effective way, of achieving 100% renewable energy in year X, is to pass a law redefining renewable energy to include all forms of energy in year X.

SPOOF SOLUTION 2: Convert all energy demand to gas provided by the Gas Company, and/or diesel burned in on-site generators. Both are exempt from all renewable energy requirements.  

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Saturday, August 26, 2017

Life of the Land Appeals Hu Honua Decision


Henry Curtis, Executive Director
Life of the Land
(808) 927-0709


HONOLULU – Monday, August 28, 2017 -  Life of the Land has lodged an appeal to the Hawai`i Supreme Court to reverse the Public Utilities Commission ruling in favor of the HELCO-Hu Honua biomass power purchase agreement. This is the first challenge by a PUC docket participant regarding climate change and greenhouse gas emissions in Hawai`i. Life of the Land is represented by Maui attorney Lance D. Collins.

          The PUC granted Life of the Land participant status in this case because of our extensive research and understanding of energy and environmental issues. “It is critical that state regulatory agencies consider climate change,” asserted Henry Curtis, Executive Director of Life of the Land. “And, the PUC is specifically required by law to do so.”

          Since 2011, the PUC has been expressly mandated by state law (Act 109 SLH 2011) to consider greenhouse gas emissions in their decision-making but has continued to totally disregard its duties under the law.

          Life of the Land believes that the total lack of any analysis let alone any mention of greenhouse gas emissions in the final decision of the Commission was grave error compounded by the PUC's categorical dismissal of Life of the Land's attempts to raise these issues. Life of the Land is asking that the Hawaii Supreme Court vacate the PUC's decision and direct it to properly consider all issues required by law.

          This failure is even more troubling in light of more recent enactment of Act 32 (SLH 2017): “The legislature finds that not only is climate change real, but it is the overriding challenge of the 21st century and one of the priority issues of the senate.  Climate change poses immediate and long-term threats to the State's economy, sustainability, security, and way of life.”

          Life of the Land is Hawai`iʻs own energy and environmental group working to protect the people and the `aina since 1970. Our mission is to preserve and protect the life of the land through research, education, advocacy, and when necessary, litigation.

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Life of the Land`s Statement of Position re Hu Honua

Life of the Land filed its Statement of Position with the Public Utilities Commission on July 10, 2017. This is a web-based version, excluding many footnotes, and formatting it in a web-friendly version.

This proceeding involves a Hawai'i Electric Light Company (HELCO) proposed Power Purchase Agreement (PPA) with Hu Honua Bioenergy LLC which was filed with the Hawai'i Public Utilities Commission. After reviewing the filings in this proceeding. Life of the Land (LOL) believes this project is not in the public interest and should be rejected

I. Hu Honua’s Proposal Fails to Fully Address Issues of Climate Change and the Environmental Impact of their Proposed Operations.

The first two sentences of SB559 SD1 HD2 CD1, which Governor Ige signed into law as Act 32, read: “The legislature finds that not only is climate change real, but it is the overriding challenge of the 21st century and one of the priority issues of the senate. Climate change poses immediate and long-term threats to the State’s economy, sustainability, security, and way of life.”

Notwithstanding this clear statement of State policy, Hu Honua 1) declined to discuss the environmental impact of its operations, 2) made unsupported “carbon” claims, or 3) simply refused to answer Information Requests on the subject.

Hawaiian Electric Industries CEO Constance Lau spoke at the VERGE Hawai'i 2017 conference. (Lau`s comment started at about 41 minutes 57 seconds).

“Everybody is still moving in the same directions, that they were moving in, and particularly for the electric utility industry, that's been towards much more renewables, and it all started with climate change, and it's still is about climate change, but frankly, there are so many forces that are actually making it economically right, to have renewables.”

When community members asked the Hu Honua team about their statements on climate change at a community meeting in Kukuihaele Village, on June 19, 2017, one member, Rob Robinson told the community, “We are carbon-neutral.” Another team member, Kevin “KJ” Johnson qualified this to, “In our ends up being carbon neutral.” No details were offered aside from an assertion that they would plant trees that would be harvested and replanted every seven (7) years. No discussion of the carbon costs of transportation or the harvesting operation itself was discussed.

When LOL subsequently submitted Information Requests on June 29, 2017, including whether, “In Hu Honua's view, is Climate Change a public interest issue?” and “In Hu Honua's view, is avoiding greenhouse gas emissions a public interest issue?”, Hu Honua responded on July 7, 2017 that it objected to each request: “It is not relevant or material to Issues Nos. 2.a.i or 2.b, which are the only issues for which the Commission authorized LOL's participation.”

In reality, the issue of climate change is embedded in both issues the Commission assigned to LOL to consider:

Issue 2(a)(1): ''Whether the energy price components in the Amended and Restated PPA properly reflect the cost of biomass fuel supply.” According to HECO's Project Economic and Bill Impact Analysis, the benefits of the project include reductions in emissions and increases in energy security, but “the benefits from these other factors have not been explicitly quantified or monetized in the calculation of the Project’s benefit-to-cost (B/C) ratios but nonetheless are important considerations in the determination of the overall viability of the project.” The cost of biofuel includes both financial and non-financial components, which Hu Honua has failed to adequately address.

Issue 2(b): “Whether HELCO's purchase power arrangements under the Amended and Restated PPA are prudent and in the public interest.” The issue of climate change is of major public interest to the State and to the world, except, apparently, to Hu Honua.

Contrary to Hu Honua’s contentions, it is beyond doubt that LOL can, and has, raised climate change issues and greenhouse gas emission issues in previous Commission proceedings. In fact, this proceeding before the Commission is the ninth regulatory action dealing with Hawaiian Electric Companies bioenergy applications in which LOL is the only party or participant that represents environmental and community interests.

When HECO filed an application for the Campbell Industrial Park Combustion Turbine 1 with the Commission, Docket No. 2005-0145, LOL was a party, and was permitted to cross-examine a number of HECO witnesses on climate change. Several HECO witnesses testified to the effect that “Aren’t there two sides to this question?” and “It’s not my kuleana,” and “I`m not really up on this issue.” However, one of HECO’s witnesses, Senior Vice President for Public Affairs for Hawaiian Electric Company, Robbie Aim, conceded as follows:

“You know, Hawaiian Electric does not have the resources to conduct independent science, scientific research on the issues related to global warming. But like you, we've seen the growing body of scientific evidence which tells us the following: That human activity has caused an increase in global warming, that the human activity which has the strongest impact on this increase is the burning of fossil fuel, and that global warming has associated climate change impacts. We accept — you know, even though we cannot independently, scientifically verify that, we accept this as an operating premise for our actions and we accept our need to be part of the solution.”

Also in that Docket, LOL sponsored one of the world's pre-eminent scientists questioning the role of biofuels. Dr. Tad Patzek’’ has been a consultant and expert witness for the California Energy Commission, General Electric, Inc., and has testified before Congress. In testimony before the Commission, Dr. Patzek had this to say:

"People, especially the so-called pure environmentalists, are loath to accept the fact that what they think religiously -- that is, green is good — is not necessarily so. And they really have a hard time believing or accepting or- thinking that not everything that is green is in fact good."

“One must calculate the C02 emissions over the life cycle of the Corn-Ethanol System. Emissions of other gases, mostly nitrous oxide N20, ammonia NH3, and methane CH4, must be converted to equivalent C02 emissions using their relative potencies in creating the greenhouse effect. The methodology for determining equivalent C02 emissions must include all emission sources.”

For ethanol production, Patzek listed in descending order, the equivalent C02 emissions from 18 different aspects of production, use, and disposal. The top three were (1) use in a power plant, (2) Humus Oxidation of the soil, and (3) Nitrogen as Ammonia Fertilizer. The fifth element to be considered was transportation, which Hu Honua ignores.

Cognizant of the fact that the number of bat takings is a central issue in the pending Habitat Conservation Plan (HCP) for the Na Pua Makani wind generation facility in Kahuku, LOT also asked Hu Honua questions about potential impacts to endangered and threatened species. Despite Hawaiian Electric Industries CEO Constance Lau’s comments to the VERGE Hawai'i 2017 conference, that the community must have a voice to express concerns such as bird kills, “They are all really important issues that must be on the table.” Hu Honua refused to respond to LOL’s questions regarding whether bats or other endangered species would be impacted by proposed logging operations, stating it is beyond the scope of LOL’s participation in this docket.

To summarize: Hu Honua plans to chop down existing trees for seven years, and then to rely on a rotational system of growing new trees and then chopping them down. Omitting any discussion of the fossil fuels used in the mechanization of growing, chopping, chipping, and transport, Hu Honua alleges that this operation is carbon neutral. In the absence of hard facts, however, the only thing supporting Hu Honua’s analysis is an audacious statement that amounts to, “Trust us, we're green.”

Hu Honua also plans to supplement tree harvesting with other not clearly identified biomass supplies. Again, these are assertions of carbon neutrality without supporting facts or analysis. Hu Honua’s attempts to avoid meaningfully addressing climate change and the environmental impacts of their proposed operations with absurd statements such as “the Commission will not allow LOL to ask questions relevant to these issues”, speaks volumes.

II, The Pricing of Hu Honua's Proposal is not in the Public Interest and its Economic Analysis is Incomplete.

In the face of dramatically falling prices across the globe, Hu Honua has proposed a 30- year contract, running from 2019 to 2048. Hu Honua is asking to be paid over 20 cents per kilowatt-hour in 2018, which would then rise to over 32 cents per kilowatt-hour in 2048. Unidentified additional costs to cover transmission, distribution, and administration will then be tacked on by HELCO.

Compare the above with the following examples of lower priced proposals: the Hawai'i Public Utilities Commission approved the KIUC-AES Lawai Solar, LLC Power Purchase Agreement for solar-based electricity, at 11.08 cents per kWh, in Docket No. 2017- 0018, and approved the KIUC-SolarCity Corporation solar-plus-battery Power Purchase Agreement at 14.5 cents per kWh. 

The Commission also approved a waiver from competitive bidding for the proposed West Loch PV Project, stating, “the Equivalent Levelized Energy Payment for the Project, as well as the PPA equivalent energy price, is estimated by HECO and the Consumer Advocate to be 9.56 cents per kilowatt-hour (kWh).” 

With respect to the West Lock Project, the Commission took notice of Tucson Electric Power's solar-plus storage project priced at 4.5 cents per kWh.

Moreover, Hu Honua's cost analysis included “Comparing HELCO Fossil Fuel Units to Hu Honua Bioenergy” whereby they asserted Hu Honua’s operations would save Big Island ratepayers some $600,000,000.00 starting in 2040. These numbers, however, are based on the high cost of biomass relative to the higher cost of fossil fuel, despite the fact that HELCO has asserted it will not be selling fossil-fuel-based electricity by the 2040s. When LOL questioned Hu Honua on these issues, Hu Honua refused to answer, stating that it was beyond the scope of what LOL was permitted to address in this proceeding.

The question for Big Island ratepayers and for the Commission is: why should a 30-year contract lock in high prices in the middle of a turbulent transformational period in which the price of firm baseload solar plus storage is sharply decreasing, and the power and duration of storage is rapidly increasing?

In addition to the dramatic and continuing downward trend in the cost of electricity generated by solar and solar-plus-battery systems, there are other advances being made which will fundamentally alter the reality of today. 

The Commission has an open proceeding on Demand Response, whereby utilities can rely on customer-based energy efficiency, renewable energy, and energy storage systems, to displace the need for centralized firm power, while saving money for all ratepayers. The “demand response” approach is poised to change everything. Hawai'i is at the leading edge of a vast energy-based technological revolution. What will the cost and environmental impact trajectories look like in the second and third decade of Hu Honua’s fixed-price, cost-escalating proposal?

An additional weakness in Hu Honua’s proposal is its analysis of economic benefits. Hu Honua stated that one economic benefit of the high-cost electricity they propose to provide would be job-creation: “Hu Honua operations are projected to generate about 190 jobs on the Big Island, including approximately 30 jobs at the power plant, 70 forest jobs, 20 trucking jobs, and 70 indirect jobs. ... Earnings from these jobs are expected to support 430 residents living in about 190 homes.” 

When LOL asked a series of questions concerning Hu Honua’s job creation claims, including an analysis of the number of people employed in different potential energy futures, like biomass relative to solar plus battery, Hu Honua responded that it was none of our business and beyond the scope of what LOL was permitted to address in this proceeding. 

Hu Honua then suggested that IF it decided to do something in the future (but to which it was not committing, merely speculating that they are capable of doing), then the Big Island will obtain additional benefits. “If Hu Honua uses Albizia trees”, Hu Honua opines, this “would have a value to the community.” This “value” was not defined by when it would potentially be implemented nor was it quantified.

Hu Honua’s pricing is not reasonable nor in the public interest and its economic benefit analysis is incomplete

III. Conclusion

Hu Honua’s offer of pricing is unreasonable and not in the public interest. In light of steadily-decreasing costs for other energy sources, Hu Honua’s costs are exorbitant and escalating. Even if the proposed pricing could be somehow deemed reasonable, Hu Honua’s environmental-impact discussion is incomplete and its claim of “carbon-neutrality” is unsupported. Furthermore, Hu Honua's approach is in violation of the Hawai'i Revised Statutes, §5-7.5, the Aloha Spirit, and displays a disturbing disregard for community concerns. The Commission should reject Hu Honua’s proposal.

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Life of the Land`s Energy Campaign

Life of the Land is Hawai`i’s own energy, environmental and community action group advocating for the people and `aina for 47 years. Our mission is to preserve and protect the life of the land through sound energy and land use policies and to promote open government through research, education, advocacy and, when necessary, litigation.

The role of energy cannot be understated.  Both internationally, and in Hawai`i, expenditures on energy account for more than ten percent of all money spent. Energy drives commerce, industry, transportation, and schools. Energy costs are the major financial input for agriculture and moving water.

Life of the Land firmly believes that too often problems are examined using silo mentality. Artificial man-made constructs and boundaries are imposed that fail to provide a realistic picture. 

Every energy project has positive and negative economic, environmental, social, cultural, geographic, taxpayer and ratepayer impacts. Every energy project has primary impacts, secondary impacts, cumulative impacts, life cycle impacts, externalities and unintended side-effects.

Life of the Land played key roles in numerous Hawai`i energy struggles

* Preventing importation of rain forest palm oil from Indonesia and Malaysia.

*Convincing HECO that climate change is real and caused by fossil fuel use

* Stopping the Big Wind / Interisland Cable Project

* Increasing awareness that the Gas Company is importing fracked LNG

* Halting the proposed Aina Koa Pono microwaved biofuel project in Pahala

* Increasing the number of intervenors in PUC dockets

* Raising health issues associated with geothermal and wind projects

* Protecting O`ahu North Shore from floating wind generation facilities

* Promoting Distributed Energy & Rooftop Solar

* Increasing access to PUC documents

* Promoting transparency in energy proceedings

* Establishing the first web-based site for PUC decisions

* Encouraging the use of electronic filings rather than increasing climate change by mowing down trees

* Raising cyber security issues

* Educating the public on energy issues through a series of community meetings

* Stopping the proposed Wa`ahila-Ridge 138-kV Transmission Line

* Educating on the true costs and impacts of undergrounding electric lines

* Advancing Net Energy Metering

* Publishing the first editable version of the HCEI Energy Agreement

* Opposing secret, automatic approval, and permit-exempted energy projects

* Being the first group to raise climate change issues at the PUC

* Being the first group to raise environmental justice issues at the PUC

* Winning a Hawai`i Supreme Court case: HECO can`t force ratepayers to pay for ads to encouraging the use of electricity

* Intervening in a Federal Energy Regulatory Commission (FERC) docket opposing a wind generation facility in the Moloka`i Channel

* Promoting Pumped Storage Hydro

* Promoting Distributed Energy Storage Systems

* Stopping the proposed HECO-NextEra merger

* Protecting rural areas from urbanites who want to dump projects “out there”

* Questioning the use of genetically engineered algae for biofuel

* Writing the Energy Chapter in "The Value of Hawaii: Knowing the Past, Shaping the Future," ed. by Craig Howes; Jonathan Kay Kamakawiwo‘ole Osorio. Published for the Biographical Research Center, University of Hawai‘i (July 2010)

Writing Life of the Land’s “Energy Independence for Hawai`i (2030): An Integrated Approach to Economic Revitalization in a Culturally and Environmentally Sensitive Way” (2011) (234 pages)

Writing Wayfinding: Navigating Hawaii’s Energy Future which focused on a 100% Renewable, Distributed Generation approach. (2012)

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Friday, February 3, 2017

Life of the Land at the 2017 State Legislature

The view is from the Lanai of the Office of the Attorney General, which wraps almost all of the way around the top floor of the State Office Tower, 235 S. Beretania Street.

The 2016 State Legislature has opened with a total of 2918 bills being introduced, 1317 in the Senate and 1601 in the House. 

Life of the Land has filed testimony on over 15 bills, including issues dealing the usually array of anti-environmental issues such as gutting land use laws, and removing projects from the environmental review process and/or county zoning laws. 

Life of the Land is Hawai`i’s own energy, environmental and community action group advocating for the people and `aina for 47 years. Our mission is to preserve and protect the life of the land through sound energy and land use policies and to promote open government through research, education, advocacy and, when necessary, litigation.

We are supporting monitors being hired by the land use commission, and moving agencies into the 21st century by encouraging electronic record keeping. We are also supporting greater funding to fight invasive species such as Rapid Ohia Death (ROD).

At the beginning of the session a few housekeeping resolutions are filed. Then in March additional resolutions are offered which are discussed during conference committee. The rule is that an agency must follow a concurrent resolution, but may or may not follow a Senate or House resolution.

This year, 104 resolutions have already been filed: 31 House Concurrent Resolutions (HCR), 15 House Resolutions (HR), 47 Senate Concurrent Resolutions (SCR), and 11 Senate Resolutions (SR).

HCR12/HR7 has already passed the House. The resolutions were introduced by House Speaker Souki and former House Speaker Say to designate January 24, 2017 as “Bioenergy Day”. 

House Resolution 14 realigned leadership in the State House Republican Minority Caucus. Rep. Fukumoto spoke out against some of President Trump`s positions. Fukumoto was replaced by Representative Tupola, by a vote of 3-2 with one abstention. Fukumoto is considering leaving the Republican Party.

One bill dealt with the proposal to provide enhanced sentencing for utility meter readers who are attacked while performing their jobs. We testified in favor of uniform laws across all public workers. The IBEW noted that some workers were allegedly attacked for discovering marijuana plants, while others were attacked while seeking to clear trees during Tropical Storm Iselle. Under examination by Legislators, the IBEW was unable to elaborate on either issue.

Likewise, there was a bill to require that two senior staff members of the Public Utilities Commission must file annual financial disclosure statements with the Ethics Commission, but the filings would remain classified. We favor uniformity across agencies. Either the most senior staff of each State agency files or doesn`t file. If filings occur, they should be made public, in part because of transparency and open government, and in part because the Ethics Commission lacks the resources to review practically all of the annually-filed financial disclosure forms.

SB11 would protect homeless individuals from having their personal property taken from a state or county agency without proper documentation procedures and the ability to recovery property from the agency. 

We have been hearing horror stories where personal identification, wallets, and medicine have been confiscated and/or thrown into the garbage during indiscriminate homeless sweeps by the City and County of Honolulu. This is unacceptable. We proposed modifying the bill with a new clause: “Notwithstanding any law to the contrary, it shall be unlawful for any state or county agency to confiscate government-issued identification documents and medicine.”

Representative Lee introduced HB805 on intervenor compensation. Life of the Land noted that a California State Auditor audit of the California Public Utilities Commission (CPUC) intervenor compensation program found that one intervenor had saved California ratepayers $354 million and had received compensation of $784,000, while another intervenor had saved ratepayers $130 million in savings and received an award of $586,000 in compensation. Thus, the payout to these two intervenors were well below a half of one percent of the savings to ratepayers.

The California program also increased intervention by socioeconomically, culturally, and geographically diverse groups.  Hawai`i could benefit from a similar program.

Life of the Land testified on bills dealing with utility merger criteria, and incentive regulation aimed at rewarding the utility for moving more rapidly towards public interest policies. We also testified on a bill requiring greater use of third parties in overseeing renewable energy planning for electric utilities.

Currently around one-fifth of the electricity transmitted and sold by utilities is from renewable energy. But when other energy uses are mixed in, the renewable energy percentage drops to eight percent. 

One bill proposed that ground transportation. like electricity, achieve the 100 percent renewable energy goal by 2045. We proposed benchmarks along the way, similar to electricity. We also favor the same approach for the Gas Company, which is currently exempt from the renewable energy requirement.

A bill was introduced to promote the use of hydrogen. The utilities are unable to use of all the renewable energy that is offered to them, so some of it is wasted, because most power purchase agreements forbid selling power to others. The proposal is that power producers could use excess energy for non-electric purposes, such as making hydrogen.

Life of the Land noted that 95 percent of all hydrogen in the US is made from fossil fuel, so the bill should state that there is a desire to increase the use of renewable hydrogen.

There are several bills that seek to harmonize, or lower to the least standard, existing practices. Working class people are struggling. Some entities are buying planes for the booming, $1.2 billion a month tourism industry. These entities get to purchase airplanes without paying any general excise tax. Therefore, those buying helicopters should also get the same tax breaks, regardless of the profitability of the helicopter industry. We testify against bills that seek to weaken standards and allow tax breaks for booming industries.

This is clearly an environmental issue, as health issues are important. We are currently monitoring a number of bills.

Prisons are for those serving sentences of more than a year. Jail is for short-timers, and those who can`t make bail and are stuck inside. Currently those not convicted who are awaiting trial, the homeless, and the mentally ill compromise the vast majority of those in jail. One approach is to design a better system, and then figure out what should be built. The Department of Public Safety is seeking a top-down, non-community friendly approach where the selection of a new facility is planned and built before any determination is made of what is needed.

Releasing some inmates in paper clothes without money or identification is crazy. A society should be judged on how it treats those at the bottom of the socioeconomic spectrum. Dealing with homelessness, mental issues, and affordable housing up front, will lower total societal costs, and alleviate stresses on the environment, that are currently caused by get touch social policies.

A few bills were introduced that would give preferential rates to lower income ratepayers and to those living in regions with large centralized renewable energy facilities.  Life of the Land supports differentiated rates. Economically challenged individuals should have lower electric rates, while boutiques that try to freeze sidewalks to lure customers into their stores should pay much higher rates.

There are opportunities to go much further, as we noted in our testimony. In the beginning all electricity came from the utility power plant, and radially spread out to end users. That system no longer exists.

Electricity and telecommunications move in multiple ways along a utility`s transmission and distribution grid. Today, 99 percent of the total physical number of all electricity generating stations in the State are rooftop solar systems. In aggregation, on the major islands, rooftop solar output exceeds the utility`s largest single power plant.

Home energy storage systems, smart energy efficiency systems, and demand response mechanisms will allow customers to be compensated for providing frequency and voltage support to the grid.

There are proposals floating around that transform the older cookie-cutter customer approach.

Commercial and Industrial (C&I) customers of HECO, MECO and HELCO can sign up for an Interruptible Load Tariff, whereby a few times a year they are cut off from the grid, in exchange for lower rates year-around. Residential customers should have the same option.

Commercial customers who want higher reliability levels, but who do not want to pay for on-site systems, should pay a premium for added grid-based reliability, under the existing cost-causer principle.

In 1990 the National Regulatory Research Institute (NRRI) published “Reliability Differentiated Pricing of Electricity Service. “It has been suggested that electricity customers be given the choice of opting for different levels of service reliability.  Customers would then subscribe to the level of reliability that best suits them and their processes. Such a choice would unbundle the service.”

"A review of electricity product differentiation" by C.K. Woo et al was published in the journal “Applied Energy” in 2013.  “Product differentiation recognizes that customers have heterogeneous preferences, with varying willingness-to-pay (WTP) for differentiated products. From a customer’s perspective, electricity has several distinct attributes: power quality, level of reliability, time of use (TOU), volume of usage (kWh), maximum demand (kW), and level of environmental impact. A differentiated product can be formed by packaging its non-price attributes at a commensurate price.”

Siripha Junlakarn is a graduate student at Carnegie Mellon University. “Although different end-users might have different reliability preferences, these preferences are not taken into account in the investment decision made by a utility company.  If the utility can provide differentiated reliability options according to customer preferences, it enables customers to price their reliability options according to their need. … Smart grid technologies, such as distribution automation and advanced metering infrastructure, can effectively manage power outages and provide a differentiation of reliability based on customers’ value of reliability.”

In 2013 the National Association of Regulatory Utility Commissioners (NARUC) published “Resilience in Regulated Utilities” by Miles Keogh and Christina Cody. “Commissions may decide that the smartest approaches to investing in resilience may be those that not only differentiate between classes, but also within classes.”

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