Category Archives: Technology

Raising the Reef

story by Dennis Hollier

The Waikiki Aquarium might seem modest compared with some of the super-aquariums that have sprouted around the country. It doesn’t offer the drama of great white sharks, like the Monterey Bay Aquarium, for example, or of whale sharks, like the Georgia Aquarium. But it does offer exhibits of astonishing beauty and naturalism. In one room, swarms of ghostly jellyfish pulse slowly through a spectral realm that recalls the mysterious lakes of Palau. The two giant clams hulking in the heave and surge of the Barrier Reef exhibit are the largest and oldest in captivity—gorgeous, 200-pound, purple-fleshed animals billowing out of boulder-size shells.

Yet these enormous bivalves are overshadowed, even in their own tank, by something even more remarkable: the massive purple, gold and sanguine colonies of live coral, which make the scene so realistic you almost want to snap on your snorkel. What really sets all the aquarium’s exhibits apart is the diversity and abundance of live coral, more than 100 species in all. This dazzling display of bright colors and fanciful shapes is unmatched in any aquarium in the world.

The full story of the aquarium’s coral collection isn’t apparent from the virtuoso displays out front. It’s to be found in the warren of labs and offices behind the tanks and especially in the sheds and holding tanks lining the narrow access road beside the aquarium. Here, in this ramshackle setting, is the world’s most successful coral farm.

The man behind the coral is Charles Delbeek, an aquarium specialist and former hobbyist who’s been raising coral for nearly twenty years. Delbeek is quick to point out that the aquarium’s coral program began long before he got there. “The previous director, Dr. Bruce Carlson, started bringing back corals from his travels in the 1970s,” he says. At that time, the display of live corals was largely the province of hobbyists rather than professional aquarists, especially in Europe. The big public aquariums relied upon rocks, dead coral or man-made substrates for their displays. “Back then,” Delbeek says, “marine scientists would have told you that you couldn’t keep corals alive. Meanwhile, people in Germany were keeping them alive in their living rooms.” Carlson met Delbeek at a conference where Delbeek was giving a talk on raising coral. Some years later, the aquarium offered Delbeek a job presiding over its growing collection. The Waikiki Aquarium became the first public aquarium in North America to display live South Pacific corals, and it still has the largest, most diverse exhibition of live corals in the world. One of its founding colonies, a bristling head of Acropora bruggemanii, is probably the oldest live coral in captivity.

More than two decades ago, the Waikiki Aquarium began systematically raising coral for use in its exhibits. In the early 1990s there was a growing concern about the sources of the coral displayed in public aquariums, which rely upon suppliers in places like Fiji, Indonesia and the Solomon Islands. Although there’s now a trend toward culturing corals and other organisms for the aquarium trade, back then much of the live coral was collected right off the reef. Aquariums had little idea where their coral came from or whether harvesting them harmed the reefs. “We’re probably unique,” Delbeek says, “in that we can say exactly which reefs all our corals come from in the wild. We even have the GPS coordinates for some of the species in our collection.”

Visitors to the aquarium can get a sense of how coral farming works in a special exhibit near the Hawaiian monk seals. Despite the prior reservations of marine biologists, who felt corals were too fickle and sensitive to raise in captivity, coral husbandry turns out to be fairly straightforward.

What we perceive as a single mass of coral is actually a colony of thousands or millions of individual organisms called polyps. In the hard or stony corals, these polyps remove calcium from sea water and secrete the skeleton most of us know as coral. Soft corals don’t grow this hard skeletal structure; instead, their polyp colonies coat rocks or dead coral stone and can resemble a mass of anemones. For both kinds of coral, one form of reproduction is asexual, the simple multiplication of polyps in the colony; thus all you need is one finger-size fragment—a “frag” in the trade—and you can grow a new colony, a genetic clone of the original.

The tanks of the aquarium’s coral farm are fabulously congested with colonies of both stony and soft corals. They grow surprisingly fast. Stony corals can grow as much as 8 inches a year. The impressive samples of purple-tipped staghorn coral that overshadow the giant clams in the Barrier Reef exhibit began as basketball-size chunks only a little more than two years ago. Now they’re shading out other corals, and Delbeek is considering replacing them with smaller pieces. Soft corals are even more prolific. “They grow like weeds,” Delbeek says.

Of course, it’s not as easy as it sounds. It turns out that there are a lot of things to know about growing coral. Lighting, for example, is critical. The Waikiki Aquarium is unusual because its tropical location means that natural light can be used for many of the exhibits. The climate is also a factor. “We can easily do exhibits outside,” Delbeek says. “Other aquariums really can’t. We can just dig a hole in the ground, where other facilities would have to spend millions.”

Delbeek also stresses the importance that water chemistry—calcium levels, alkalinity and pH—has on the health of coral. Part of the aquarium’s unusual success in growing coral might have to do with its extraordinary water, which comes from a saltwater well deep underground. After percolating through 80 feet of calciferous rock, the chemistry of the water is different from normal sea water. Then it’s vigorously aerated to remove excess carbon dioxide. The result is a perfectly clear fluid that one researcher calls “miracle water.” Its superior quality is so sought after that one of the benefits of membership at the Waikiki Aquarium is the privilege of bringing its water home for your private aquarium.

While most public aquariums now have a live coral exhibit, at the Waikiki Aquarium almost every display contains live coral. Except for a small amount of seed stock—frags carefully collected from around the tropical Pacific—all the coral on display at the aquarium was raised on the premises. But one of the principal functions of the aquarium’s coral husbandry program is to supply live coral to other institutions. “I’ve been here since 1995,” Delbeek says. “During that time, we’ve sent out more than 6,000 frags to other aquariums. There’s probably not one aquarium in America that we haven’t sent coral to.” Kathryn Harper, the aquarium’s director of community outreach, highlights the scale of the operation: “We could do this full time if we wanted—there’s enough demand.” The aquarium, which is owned by the University of Hawai‘i, cooperates closely with scientific institutions like the National Oceanic and Atmospheric Agency and the Hawai‘i Institute for Marine Biology. “Right now we’re working with scientists who need samples of genetically identical Hawaiian coral,” says Delbeek. “We also sent about 600 Acropora frags to an environmental consulting company doing research on the effects of crude oil on coral.” Concerns about human effects on coral reefs, like the ship grounding that wiped out nearly 20 acres of reef in ‘Ewa, lend impetus to the coral research at the aquarium.

“Now we’re working with rare Hawaiian corals,” says Delbeek. “That’s the direction we want to move in.” Among the more fascinating corals in his care is a small collection of deep-sea corals recently collected in the ‘Au‘au Channel off Maui. “These are Leptoseris,” Delbeek points out. “They were collected at more than 100 meters—the world’s deepest-occurring photosynthetic coral.” The aquarium is trying to grow this species out so that scientists will have enough material for their research. Another Hawai‘i species in the collection is Montipora dilitata. “This coral is believed to be only found in Kane‘ohe Bay,” Delbeek says. “It’s currently classified as a species of concern by NOAA, but it may soon be listed as endangered.”

Perhaps the greatest threat facing the world’s corals is the worldwide epidemic of coral bleaching thought to be associated with global warming. When exposed for an extended period to higher than normal temperatures, many corals will expel their zooxanthellae—the symbiotic algae that live within the polyps, produce their food and give them their color.

“Hawai‘i’s far enough north that we haven’t really been affected by frequent coral bleaching events yet,” says Delbeek. But eventually, Hawai‘i’s reefs will also face this threat. Hawai‘i’s corals are already under stress from pollution, human damage and invasive algae that choke out the sunlight. Part of the aquarium’s interest in expanding the coral farming project is to be able to restock wild populations of Hawaiian corals after a die-off. The aquarium has more than 100 species of stony coral alone, including several Hawaiian species. Although the current state of the world’s coral reefs is alarming, Delbeek says there’s still some room for optimism. “If the conditions are good, the coral comes back,” he says. “Last October, I was diving in the Solomon Islands and saw a section of reef that just ten years ago was all dead. Now it’s completely covered with living coral.”

That resilience is crucial to the aquarium’s vision to become a kind of seed bank. And maybe one day, in addition to supplying coral to the public aquariums of the world, the pullulating colonies of coral in this improbable farm will help save the fragile reefs of Hawai‘i.

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Mapping the Void

Tracing the arc of the sea turtle.

story by Dennis Hollier
photos, courtesy Shawn K. K. Murakawa
NOAA Fisheries

Far out in the North Pacific, a loggerhead turtle paddles lazily with the current, glutting itself on jellyfish and pelagic snails. The water is tinged green with the plankton and other nutrients that are the basis of life in the ocean. A vast, warm-water eddy concentrates all this bounty into a narrow band along its edge. Eddies like this one are common in this part of the Pacific. Sometimes reaching 200 miles across, they spin like tumbleweeds off the great Kuroshio Current, which passes just to the north. This loggerhead has patiently foraged the edges of this eddy for several months. Four, five, six times, it has spiraled around the broad perimeter, just as loggerheads probably have for millions of years. It has the same sad eyes as all those that came before; the same tufts of red algae grow on its carapace; the same species of pelagic crabs hitchhike in the leathery creases around its tail. But there is one small difference between this turtle and its ancestors: a small, white ARGOS satellite transponder fixed to its shell.

Fifteen hundred miles away, in the Manoa office of the National Oceanic and Atmospheric Administration, the signal from that transponder pings Jeffrey Polovina’s computer. Polovina, an ocea-nographer and Director of the Ecosystems and Oceanography division of NOAA’s Pacific Islands Fisheries Science Center, has been following Turtle 124 for almost three years. Two or three times a day, the loggerhead’s position is updated on the computer, revealing a breathtaking migration that has crisscrossed 12,000 miles of the Pacific. Together with turtle experts like NOAA’s George Balazs, Polovina has been charting the movement of more than 200 Pacific turtles this way. Some were hatched in a Japanese aquarium and released with satellite tags. Others were by-catch on commercial fishing boats, and NOAA fishery observers aboard the vessels tagged and released them. Using this data, researchers are finally shedding some light on the mysterious and complicated journey of the loggerhead.

Polovina has the dignified, gray-haired eminence and measured cadences of a scientist, but his bright eyes and elfin features belie a youthful enthusiasm for his work. For him, tagging turtles is less about the turtles themselves than the opportunity to study the ocean through their eyes: The ocean is not, it seems, a vast, featureless desert that they drift aimlessly across. It’s a diverse and intricately structured habitat that they exploit meticulously.

Polovina describes the journey of the loggerhead as “one of the world’s great migrations.” All of the loggerheads in the North Pacific were born on beaches in the southern islands of Japan. Genetic studies have shown that these same turtles are often observed along the coasts of California and Mexico as adults. Although there is no practical way to tell the age of wild turtles, juvenile loggerheads can spend as much as thirty years at sea. In fact, even at the leisurely pace of turtles, some of Polovina’s loggerheads travel more than 3,000 miles a year.

No one really knew, though, what happened to the turtles in between. Experts—even scientists like Archie Carr, perhaps the pre-eminent authority on sea turtles—believed that the juvenile loggerheads were passive migrants on the great ocean currents like the Kuroshio. Maybe the most dramatic discovery that Polovina and his colleagues have made has been the clear demonstration that loggerheads are not mere passengers on a transoceanic cruise; they are some of nature’s most accomplished navigators. They do not swim in a straight line from west to east; their erratic paths crisscross thousands of miles of ocean in a way that looks, at first, to be random. But it’s not.

The ocean, as it turns out, is far from homogenous. Satellite imagery has revealed it to be an intricate assemblage of vast and changing features. “There are eddies, meanders, fronts, upwellings, downwellings, convergences and divergences,” Polovina says. For turtles and other marine animals, these features are critical habitat. “To find them and to see how the animals are using them is a real advantage.” To do that, he relies on several different satellites. Some measure the ocean’s temperature, mapping thermoclines—boundaries between cold and warm water. Others exploit tiny variations in sea surface heights to chart currents, which, on a map, look like a paisley of eddies and meanders. Other satellites detect the color of the ocean’s surface, revealing, for example, the dramatic Chlorophyll Front, an oceanwide boundary between the cold, green, plankton-rich water of the Arctic and the warm but much more nutrient- poor blue water of the subtropics.

Combined with the satellite maps of the ocean’s features, the turtles’ route begins to unscramble. It’s clear that the turtles are traveling among the ocean’s varied features, seeking the most productive habitat. Like Turtle 124, they spend months feeding at the edges of warm-water eddies. They nuzzle into the crooks of meanders and into places where converging currents crowd their food sources together. In the winter, they’re especially fond of the waters along the Chlorophyll Front, which continue to bring food to the surface even when the great eddies of the Kuroshio Current have petered out.

Knowing where loggerheads are likely to be found isn’t a purely academic issue. The International Union for Conservation of Nature and Natural Resources lists them as “endangered,” meaning they face a high risk of extinction in the near future. In the United States, they’re listed as “threatened” and are protected under the Endangered Species Act. Swordfish and tuna longliners sometimes accidentally hook turtles, but NOAA has set strict limits on by-catch. Once the Pacific Island fleet catches eighteen loggerheads or seventeen leatherbacks, the whole fishery is shut down for the season. The fishermen clearly have a real incentive to avoid snagging turtles. In 2006, the first year of the regulations, the eighteenth loggerhead was caught in March, sending the entire fleet back to port after only two months. Now, though, Polovina’s maps are available on the Internet; the longliners can simply avoid areas where there are likely to be loggerheads. The fishery hasn’t shut down since 2006.

One of the more remarkable things about Polovina is that he’s not a turtle biologist. “I’m an ecological nomad,” he says. Scientists typically become specialized over the course of their careers, but Polovina’s career has been characterized by highly productive dabbling. After an undergraduate degree in biology and graduate work in statistics, Polovina has bounced in five-year increments among different specialties. He did work in aquaculture and population dynamics. He studied the efficacy of artificial reefs in Japan and managed commercial fisheries here in Hawai‘i. Among his peers, though, Polovina is probably most closely associated with something called Ecopath modeling. “I’m famous for that,” he says. Employing simple statistical methods, Ecopath allows ecologists to predict the effect small changes will have in a large ecosystem—in essence, Ecopath is the precursor to modern ecosystem management.

It was probably his statistical bent that led Polovina to oceanography and the high tech world of satellite telemetry. The power of statistics to make predictions—their principal value to scientists—depends upon having sufficiently large and stable data sets. Some of the satellites Polovina uses have scanned the surface of the ocean continuously for decades. With these “very large and very unusual data sets,” he can study ocean features spread thousands of miles across the globe—often without leaving his desk. For example, he used a decade of satellite data to prove that the ocean’s desert zones—the vast, almost lifeless blue areas at the centers of the ocean’s equatorial gyres—are growing at a faster pace than would be predicted by current models of global warming. The unexpected growth could just be part of the cycle of El Niño and La Niña events, or it might forebode the continued decline in the world’s fisheries. “We may need another decade of data to know for sure,” Polovina says.

In the absence of this kind of data, the ocean can seem mute and undifferentiated to us. Though satellites can reveal some of its features, they don’t always tell us what those features mean to the animals and plants that live among them. Tracking the turtles allows Polovina to see the ocean through their eyes and to begin to understand the ocean as habitat. In addition to turtles, Polovina has tagged tuna and opah (moonfish) and even whale sharks. In effect, in addition to the satellites, Polovina has hundreds of little remote submersibles constantly scanning the features of the ocean. Polovina’s eyes narrow conspiratorially when he thinks of all these turtles gathering data for him. “Each satellite gives you a different way to find these features and to measure different aspects of them,” he says. “Then you put the animals out there. These turtles are 100 million years old; they’re sensing the ocean in a different way. In a way, we’re using these animals to tell us what part of the ocean is important.”

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Steel Birds

story by Dennis Hollier

photos by Sergio Goes

 

 

 

 

The skies of Hawai‘i teem with helicopters. Behind my home in Windward O‘ahu, I can hear the tour birds thrum in the mountains, looking for waterfalls in the hanging valleys. Over Kane‘ohe Bay and along the North Shore, the big military choppers thump-thump-thump up the coast on their mysterious errands. And anyone who spends time in the surf zones of O‘ahu has heard the whine of the Coast Guard helicopters on patrol.

 

In fact, helicopters are so common here they seem to blend into the background. Until recently, I hardly noticed them. Then, last September, while working on a story about Hawai‘i’s endangered plants, I teamed up with a couple of state Department of Land and Natural Resources biologists and hopped a ride to the top of the Ko‘olau Mountains in a little red Pacific Helicopters chopper. It was a dazzling flight, and one that opened up a whole new perspective for me. Since then, I see helicopters everywhere.

 

That day, Joe Allen was waiting for us in a small clearing on the ridge at the top of Waimano Home Road in ‘Aiea. His helicopter gleamed in the sun. It was a windy day, and the biologists were worried about conditions in the mountains. At the time, I had no idea that Allen’s MD-500 was something of a hot-rod, or that he was an unusually talented pilot. Later, the biologists would tell me that Allen was the only pilot who would fly for them in those conditions—and the only one they trusted. But his helicopter didn’t evoke much confidence: It was just a small four-seater with no doors. And Allen was a soft-voiced man who joked easily with the biologists, but didn’t show outward signs of his years of experience.

 

After taking a moment to explain the safety procedures to me (stay low and in front of the helicopter so the pilot can see you; avoid the tail-rotor) we all strapped in and Allen fired up the engines. Then he slowly wound up the RPMs and we rose out of the clearing, hovered for a moment, then turned toward the mountains and floated away.

 

Our destination was a ridge-top at the back of Halawa Valley, and we sped there over the densely forested Ko‘olau Watershed. Below us, I watched the succession of green ridges and valleys. I saw the long, snaking trail that climbs Waimano Ridge. I saw the streams twinkle in their dells. And, level with the inaccessible hanging valleys, I saw the profusion of plants known nowhere else in the world.

 

A helicopter flies in an in-between world. Higher than the treetops or the buildings or the mountains, yet lower and more intimate than an airplane. Even hovering a few feet off the ground is a novel view. Flying in the mountains, I felt simultaneously above and below and among them. I felt giddy, like I was flying for the first time.

 

We flew on a diagonal course, climbing steadily over the leeward ridges toward the Ko‘olau crest. On foot, the long climb up these ridges ends with a spectacular view of the windward side. The sheer cliffs of the Pali bring you up short and take away your breath. In a helicopter, the effect is magnified. Instead of creeping up to the edge and pausing, Joe launched the helicopter right over it into the vast, empty space beyond. Then he veered west and hurtled along the vertiginous crest toward our destination.

 

Up on the Pali, the wind blew fiercely. When we arrived at the biologists’ worksite—several small clearings surrounding a high promontory—it became clear we wouldn’t be able to land there; we bounced too much in the wind to set the helicopter down safely. After several passes, Allen decided to drop us where the wind was calmer, a couple hundred yards down a ridge. We plummeted there in a down draft, but Allen wheeled around into the wind at the last moment, ]settling the helicopter onto a clearing on a ridge not much wider than the skids. Climbing out, I was glad for the little metal footsteps. We scurried forward and waited there in front of the helicopter as Allen carefully lifted off, peeled away and flew out of sight down the mountain.

 

Even a basic helicopter is a mind-bogglingly complicated machine. Shortly after my flight with Joe Allen, I arranged a meeting with Mike Klink, a young instructor at Mauna Loa Helicopters, to learn how they work. Klink is as amazed as I am. “I can’t believe a human being had the time to figure all this out,” he says, as he describes the helicopter’s control systems.

Flying involves both hands and both feet. Pedals at the pilot’s feet control the tail rotor, which he uses to pivot the helicopter left or right. The main rotor, which pilots refer to as the “disk,” is controlled by the pilot’s hands. With his left hand, he moves a lever called the collective up or down to make the helicopter climb or descend. A twist throttle at the end of the collective lets the pilot adjust the engine speed. In his right hand, the pilot holds the cyclic, a joystick that sits between his knees. He controls the direction and speed of flight by pushing the cyclic in the direction he wants to go.

According to Klink, learning to fly from point A to point B is relatively simple. Hovering is the bugaboo for new pilots. A steady hover, the maneuver that distinguishes helicopters, requires rapid and minute adjustments of all the controls at once. Experienced pilots describe it as learning to juggle while riding a unicycle. It can take days of failure and humiliation before the student reaches his first hover. Then, it arrives suddenly, like satori. Only after learning to hover does the real fun start.

Although the skies above Hawai‘i are thick with helicopters—with the lumbering military birds and scores of tour craft on their bus runs around the islands—it’s the private helicopter pilots who seem to have the most fun flying in Hawai‘i. As a group, they’re affluent and have the time and inclination to get the most out of their toys. They fly where and how and when they want. They’re also an eccentric group.

John Pitre, the artist and inventor, keeps his helicopter in the T-Hangars at the end of the runway at Honolulu International Airport. I recently visited him there to talk about flying in Hawai‘i and to take a ride in his helicopter, an R-44 Clipper. Like most private pilots, Pitre has an informal attitude. He greeted me in the parking lot in a black T-shirt and shorts and sneakers. He wears his hair pulled back in a ponytail.

Helicopter pilots, no matter how unconventional, are scrupulous about safety. Pitre was no different. We checked the oil and the transmission fluid. We sampled the fuel at three points in the fuel system. We checked to make sure all the panels on the fuselage and the fuel cap were on tight. He took special pains to show me the electrical system, testing the warning lights one at a time to make sure they worked. Only then were we set to fly.

It’s easy to spot Pitre’s helicopter; it’s the one with floats. Because so much flying here is over water, many helicopters in Hawai‘i have long, thin tubes mounted on the skids that the pilot can inflate in case of an emergency. But Pitre has his big white floats permanently mounted in place of skids. It gives him a sense of confidence and lets him go places that other pilots would find uncomfortable.

The day we flew, the weather was strange, with Kona winds sometimes giving way to trades. To the east and west, showers blurred the skies. Offshore, a dense column of rain blocked the sun. “Let’s go through the Pali pass and see how it looks over there,” Pitre said. When the tower gave him clearance to fly past the highway (what’s called the Freeway Approach), he gently pulled the collective and we rose and sailed off over Ke‘ehi Lagoon. In the harbor below, I watched the yachts swing at anchor. Here and there a submerged boat hung on its mooring. We paused over a clear spot in the harbor.

“Here,” Pitre said, “I’ll show you how we do an autorotation.” This is the procedure pilots use in an engine failure. Surprisingly, even though helicopters can’t glide to earth like airplanes can, they’re still relatively safe in this kind of emergency. The wind generated by falling still drives the rotor blades, giving the pilot full control as he comes down. Pitre demonstrated it for me. He killed the throttle so we lost engine power; and, as we began to fall, he flared the nose of the ship up so that the air passing over the blades kept them spinning and generating lift. We descended gently, never losing control. Near the water, he gave the throttle a twist, and we rose off again under power. “There,” he said, “now you’ve crashed.”

Helicopter pilots like to call their ships “magic carpets,” and that’s the sensation of flying. The motion seems so antithetical to what we call flight. It’s more of a simple swoosh through space. “I like to fly at low speed,” Pitre said as we passed into the confines of Nu‘uanu valley. “We’re just nibbling along at seventy-five or seventy-eight knots. The engine’s in pure idle. There’s no rush or worry. If we have a problem, we stop; we back up. That’s why helicopters are the best of the small, light aircraft.”

We dawdled in Nu‘uanu, pausing to gaze down into the valley. “Somewhere down there is my daughter’s house,” he said. “I look for it every time, but I’ve never seen it.” I peered down into the forest from 500 feet up, looking for the glint of the falls at Jackass Ginger. We scoped out the mansions in their old estates. As Pitre gradually pulled up on the collective, we rose toward the gap at the Pali Lookout. Then, just as suddenly as that time with Joe Allen, we burst forth onto the Windward side and hung improbably before those sheer, pleated cliffs.

We looked north, and Pitre scowled at the rain ahead of us. It was raining over Waimanalo, too. “Let me show you something else then,” Pitre said, swinging the cyclic right. Suddenly, we swerved away from the mountains, toward Kane‘ohe Bay. Out over the middle of the bay, Pitre brought us to a hover, his right hand twitching on the cyclic. Then he gradually eased down the collective and we wafted gently to the surface of the sea. The floats settled on the water so easily that I didn’t feel us land.

“That’s what floats can do for you,” Pitre said. “I like to fly low so I can see things. Other pilots would be nervous to fly so low. But, with these, I have that extra layer of security.” Once again, he pulled the collective and as we rose, he gave us a quick pedal turn, and we shot off toward the Pali again.

Pitre is enthusiastic about his helicopter, and he gave me the cook’s tour. We ferried over the heights of Tantalus. We swept past the hotels and beaches of Waikiki. We zoomed triumphantly over the breakers of Kahala and Diamond Head, eliciting waves from surfers in the line-up.

From Koko Head, we traced the tumultuous Ka Iwi coast. By this time, it was dusk and Hanauma Bay had emptied; Pitre hovered over the ridge so we could gaze down on the reef. Atop Koko Head Crater—where hikers stood on the platform and waved in awe—we approached an old radio station with a dilapidated heliport attached. It was too fragile for us to land, but Pitre hovered over it to show how it was used. “That’s called a ‘pinnacle landing,’” he said as we veered off toward the cliffs of Makapu‘u. Once there, we slowed to an idle to avoid the flocks of tropic-birds and noddies that nest there. Sidling past the lighthouse, we watched the sea beat against the rocks, 300 feet below. Then, still careful of the birds, we slowly rounded Rabbit Island. Although I have swum and surfed and hiked this coast, this was my first glimpse of the broad ledge that protects its seaward side. Big swells crested there and washed over the ledge ferociously. “You may never see this again,” Pitre said.

As we approached the hang-glider cliffs behind Makapu‘u Beach, Pitre pointed out another hazard. Cables hung, almost invisible, high between two peaks. “You’ve got to be alert up here,” he said. “The rule of thumb is: Always head toward the towers. Because they never string the wires straight up to heaven.” I watched the thoughtless coordination of feet and hands as Pitre swung the cyclic left, pulled the collective and brought us over the tower. From there, we could see the lights of Honolulu winking on in the twilight. We flew back in silence.

One bright afternoon in February, I hopped a ride with a Coast Guard chopper on a routine cruise around O‘ahu. The experience was eye-opening. Flying with civilians didn’t call for any special equipment beyond a helmet and radio. To take a Coast Guard flight, I donned a fire-resistant flight suit, fire-resistant leather gloves, a “Mae West” life jacket, and a wide harness around my waist so that I could clip myself securely to the bright orange helicopter.

Before the flight, Danny Rees, the flight mechanic, gave me a safety briefing. (The Coast Guard is unique among the services in requiring the mechanics to fly regular shifts in the helicopters they service, surmising perhaps that this will inspire greater attention to detail.) Despite all the protective gear, Rees was emphatic about the safety of helicopters. “I feel safer flying in one of these than I do driving my truck,” he said.

After my briefing, we were joined by the pilot, Cmdr. Donald Dyer, and his co-pilot, Lt. Cmdr. Steve Detton. Rees made sure I was properly strapped into the far back, where the rescue swimmer usually sits. With Rees strapped into the gunner’s seat, Dyer fired up the engines and we taxied out to the runway. Once he had clearance from the tower, Dyer brought us to a low hover, then peeled out over the ocean.

We flew low along the Wai‘anae coast, looking for swimmers or boaters in trouble. At Ko Olina, we paused to circle the Pro Bowl practice fields and ogle the yachts in the marina. Then we patrolled the beaches of Wai‘anae, surveying the camps of homeless and the surfers lining up on the break. The great leeward valleys of Wai‘anae and Makua reached off to our left. Then we rounded the headland of Ka‘ena Point, braided with four-wheel drive tracks, and began the run up the North Shore.

The surf was up. No kiteboarders braved the waters of Mokule‘ia. Great, frothy breakers washed over the hard shelf there. Rees spotted a monk seal sunning on the beach and we circled back to make sure it wasn’t injured. Then we ran low down the beach, over Hale‘iwa, Waimea, Pipeline and Sunset. From 200 feet even big surf looks small. But a contest was on at Pipeline, and Dyer slowly circled the event, tipping way over to improve the view. There were crowds of spectators on the beach. Jet skis towed the surfers into the waves on the outer break and foam churned the inshore waters.

From the North Shore, we flew over the West Loch of Pearl Harbor. Here, we slowed to a crawl and Rees opened the door of the helicopter to take a picture of the mothballed fleet below us. Over Honolulu Harbor, I slid forward and clipped into the gunner’s spot. I was sitting there when we reached Diamond Head Lighthouse, where we waggled our figurative wings at the station crew. Then, as we returned along Waikiki Beach, the door open, I sat cross-legged on the floor of the helicopter, with my notebook flapping furiously in the breeze. Even the Coasties have fun.

John Corboy is one of a small group of pilots who live on Moloka‘i but commute regularly to O‘ahu. For Corboy, living on Moloka‘i allows him to have more space and privacy than he could in Honolulu. It’s a lifestyle made possible by the helicopter.

“On Monday, I fly over to Honolulu and get my work done,” he says of his usual routine. “Then, on Thursday, I fly back. Usually, I carry groceries and supplies back with me. We can’t always get good fresh vegetables on Moloka‘i. My wife hates the city. She says, ‘You go ahead and get that out of your system and I’ll wait here for you.’ She can do whatever it is she does while I’m gone—garden in the nude or whatever. Then, when I come back with groceries and flowers, she’s always glad to see me.”

There are few official controls on the movement of helicopters. One regulation requires them to stay 500 feet above densely populated areas. But all pilots know that real regulation is done “by complaint.” Corboy normally only flies in and out of his Moloka‘i home just twice a week. “Once,” he said, “I checked with the FAA [Federal Aviation Administration] to see at what point they investigate. They asked me how many events I had—meaning take-offs and landings. I told them ‘about eight.’ They said, ‘We wouldn’t bother to look into eight events a day.’ And I told them, ‘No, eight a month.’”

Corboy was eager to show me the advantages of commuting by helicopter; so, one Thursday afternoon before his usual trip back to Moloka‘i, I met him down at the airport. Like most private pilots here, Corboy flies an R-44 Clipper, which he leases rather than owning outright. When I arrived, he was loading it with groceries and a garden hose. He wore blue athletic shorts and an old aloha shirt with tattered boat shoes and support hose. Like Pitre, Corboy also wore his hair in a ponytail. He was the picture of informality.

While he figured out how to fit all his supplies into the back seats, I looked around. This was helicopter central for Honolulu. All the tour birds are parked in rows here. TV’s Channel 8’s traffic helicopter shuttles through between flights. Pacific Helicopter’s Honolulu offices are here, too, and Joe Allen’s little red MD-500 is often parked by their hangar. The Honolulu Police and the Fire departments keep their birds in hangars around the corner. And, far in the back, four little R-22s are lined up in front of Mauna Loa’s pilot training school. There’s a steady stream of student pilots ferrying between the hangars.

Finally, Corboy finished loading and going through his checklists. Once we were strapped in, he revved the engine and we flew away over Honolulu Harbor. It was a peculiar view of the harbor, flying slowly through at crane height. Once, we had to veer aside to avoid a Matson container ship backing into its berth. Up ahead, we passed the Kaiwo Maru—a Japanese tall ship—tied alongside at the wharf. Then, dead ahead of us, loomed the Queen Mary II—the world’s largest ocean liner—twenty stories tall. We coasted past, eye-level with the bridge.

We crossed the Moloka‘i Channel at 130 knots, and only 500 feet off the water. In the distance, I thought I saw whales, but Corboy made straight for the coast. Once we reached Moloka‘i, he called his wife on the radio to let her know we were coming. We followed the south shore over the fishponds and the mud flats. We flew over old plantations and craggy gorges. Then, up ahead, we saw the blue-tiled roof of Corboy’s home, sidled up to the edge of a deep ravine. His heliport was right next door.

Although the estate wasn’t ostentatious, it still felt a little like Oz approaching this way. Corboy eased the collective and gently tweaked the cyclic as we glided in over the trees. “That’s the beauty of a helicopter,” Corboy said as we touched down. “This is the magic carpet that makes it possible.” The trip took thirty minutes from door to door.

I didn’t stay. Friends and family quickly unloaded the chopper so Corboy could take me on the quick hop back to the Moloka‘i Airport. But Corboy had one more surprise before dropping me off. Instead of heading straight back to the airport, he veered again out to sea. And there, just south of Moloka‘i, we chanced upon a pod of whales making their way languorously east. We admired them from a respectful distance. “Sometimes,” Corboy said, “they’ll kind of roll over on their side—so they can look at you—and slowly wave their flipper at you.”

Corboy dropped me in a grassy field beside the drowsy terminal at the Moloka‘i Airport. He didn’t shut down, so we shook hands as best we could, then I waited by the fence for him to leave. I watched as he waved once, pulled up on the collective, and rose into the air, like Sinbad on his magic carpet. Then he did a pedal turn, and sailed toward home.

 

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Bee Beautiful

story by Dennis Hollier

photo by Gerlinde Gorla

 

When Anthony and Gwen Maxfieldmoved into their Pupukea home eighteen years ago, there were already bees on the property and it seemed perfectly natural for Anthony to step into the role of beekeeper. Thus began an apiary relationship that culminated last year when the Maxfields and their friend, Christina Sirlin, formed a new company: Honey Girl Organics.

It was eight years ago that Gwen first noticed an unexpected advantage to working with bees. “I had cut the cappings off the combs to harvest the honey,” says Anthony, “and I was wringing them out to get as much honey as possible.” Afterward, Gwen remarked on how soft his hands felt, and asked him to make her a cream for the same effect.

Today Honey Girl offers a full line of moisturizers and lotions, with most of the ingredients coming from the twenty hives behind Gwen’s and Anthony’s house. Beeswax is a natural moisturizer and emollient. Honey soothes and softens the skin. Bee pollen is rich in nutrients. Propolis, a waxy product that bees make from the sap of evergreens like ironwood and ‘ohia, is a natural antiseptic. And royal jelly, the enzyme-rich food of the queen bee, is thought to have age-reversing qualities.

For the Maxfields, the “naturalness” of their ingredients is the whole point. “Pick up a jar of skin cream at the drugstore,” Anthony says. “It’s packed with glycerin, mineral oils and other processed chemicals.” Everything in Honey Girl products is edible, he stresses, and, “it’s as close to nature as you can get.”

“Anything you put onto your skin gets absorbed into your bloodstream,” says Christina. “This is how birth control and Nicorette patches work.” And it’s why Honey Girl only uses nutritious, organic ingredients.

But Honey Girl is more than a business—it’s also a love story. “This was an opportunity to spend more time with my wife, to do something together,” says Anthony. “She liked my soft hands.” At which Gwen smiles sweetly and adds, “I think the best part of the story is that he made it for me.”

Honey Girl Organics
www.hgh-skincare.com

 

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Hawaii Seed Savers

 

story by Dennis Hollier
photos by Chris McDonough


The great wiliwili tree in my front yard is blighted. Its crown bristles with dried twigs. Leaves still grow on the lower branches, but in twisted, stunted bunches. They’re gnarled and pocked with galls. The old tree is dying — another victim in a statewide epidemic of parasitic Erythrina gall wasps.

These invasive wasps were first noted in Hawai‘i less than two years ago. Now, throughout the Islands, almost every type of tree in the Erythrina genus is infested, including both native wiliwili and ornamental imports such as the Indian Coral Tree. On the street behind my house, a windbreak of tall wiliwili stands leafless in the sun. These were once venerable trees. Now, to paraphrase Samuel Beckett, they’re more than venerable; they’re dead.

Despite the best efforts of the state’s botanists, there’s still no treatment for the gall wasps. No known pests for bio-control. No poisons to apply. No mutations to muddle the genome of these destructive pests. Fearing the worst—that the blight may only end with the extinction of the wiliwili in Hawai‘i—scientists throughout the state are methodically stocking up on seeds. In the back of Manoa Valley, the botanists at Lyon Arboretum’s Rare Hawaiian Plants Program have ninety pounds of wiliwili seeds on ice. For after the apocalypse.

Of course, the crisis of the wiliwili, although sudden and dramatic, is only the latest episode in the long story of loss and extinction here in Hawai‘i. There are about 1,000 native plant species in Hawai‘i, ninety percent of which exist nowhere else in the world. Hundreds of these species are endangered. Hawai‘i accounts for about a quarter of the federally listed endangered plant species in the country, while countless other unlisted species also teeter on the brink of extinction.

Over the last few years, a network of organizations and conservation professionals has emerged, seeking to preserve these fragile plants. The very public efforts to save the wiliwili simply highlight the largely anonymous work being done to protect Hawai‘i’s other rare and endangered plants. Scientists in white coats toil at their microscopes. Administrators scramble for funding. And high on the windy, perilous ridges of the Ko‘olau Mountains, intrepid field biologists nurture the last dwindling communities of these rare Hawaiian plants. But the nexus of all this quiet work can be found in two unobtrusive laboratories at Lyon Arboretum.

Alvin Yoshinaga runs the seed bank at the Arboretum. He’s a slight, soft-spoken man with a graying mustache and glasses. When you ask him a question about biology, he often defers to other experts, sometimes quickly pulling up their Web sites on the Internet. But his quiet manner belies a real passion for plant conservation: Yoshinaga’s experience at the seed bank has made him the expert on Hawaiian seed.

The protocols for seed storage and propagation of most agricultural plants are well-known. For rare native plants, though, these processes are more mysterious. Science knows little about the pollination biology of many of the plants coming into the seed bank. Yoshinaga and his associates spend much of their time researching the intimate details of plant sex. They look for the conditions under which a plant germinates best. They store seeds at different combinations of temperature and humidity to find the ideal climate. Using sandpaper, razors, acids and dental tools, they examine the effects of scarification on seed.

Yoshinaga is especially interested in identifying storage techniques that extend the useful lifespan of seeds. “Because most tropical seed cannot be frozen,” he notes, “people assumed that was true for Hawaiian plants, too.” But surprisingly, Yoshinaga has discovered that many Hawaiian seeds can be successfully frozen. Others survive better if only refrigerated. A few do best if stored at room temperature. This information is critical: Yoshinaga points out that a seed that remains viable for one year at room temperature might last 100 years if it can be frozen. Many of the seeds stored in Lyon’s seed bank will need that kind of shelf life.

“There are two kinds of seed banks,” says Yoshinaga. “One—what I call a working seed bank—is something like a passbook savings account. You deposit the seeds of native plants so that you can withdraw them later—for habitat restoration, perhaps.” The seed bank serves this role for many of its customers: the Army Natural Resources Program, the state Department of Land and Natural Resources and The Nature Conservancy, among others. The other type of seed bank preserves germplasm in perpetuity. Yoshinaga calls it “a kind of Noah’s Ark.” For this aspect of the work, the bank conserves not just the species, but also its genetic diversity. Sometimes, the survival of certain plants in the wild is so tenuous that special measures are taken to preserve their genome in the seed bank, in case a natural catastrophe or wildfire takes out the last surviving plants. Also, as individual specimens of a plant become rare, it’s critical to conserve the genetic diversity of every one of them.

The seed bank at Lyon Arboretum is a true bank: It doesn’t own the seed in its collection; it merely serves as a vault for the material deposited there by other organizations. Only the organization that makes the deposit can remove or use that plant material. The refrigerators and freezers are full of carefully labeled foil packets and vials of seeds. Each package contains the seeds of a single plant collected at a single time. When future researchers propagate these seeds, this kind of recordkeeping will allow them to manage the population genetics of the plants.

The accession of seeds to the collection is a detailed process. The seeds often come in fruit or pods that must be removed. Then the seeds themselves require specialized treatment to prepare them for storage. Often, they must be dried in a controlled climate so that they don’t rot later. Different kinds of seeds also require different temperatures and humidity levels during storage, and all require periodic testing and maintenance.

The seeds themselves come in a wide range of sizes. Wiliwili seeds, which are sometimes strung into lei, are about the size of a black-eyed pea. Other seeds, though, are like motes of dust. A film vial might hold thousands of them. And each species can have its own storage and germination protocols. To make sure seeds in the collection are still viable, Yoshinaga periodically checks each sample for germination rates. He uses several incubators as grow chambers in the lab at Lyon, and also has a couple at the Army’s Natural Resource Management Base near Wheeler. At any given time, he may have 300 to 400 tiny plants in various stages of germination.

But not all plants are suitable for propagation from seed. Sometimes, botanists are unsure of the protocols for getting seeds to germinate. More often, it’s impossible to collect mature, viable seeds from extremely rare plants. Upstairs from the seed bank, Nellie Sugii runs Lyon Arboretum’s astonishing tissue culture—or micro-propagation—lab. Here, Nellie and her staff laboriously tend a garden of Hawai‘i’s rarest plants. But it’s a most unusual garden.In a small, brightly lit room lined with wire rack shelves, thousands of tiny plants grow in test tubes and beakers. A glance at any one of them reveals a perfectly formed plant in miniature. All these plants have been grown from the tissue samples—leaf cuttings, immature seeds, roots and etc.—of specific plants. As at the seed bank, each plant is carefully labeled with its collection site and date, the collector’s name and the plant number. For the rarest plants, Sugii makes sure to have a tiny specimen grown from the tissue of every known wild individual. In many cases, that might mean just a handful of plants. Surprisingly, Sugii also grows plants that are extinct in the wild—plants that only continue to exist inside her carefully tended test tubes.

The work of the tissue culture lab is even more exacting than the seed bank. Out front, Sugii’s assistants manage the routine maintenance of about 10,000 plants. Under specially ventilated glass hoods designed to prevent contamination, technicians carefully remove the tiny plants, one by one, from their test tubes and meticulously trim them using scalpels. After working with each plant specimen, they sterilize their blades in the flames of a small lamp. They constantly monitor the collection for disease or dead tissue. The test tubes are periodically refilled with fresh growth medium, a clear potion concocted by Sugii. Raising plants this way is labor intensive, but seeing the garden of the tissue culture lab has a real psychological effect on the visitor.

In the seed lab, the collection is packed tightly in refrigerators and freezers, so it’s hard to grasp its full nature. The tissue culture lab, on the other hand, is more like a library: You can browse the aisles to get a sense of the desperate straits of Hawai‘i’s flora. Sugii points out a small collection of plants of the genus Cyanea, known as haha in Hawaiian. One
variety, Cyanea grimesiana grimesiana, represents a single plant, now extinct. Another, Cyanea hyperbia, is down to two specimens in the wild, known simply as plants A-3 and A-4. The label notes they were collected by the Plant Extinction Prevention program, or PEP.

Ane Bakutis and her assistant, Hina Kneubuhl, spearhead the quixotic efforts of PEP on O‘ahu. Other organizations certainly work on rare and endangered plants, but they tend to focus on habitats or remediation; PEP focuses only on the conservation of species of plants with fewer than fifty specimens surviving in the wild. Their objective is to collect and preserve the seeds or tissue from as many of these plants as possible. PEP used to be known as the Genetic Safety Net. It was an unpopular name, but it aptly describes the team’s mission.Bakutis and Kneubuhl prowl the high ridges of the Ko‘olau and Wai‘anae mountains, keeping tabs on small populations of rare and endangered plants littered along the spine of O‘ahu. These plants are almost always in remote and difficult locations, so the work is both dangerous and physical. Bakutis describes the wild setting overlooking Windward O‘ahu as “the most beautiful office in the world.” It’s serious work, though. Even with the help of a helicopter, they often have to hike for hours to reach their sites. Once there, they collect seed and tissue; they monitor plant development and health; they keep data on every individual plant under their supervision. Every plant has a tag and a number. The numbers are depressingly low.

On one typical afternoon, I took a helicopter ride with them to the crest of the Ko‘olau to check on the status of a population of about twenty Cyanea st. johnii, another member of the haha group. On a previous visit, Bakutis had noticed that these tiny plants were fruiting; now she wanted to see if it was time to collect their seeds.

Because the winds were too high to land safely near the crest, the helicopter dropped us on a small knoll below the site. From there, we hiked a quarter mile up a narrow ridge, thick with stunted ‘ohia, sphagnum moss and ‘uki sedges. At one point, I lost my footing and ended up straddling the ridge, neck deep in the moist ‘ohia. When I reached down to find a handhold, the ridge was only the width of my palm. The drop-off on either side was a couple hundred feet. Nevertheless, Bakutis and Kneubuhl, wearing spiked tabi, made their way confidently along the narrow ridges. At one point, Bakutis walked out on a nearly vertical slope to check the status of one of her haha. In the high wind, she signaled its condition to Kneubuhl by slashing her finger across her throat.

Bakutis had taken the precaution on her last visit to wrap the fruit of these plants in small, green mesh bags. This kept the rats from eating them, or the seeds from dispersing in the wind if the fruit had matured before she had a chance to return. Laying prone in the tall grass surrounding plant number twenty-two, she gently pulled the bag back to check the fruit. No luck. They were still green—there would be nothing to deliver to the seed bank from this trip.

One by one, Bakutis and Kneubuhl surveyed their precious plants, but none were ready to harvest. On one plant, the main stalk had died, leaving only a sucker at its base. And plant number seven, on the windward side of the crest of the Ko‘olaus, had disappeared altogether. Two or three peaks over, the last Cyanea truncata disappeared in the 1990s.

After coming down from the mountains, I asked Bakutis if the work depressed her. Instead, she and Kneubuhl seem to find it heartwarming. Bakutis, a local girl who grew up in Wai‘anae and earned degrees in both botany and Hawaiian Studies at the University of Hawai‘i, says she wishes every Hawaiian kid had the opportunity to see that you can make a living like this. Her enthusiasm reminds me of something Nellie Sugii told me back at Lyon Arboretum. “Sometimes people don’t realize what they have in their own back yard,” she said, gesturing to the tiny plants in her improbable garden. “This is like a dream job. It’s the best thing that ever happened to me.”

 

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Toxic Waste in Paradise

     Photo: iStock

Thirty years after it shut down, the old Gasco site in Iwilei is still a vacant lot. For generations, it converted heavy petroleum into synthetic gas and light oils. Now, its storage tanks, thermal cracker unit and pipelines are long gone and, in their place, is a field of gravel and weeds.

All that remains of the old gasworks is its contamination – a vast underground reservoir of viscous tar and toxic aromatics, like benzene, toluene and ethylbenzene. Indeed, the Gasco site is one of the most contaminated sites in the state, and the technical and legal consequences of that contamination are why the land sat vacant for more than three decades. Even so, three years ago, Weston Solutions, an international environmental engineering company, bought the property – and all the liability that goes with it.

That’s because the four-acre site is prime real estate. It’s near downtown, the harbor, airport, highways and the planned rail line. Weston plans to clean it and redevelop it, but three years after buying the land, Weston’s project still faces technical glitches and regulatory hurdles, and has become a symbol of Hawaii’s contaminated lands problem.

     Operations manager Dave Griffin, left, and Mark Ambler are 
     confident that Weston Solutions’ chemical oxidation process 
     can clean up the old GasCo site in Iwilei. The contaminated 
     property is immediately makai of the Home Depot store.
     Photo: David Croxford

Distribution of toxic sites

Here’s the good news: Hawaii is much less affected by contaminated sites than most Mainland states, according to Fenix Grange, manager of Site Discovery, Assessment and Remediation for the state Department of Health. That’s largely because we haven’t had as many heavy industries as in the Rust Belt or the petrochemical regions of the Gulf Coast. Also, according to Grange, it’s rare for contaminated properties here to sit idle.

“In Hawaii, because land is so valuable, most large, urban properties that have contamination on them get developed anyway,” she says. “People just make the cleanup and control costs part of their redevelopment plans,” Grange says.

Nevertheless, industrial areas like Iwilei, Campbell Industrial Park, Mapunapuna and Kakaako are heavily contaminated, which complicates land sales and development. The main issue, of course, is liability for the required cleanup, which can mean millions of dollars in uncertain expenses.

Beyond these large, well-known industrial sites, there are hundreds of anonymous, smaller sites: dumps, auto-repair shops and old underground tanks at gas stations. Former sugar and pineapple plantations have dozens of contaminated sites that were once used for fertilizer storage or pesticide mixing.

The state Department of Health has investigated more than 1,700 sites of potential contamination, nearly half of which merited further action. “We have about 800 sites in our database that have current or historic contamination that are either still dirty, or were dirty and have been cleaned up,” Grange says.

Joint and several liability

Hawaii’s rules on toxic sites are mostly derived from the U.S. Environmental Protection Agency’s regulations. “In federal law,” Grange says, “liability is ‘joint and several,’ which means anybody associated with the contamination is in the chain of responsibility. The regulators look first to the party that actually caused the contamination. Then they look to the current property owner. But anyone associated with the contamination is in the chain of responsibility.” That means, the current property owner is on the hook, but so is the previous owner.

An excellent example is Weston’s other Oahu project, the old Chem-Wood facility in Campbell Industrial Park. From 1973 to 1988, Chem-Wood, a Campbell Estate tenant, used copper chromate arsenic to pressure-treat lumber there. Campbell sold the property to Chem-Wood in 1989, but, under duress from the EPA to clean up the site, Chem-Wood went bankrupt in 1997, leaving behind tanks of the toxic chemical. In 2008, vandals broke in, spilling 300 pounds of the copper chromate arsenic. Arsenic levels in the soil are now some of the highest in the state.

In the intervening years, other responsible parties have disappeared. The most recent owner, a Japanese businessman who also faced pressure to clean up, walked away from the property, taking haven from the EPA in Japan. His predecessors went bankrupt. But bankruptcy is not an option for the Campbell Estate; its pockets are too deep. Until it sold the site to Weston Solutions, it was stuck with all the liability for the cleanup, even though it hadn’t been the owner of the property for more than 20 years. That’s the principle of “joint and several.”

The uncertainty and risk created by joint and several liability has made it difficult to redevelop parcels that are contaminated – or are even suspected of contamination. As a result, the EPA and state regulators have devised programs intended to ease liability for buyers that want to redevelop a contaminated property. The state’s Voluntary Response Program, for example, provides owners and purchasers with technical assistance, quicker oversight and some relief from future liability.

“With the VRP,” Grange says, “a developer comes in, agrees to characterize a site and take responsibility for the contamination up to a level suitable for their proposed use, and then they’re free from additional liability.” She adds that the liability for the remaining contamination doesn’t simply go away. “That liability stays with whoever caused the contamination in the first place.”

She gives an example from Iwilei: “The site of the Lowe’s store has a bunch of petroleum-contaminated soil from the old ConocoPhillips tank farm. Lowe’s wanted to build its store there, but it didn’t want to assume all of ConocoPhillips’ responsibility. So it entered our VRP and agreed to remediate within the property boundaries to a level that was safe and appropriate to build a commercial store. The VRP leaves the remaining environmental responsibility with ConocoPhillips.”

Probably the most important program for encouraging the redevelopment of contaminated lands has been the federal Brownfields Program. This law, which was mirrored at the state level in 2009, provides many of the same protections as the VRP. “We have about 20 VRP sites in the state,” Grange says. “But with the new Brownfield purchaser law, I think there will be less need for those in the future, because they can get those protections automatically now.”

One of the big differences with the Brownfield Program is its funding options. “Right now, we have what’s being presented as the poster child for Brownfield,” says Mike Yee, one of the principals at the local consulting firm EnviroServices and Training Center. “That’s our East Kapolei site, the pesticide-mixing site and surrounding area in Ewa that the Department of Hawaiian Homelands wants to put homes on.” Through the Brownfield Program, DHHL is funding some of its environmental assessment costs with a $200,000 EPA grant. DHHL is also the first entity to use a $1 million EPA revolving fund administered by the state Department of Business, Economic Development and Tourism. This money can be used for the actual cleanup and paid back after the property has been redeveloped.

“Wow,” says Yee. “What a wonderful way to use federal money: to bring that money into our state to investigate and clean up contaminated sites. It’s good for the developer, good for the state and, ultimately, good for the community – not to mention the environment.”

Weston has created an interesting business model for its Gasco and Chem-Wood projects. Typically, environmental firms are simply consultants or subcontractors; the developer remains liable for the contamination. But Weston bought these properties outright. In effect, Weston has gambled on its expertise in environmental engineering, believing it can purchase properties at a discount, clean them and sell them at a premium. In the interim, though, Weston is the responsible party as far as DOH is concerned. In the lingo of environmental engineers, Weston has bought the liability.

“I’d like to tell you that we’re really smart at this,” says Dave Griffin, Hawaii Operations Manager, “but we have a card up our sleeve: We buy an insurance policy. We engage insurance to underwrite this risk for us, so if we encounter 50 drums of methyl-ethyl that nobody knew about, we can recover some of our expenditures.”

While being the property owner is much riskier, Griffin points out some advantages. To begin with, any upside on the development end of the deal belongs to Weston. And since the company’s cleanup agreement with DOH is based upon the end use for the property, Weston can tailor its cleanup process to a specific function, potentially saving money.

There’s also the method of payment. Although Weston technically “bought” the property from BHP, the details of the contract are more complicated: The seller pays most of the downstream costs. “Instead of billing for hours,” Griffin says, “we get paid up front. So now we’re sitting on that money, drawing interest. Financially, that makes a lot of sense.”

Rick Smith elaborates: “You get paid for everything up front,” he says. “So they (property sellers) pay for the insurance. We don’t pay for that. … The cost of the cleanup, what we actually do in the field, all that’s paid up front. All that’s part of the calculation.” But he notes there’s a lot of prelude before the symphony of cash. “That reward, that big lump of money, doesn’t just stroll in the front door. There’s a lot of work that goes into putting one of these deals together.” In this case, the deal took 18 months to arrange.

“It’s not for the faint of heart,” says Griffin. “The truth is, we’re trying to do the right thing here. By redeveloping this property, we get jobs, we get tax base and we get a more vibrant community out of the deal. That’s our kind of model. Would we like to make some money at the end of the deal? Absolutely. We found a piece of property that’s been sitting vacant for 30 years (the old Gasco site), and it’s right next to the highest-selling Costco in the country. We think we’ve found a little gem here. But, in the end, it’s Weston’s contamination now.”

 

Bankers and Consultants

Although a large, international company like Weston Solutions can afford to self-finance its projects, most local companies interested in redeveloping contaminated property will need a lender. And that’s just the beginning, says Scott Rodie, environmental risk manager at Bank of Hawaii.

“Banks don’t like uncertainty,” says Rodie. “What we try to do, cooperatively with the client, is help them avail themselves of the experts that are out there.”

That means making sure their clients have qualified environmental consultants and appropriate insurance, and that, overall, they know what they’re getting into.

One problem is figuring out if your advisors are knowledgable. “It’s unregulated and unlicensed,” Rodie says. “Under federal law and Hawaii Revised Statutes, there are requirements that you have an ‘environmental professional,’ as defined by the rule, perform a Phase-1 (site investigation). But, again, it’s unlicensed. You have nearly nothing to go after” if they get it wrong.

“So it’s buyer beware,” Rodie says. Or, better yet, listen to your banker.

 

 How Toxic Land is Cleaned

Environmental engineering companies have several ways of cleaning contaminated land, from the most basic method to high-tech solutions.

First, figuring out if there is anything toxic in the ground, what it is and where, can be complicated. Mike Yee, of EnviroServices, elaborates: “How far down does the contamination go? How wide has it spread? What are the actual contaminants and what is the level of the contamination? Then we look at remediation alternatives – what’s the best way to treat it? Normally, there’s not just one way to clean up a site, and there are a lot of factors that go into determining which one you select.”

One option is very basic: dig up the contaminated soil and remove it. Damon Hamura, project manager for EnviroServices, calls it “Bag it and tag it.” With this method, you’re not actually getting rid of the contaminant; you’re just moving it – often to a landfill.

That’s sometimes the only solution, particularly with metals contamination, but it presents its own problems, including moving truckloads of contaminated soil through the neighborhood.

“Sometimes,” Hamura says, “they just put it back on the same site – a kind of reinterment. They dig a pit, put all the contaminated soil in there, then cover it with concrete or asphalt. That’s called ‘encapsulation.’ ”

This is the strategy being used at the Chem-Wood site in Campbell Industrial Park.

When it comes to cleanup options, Hamura says, “Removal is a pretty short list, but when you get to remedial action, it’s a relatively long list. And it’s getting longer as technology grows.” This is particularly true for petroleum-based contaminants, the prevalent form of soil and groundwater pollution in Hawaii. For example, you have various kinds of bioremediation – basically using petroleum-eating microbes, either natural or introduced – to remove the contaminant. This is often combined with sparging, essentially bubbling oxygen through the groundwater to improve the effectiveness of the bacteria.

A more radical approach is thermal desorption. “Basically,” Hamura says, “you’re heating up the soil, trying to burn off the contaminants. But you also need to capture the vapor that’s produced. Usually, you use this method for organic contaminants. If you have a metals issue, that’s not going to do much for you.”

Often, remediation is an ongoing responsibility. Many properties, especially those that have passed through the VRP or Brownfield Program, require “administrative controls.” These controls might forbid digging or strictly limit the use of the property.

The remediation can also be engineered into the new development. In areas with petroleum contamination, like the Lowe’s and Costco sites in Iwilei, this probably involves the installation of a vapor barrier and a vapor extraction system.

Weston plans a more aggressive approach with the tar and benzene at the Gasco site. “We’re proposing to use in situ chemical oxidation,” says David Griffin, Weston’s operations manager in Hawaii. “That’s pumping 40,000 gallons of diluted industrial-grade hydrogen peroxide into the ground. That treats the contamination. (The byproducts are carbon dioxide and water.) Plus, it destroys the contaminants in place, so we’re not bringing them to the surface, putting them in trucks and hauling them through the local neighborhoods.” This drives the benzene out of the groundwater to a ventilation system on the surface, where it’s burned off. “Then, we do a monitoring program to make sure we’re meeting the levels we signed up for,” Griffin says.

This system is not without risks. Last September, the flame arrester failed on the thermal oxidizer – basically a big furnace – and the resulting backflash caused an explosion in the PVC ventilation system, which ignited a small fire in a benzene vent. No one was hurt, but the fire department arrived in HazMat gear and took two hours and 200,000 gallons of water to put out the tiny fire. Nevertheless, Weston is confident in its system – early tests suggest it’s already lowered the benzene level 60 percent – and only awaits Department of Health approval to expand from the current test grid to the whole site.

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Hawaiian Electric Transformers

BY DENNIS HOLLIER

     From left: Lynne Unemori, Darcy Endo-Omoto, 
     Tayne Sekimura and Dave Waller 
     Photos: Rae Huo

“You can’t run an operational company like this without leadership that’s experienced in operational issues,” says Robbie Alm, executive vice president for Hawaiian Electric Co. “That’s not me. That was never going to be me.”

Alm isn’t being modest. He’s trying to explain the origins of the Clean Energy Team, a small cadre of company engineers, planners and policy wonks who are behind the greatest corporate transformation the Islands have seen in decades. The changes began two years ago, Alm says. That’s when the utility signed the historic Hawaii Clean Energy Initiative (HCEI) with the governor, and agreed to some audacious goals, including a legal commitment that, by 2030, 40 percent of its power generation would come from renewable energy.

It was the technological, structural and regulatory challenges of meeting these goals that gave birth to the Clean Energy Team. But Alm believes that the leaders of this group, 10 mid-level managers and young vice presidents, will lead the company far into the future. He also believes one of them is likely to be its next CEO.

A Top 250 Leader

Hawaiian Electric Industries – parent company of the electric utilities HECO, MECO and HELCO, and American Savings Bank – has been in the first, second or third spot on the Top 250 since 1990. In the 1980s, the parent company always ranked fourth or fifth.

 How it Started

In the years leading up to the Clean Energy Initiative, HECO (along with its Neighbor Island partners, MECO and HELCO) found itself increasingly beleaguered. Its public image had been battered by a series of highly publicized conflicts over issues like the construction of transmission lines on Waahila Ridge and the expansion of power plants at Kahe and Keahole. There was also a sense among the public that the company’s existing clean-energy programs were just empty gestures. “The company found itself in fairly unhappy straits,” Alm says. “The editorial writers were against us, the Legislature wasn’t happy about us, and the environmental and historic preservation groups were against us.”

The company also had built-in financial problems. As HECO chair Connie Lau points out, the company’s efficiency programs and changes in technology meant that even when the economy was expanding, and costs increasing, sales declined steadily. In fact, net revenues have declined in each of the last six years. And, as Lau notes, although the company is allowed by statute to earn 10 percent profits, by 2008 they had fallen below 4 percent.

“If you look at the late 1990s,” says Alm, “we were kind of booming. By the 2000s, though, the economy’s not doing so well. The stock market took that tech dive, interest rates went way down, and we hadn’t been in for a rate case in quite awhile. Financially, the company was challenged. And we weren’t helped at all by being so unpopular with the public. People used words like ‘arrogant,’ ‘monolithic’ and ‘oil-addicted’ to describe us.

“And then, Linda Lingle comes in,” Alm adds, “and she clearly doesn’t like us. If you go back and read her speeches, particularly those leading up to the 2006 legislative session, we were sort of public enemy No. 1. Again, it was our addiction to oil and unwillingness to change.” It wasn’t just idle complaining; the Lingle administration was clearly taking Hawaii’s dependence on fossil fuels seriously. “So, in the 2006 legislative session,” Alm says, “she had those big bills to alter the playing field. And a lot of it passed.”

Maurice Kaya, the former state energy administrator and one of the original authors of the HCEI, points out that some of those laws were transformational. “One,” he says, “was the recognition that the efficiency programs, which were run by the electric utility, were sort of the fox guarding the henhouse. So that was taken away from them. In that same context, we were able to convince the Legislature that there was really no business motivation for the utility to change their ways and get off oil.” In short, Kaya paints a picture of a company financially and structurally unprepared for a clean energy future. It was hard to avoid the perception that the 109-year-old utility was in decline.

So in 2007, when Kaya and Bill Parks, the Department of Energy official who helped write the HCEI, came to Alm with a proposal to radically transform the state’s energy system, it’s not surprising that the utility was interested. In the fall of 2008, after its due diligence, Hawaiian Electric signed on. All that was left was the execution.

     Dan Giovanni (left) and Robert YoungOperations Team

Operations Team

The nuts and bolts of utility work are in operations. That’s what happens in the big power plants, on the vast networks of transmission lines, on the distribution grids that feed electricity to the customer, and in the master control room that oversees it all. Operations is also usually the lair of the most conservative, risk-averse engineers.

At HECO, though, operations is a hotbed of experimentation. It’s the crucible for the schemes and analyses of planners. It’s where the formulations of policy makers and regulators are put to the test. It’s also the site of a remarkable little research and development program into the use of biofuels in traditional steam generators. It’s a good thing, too, because renewable biofuels are a critical part of the company’s clean-energy plans, and it’s hard to see any of those plans without the strong support of operations.

Dan Giovanni
Age:
 62
Title: Manager, Generation Department

 

Clean-Energy Responsibilities: Conducting R&D and developing operational plans to convert HECO’s existing fleet of generators to use biofuels.

“The devil’s in the details,” says Giovanni, explaining some of the difficulties of converting from fossil fuels to biofuel. “It means a lot more than asking: ‘What’s the price?’ ‘Does it meet sustainability criteria?’ ‘Can we get it here in time and in volume?’ Those are the simple questions.” The more important questions, at least for an operations guy like Giovanni, are the technical ones. “ ‘How will it behave once we commit to it operationally within our infrastructure?’ ”

Giovanni is leading the utility’s own little R&D program into that question. “We’re going to take one of our largest and most important generating units and operate it for a month on biofuels – 30 days, 24/7. It’s a $12 million test: $5 million worth of equipment, $5 million worth of biofuel, and about $2 million worth of experts from around the world to do the testing and analysis. They’ll look at the environmental impacts, the combustion impacts, the thermal and performance impacts, and the fuel stability question. There’s no shortage of technical questions. But I can tell you this: Six months from now, our team will be the most informed people in the world on how to use biofuels in a conventional steam power plant.”

Robert Young
Age: 
55
Title: Manager, Systems Operations

 

Clean-Energy Responsibilities: Run the operations center so the grid can reliably incorporate the most renewable energy possible.

Part of the idea of the Clean Energy Team is the inclusion of operations guys like Young and Giovanni in the mix. Like all the engineers on the team, they have a fundamental grasp of the tension inherent between adding more and more intermittent energy sources, like wind and solar, and maintaining inexpensive, reliable power for customers.

“There’s this conflict,” Young says. “We have to protect the system, but we know that if we don’t do anything, eventually we’ll be subject to higher and higher fuel prices that will drive the cost of electricity up.” He points out that this tension chaffs the fundamental conservatism of engineers.

“Being in operations, I’d like to see more stable resources,” he says. Like Giovanni, he sees biofuels as a critical part of dealing with the intermittency of most renewables. “The fallback really is that some generation sources have to burn some form of fuel. Biofuel is a way to get off crude oil.” And Giovanni’s research program has provided him some hope for clean energy.

“In the beginning, there was a pretty high level of anxiety for us engineers,” he says. “The unknown is always daunting. But, from the operating side, as we’re working through things, the comfort level is getting better.”

The Planners

For nearly 100 years, the basic model of an electric-power utility has been relatively simple: Produce electricity in power plants and send it to customers through transmission and distribution lines owned by the utility. If customers need more electricity, fire up another generator. If demand drops, reduce production. This model fit well with the physics of electricity, which require that production and demand move in unison.

But the clean-energy future is less predictable. It’s going to include generation, like wind and solar power, that can’t be fired up at will, and won’t be controlled by the utility anyway. The same opacity will apply to customers as well, many of whom will generate some of their own power. This intermittent, unpredictable power is the bugbear for modern utility engineers, whose principal objective is to produce reliable, high-quality power for their customers.

Some of the key players on the Clean Energy Team are the planners who struggle to cope with this conundrum. It’s their job to design the systems and acquire the resources that will allow the company to integrate ever more renewable energy sources onto the grid without the customer – that’s you and me – even noticing.

Colton Ching
Age:
 43
Title: Manager, Corporate Planning

Clean-Energy Responsibilities: Long-range planning to ensure the company has the generation, transmission and program resources to meet its renewable-energy goals and maintain reliability.

“My group has a hodge-podge of responsibilities,” Ching says. “Part if it is internally focused: We do strategic planning for the company. That includes a lot of internal reporting and risk assessment. But the other half of my department is externally focused: planning – we’re talking 20-year planning – related to long-term use of resources in the system. What are our future needs going to be for transmission? For new generation? What kinds of new demand-side management programs should be deployed? And, most important, how would those resources work together so that we can develop some long-range plans to serve our customers?”

Ching describes how the work of his group dovetails with the work of Leon Roose and Scott Seu, the other key planners on the Clean Energy Team. “I’m going to oversimplify this, but the real focus of Leon’s group is to look at the integration of these new resources on our grid, to look at the math, science and actual day-to-day, minute-to-minute, second-to-second type of solutions to answer the question of how you connect a large wind farm or a lot of PV (photovoltaic solar) power to the grid. How do you make use of their energy, but maintain reliability to the customer. It’s very technical, very focused on shorter time frames.

“My planners look at a broader time scale – from an hours perspective up to a multiyear perspective. And because our time frames are so different, the tools that we use and the analyses we perform are very different. But Leon and his folks and me and my folks, we’re literally joined at the hip. Because we have to look at all these time scales when we plan our system.”

Ching also notes that members of the Clean Energy Team have a responsibility to help change the culture within the company. “Aside from the technical, operational and planning things that all of us are tasked with, we have to affect that sort of change in the rest of the employees as well. We’re the saints that have to spread that gospel.”

Leon Roose
Age:
 44
Title: Manager, System Integration Department

Clean-Energy Responsibilities: Analyzes the potential effects of integrating new renewable-energy sources into the grid, and develops implementation strategies using technologies like the interisland cable, smart grid and advanced metering systems.

Roose’s role on the Clean Energy Team is to figure out what it will take to add new, renewable generation to the system. That turns out to be much more complicated than it seems. “Some people think: ‘It’s a small island system; it must be simple,’ ” Roose says. “But it’s completely the opposite. When you’re a small grid, the physics of electricity are actually more complex, because it’s easier to upset the grid when a small disturbance happens.” It’s his job to make sure that doesn’t happen.

It helps that over the years he’s held most of the planning positions in the company. Now, with systems integration, he is responsible for transmission planning and generation planning. “And I’ve added to those functions the planning for what we call our distribution grid,” he says. “Which means I’m responsible for system protection. That’s how we put in relays and other things on our lines so, when you have a problem, it protects the equipment as well as the public.” These kinds of devices and strategies are also going to be a big part of the smart grid, he says, and that’s the real future of integrating the dramatic amounts of renewables on the grid.

Scott Seu
Age: 44
Title: Manager, Resource Acquisition Department

Clean-Energy Responsibilities: Using tools like power-purchase agreements and feed-in tariffs to negotiate and purchase as much renewable energy as possible.
 

If it’s Roose’s job to figure out how to integrate renewable energy sources onto the grid, it’s Seu’s to actually go out and buy it. That means everything from putting out the requests for proposals and negotiating the power-purchase agreements, to actually administering the contracts. It’s a remarkable commitment to clean energy. “People say ‘seamless,’ ” Seu jokes, “But we’ve still got a few seams to work on.”

In many ways, the leading edge of the clean-energy future is the relationship between the utility and the independent wind farms and photovoltaic arrays and other renewable-energy sources that the HCEI envisions. As Seu points out, feed-in tariffs will help to formalize that relationship, and he’s been a key member of the negotiations on the docket now before the PUC. “As we got into details,” he says, “it quickly became about much more than just distribution issues. It got into talking about all the details of how you develop contracts for renewable-energy resources.”

After all, one of the principal tenets of a feed-in tariff is that the price of these new sources should no longer be tied to the price of oil. “So what should be the appropriate price?” Seu asks. “We want to come up with a fare that will be fair to the developer and pay them a reasonable profit. Yet, at the same time, all that is going to be paid by our customers.”

His point, though, is clear: “I don’t think we’re ever going to build a brand new fossil-fuel power plant again.”

Ron Cox
Age: 53
Title: Manager, Energy Solutions Department

Clean-Energy Responsibilities: Help customers minimize energy use and reduce their bills through programs like demand-side management and the application of advanced technologies.

 Although renewable-energy sources, like solar, wind and biofuels, may seem sexy, in the short term, conservation and greater efficiency will likely play a greater role in helping the state reach its clean-energy goals. It’s Cox’s role to expand and reinforce programs like Energy Scout that help customers reduce the energy they need from HECO.

But like many on the team, Cox brings a breadth of experience that’s invaluable in the group’s customary give and take. He came to the utility after a career in the nuclear Navy. “My first year with the company, I was in operations doing strategic planning,” he says. Then he moved into power purchasing and fuel contracts, including going through the regulatory approval process for critical issues, like biofuels. In fact, this expansion of responsibilities gets to the heart of the Clean Energy Team, Cox says. “This is just the recognition that we needed to make some organizational changes. Today, we literally have three managers doing what I used to do. One manager does nothing but buy biofuels, another manager does traditional fuels and another does power purchase contracts.”

According to Cox, this is a sign of the company’s commitment to clean energy “We’re out there on the leading – sometimes bleeding – edge of trying to implement change. For example, I don’t think any other state has set a target of 40 percent renewables as early as 2030.”

Public Face of Change

Of course, careful planning and resourceful operations are essential to the company meeting its clean-energy goals. But they’re not sufficient. The ambitions enshrined in the HCEI will require a partnership between the utility and the community. It means going out and engaging the public. It means accounting for people’s skepticism and managing their expectations. And it means focusing on customers and service as much as technology and policy.

In some ways, this perspective is built into all parts of the Clean Energy Team. Operations and planners, for example, are already obsessed with reliability and customer service programs. But the team also includes members whose principal focus is how the company’s clean-energy plans impact public and customer relations.

Lynne Unemori
Age: 50
Title: Vice President, Corporate Relations

Clean-Energy Responsibilities: Communicate the company’s green objectives, to both employees and the public.

Unemori points out that there’s both an internal and external aspect to communicating the company’s clean energy goals. Internally, she says, it’s important that employees realize these goals aren’t just window dressing; they represent the utility’s future. “It’s critical to make sure they understand our mission, our vision of what the goals are, how we’re going to stay focused. Most important: making it clear that every employee has a role to play in our future.” Unemori also acknowledges that the company has to communicate that same sense of conviction and commitment to a skeptical public.

That public – the ratepayers and taxpayers who will ultimately underwrite the goals of the HCEI – has to know they have a stake in the process. “Another key message,” Unemori says, “One, I think isn’t always easy – is that we have to make investments in order to harvest this energy, to get the infrastructure in place, to be able to reliably include renewables. This investment will come with a price tag, too. But, if you look at it in a bigger context, it makes a lot of sense.”

Dave Waller
Age: 61
Title: Vice President, Customer Service

Clean-Energy Responsibilities: Ensure that the company’s clean-energy programs, like demand-side management or net metering, operate seamlessly for customers.

Waller, who had an earlier career in the petroleum industry, brings a unique perspective to the team. Ultimately, he says, clean energy, like anything else the company does, has to benefit the customer. “Really, to affect all the change that we’re looking for, the customer plays a very important role in that process. What we really want to do is make sure that, in every product, every service, every interaction with the customer, we execute that with clean energy in mind.”

Although it’s tempting to envision the work of the Clean Energy Team in a technological or regulatory framework, Waller notes, “The effects and the work of clean energy really don’t happen until they happen in the customer’s place of business or at the customer’s home.”

Regulatory Dance

In large measure, the future of the utility is in the hands of the Public Utilities Commission. Its shape will be decided through an unprecedented welter of dockets before the commission. The most important – the feed-in tariff and decoupling – which the commission has already agreed to in principle, represent revolutionary changes in the way the company does business. The feed-in tariff will encourage the development of ever more renewable power by establishing in advance the price the utility will pay independent producers. Decoupling removes the perverse incentive to sell more, not less power. It does this by decoupling the company’s income from sales; instead, the company will be rewarded for encouraging conservation and adopting more renewable-energy sources.

Of course, that’s the theory. But figuring out the details of these regulatory changes is the primary responsibility of a couple of members of the Clean Energy Team. In fact, the regulatory framework is so important that almost every member of the team has participated in planning and negotiating the PUC’s final ruling.

Darcy Endo-Omoto
Age: 46
Title: Vice President, Government and Community Affairs

Clean-Energy Responsibilities: Work with the Public Utilities Commission and Hawaii’s consumer advocate to develop a sound, clean-energy regulatory structure.

As a regulated utility, none of HECO’s ambitious plans can happen without the approval of the PUC. That’s the bailiwick of Endo-Omoto. “When you put the whole puzzle together, I have the regulatory part,” she says. “I’m also responsible for government relations, which is the liaison between us and the Legislature, the (state) administration, the City Council and the federal side. Also under my area: We do all community relations – neighborhood boards, etc.”

“I think we have to take these aggressive steps, not only because of what state law requires of us in terms of our renewable portfolio standards, but also because of what I can see happening on a national level with respect to climate change and global warming.”

Tayne Sekimura
Age: 48
Title: Senior Vice President and Chief Financial Officer

Clean-Energy Responsibilities: Ensure that clean-energy plans, especially decoupling and feed-in tariffs, leave the company on a sound financial footing.

For regulated industries like HECO, it’s sometimes easy to forget they’re publicly traded companies that still have to make a profit for their investors. As CFO, Sekimura’s role on the team is largely to ensure that, in the rush to meet the company’s clean-energy goals, they don’t lose sight of those basic corporate responsibilities. “I’ve still got to be able to recover costs,” she says. “I can’t give away the candy store.”

The clean-energy agreement inevitably will mean new structures, new financial models for the company. But, as Sekimura notes, they still have to make economic sense. “It’s my job, as financial steward of this company, to make sure, when we go down these paths, that it’s not devastating from a financial standpoint,” she says. It’s a perspective that colors how she negotiates issues like decoupling and feed-in tariffs. “These are not just financial instruments for the sake of increasing profits,” she says. “They’re really the underpinnings of a financially healthy utility that’s able to do these new things and, at the same time, be a supplier of reliable electric power.”

 

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The Billion Dollar Gamble: State Investment

BY DENNIS HOLLIER

Photo: istockphoto.com

What a difference a billion dollars makes.

Until recently, the state treasury – officially, the Treasury Management Branch of the Financial Administration Division of the Department of Budget and Finance – has operated in relative obscurity. With its staff of seven or eight employees, the treasury acts as cash manager for the state government. Its primary responsibility is to make sure the state always has enough cash reserves to meet its ongoing obligations: payroll, debt service, pension contributions, etc.

The treasury also manages the day-to-day investment of so-called excess funds: monies collected, but not yet spent, by state agencies. As it happens, that’s a lot of money – more than $3 billion at last count. Even so, these investments are hardly sexy, consisting mostly of safe, low-yield, highly liquid instruments like U.S Treasury securities, Federal Agency securities, collateralized CDs and something called SLARS, student loan auction rate securities. In other words: boring, boring, boring.

Then, in February 2008, the market for those auction rate securities collapsed. Overnight, the state’s $1 billion investment in SLARS ceased to be either safe or liquid. And suddenly, the treasury didn’t seem so boring after all.

Where the money goes

So, where did it go wrong? Georgina Kawamura, director of the Department of Budget and Finance, and the official state treasurer, describes treasury operations as a juggling act. “Here’s the day,” she says. “We get daily reports from the banks to let us know our ‘checking account’ balance. We also know, on a daily basis, what investments will mature.” These figures, combined with information about payments that will go out, constitute the calculus of the day’s excess funds, the funds available for investment. This begins yet another juggling act.

For the most part, treasury investments are scheduled to mature around large payments. Scott Kami, administrator of the Financial Administration Division (FAD), which oversees day-to-day operations of the treasury, gives the example of payday. Payroll, he says, averages about $8 million per pay period. “Normally, we schedule about half of that to mature on Friday, and the other half to mature on the following Monday. Because, historically, that’s how the checks clear.”

Armed with that information, treasury accountants can now contact brokers, banks and other financial institutions to find investment opportunities. In this way, the treasury’s responsibilities of cash management and investing are always intertwined. Every debt obligation and every dollar of excess cash must be meticulously tracked because, as Kawamura points out, “All the money is invested. All of it is earning interest.”

And yet, in a scathing report on the Department of Budget and Finance released in March, state auditor Marion Higa turns most of these mundane details on their head. For example, the treasury uses an almost indecipherable, handwritten, color-coded monthly calendar to monitor its investments. It calculates excess cash from manually prepared worksheets rather than electronic spreadsheets like Excel. And it deals with brokers through a decidedly informal system of e-mail and faxes.

Still worse, Higa says, is the treasury’s lack of oversight. The report notes that the FAD failed to prepare and review bank reconciliations, failed to produce a monthly investment report, and routinely allowed investment classes to exceed their statutory limits. In her view, it was this lax supervision that allowed the SLARS calamity. When the independent accounting firm Accuity conducted the state’s fiscal year 2008 certified annual financial report, it also said flawed internal controls led to the SLARS purchase. In her report, Higa points out that treasury staff never even saw the offering documents for these investments. Those documents clearly state many of the risks pertaining to SLARS.

The state uses a handwritten monthly calendar to monitor the
treasury’s $3 billion portfolio.

What Are SLARS?

Auction rate securities are basically debt instruments consisting of bundles of securities – in this case, student loans. The interest rates are set through periodic auctions: sellers offer securities at the lowest rate they’re willing to accept; buyers indicate the highest rate they’re willing to pay and how many they want to buy at that rate. This process is designed to determine the lowest interest rate at which all available shares of a security can be sold at par. This is called the clearing rate, and it serves as the interest rate for that entire issue of SLARS until the next auction. In the event an auction fails, the rate is set based on a pre-established relationship to some benchmark, usually the London Interbank Offered Rate, or LIBOR. Naturally, brokers assure buyers that auctions never fail.

To be fair, these auctions appeared to work efficiently for more than 20 years. And because the auctions usually happened every seven, 28 or 35 days, investors like the state treasury could treat SLARS as liquid investments, even though the underlying securities might not mature for 35 years. But sustaining that liquidity meant that all the available SLARS had to sell at every auction. That didn’t always happen, but the underwriting broker quietly bought enough to keep the auction from failing. Between auctions, brokers often tried to unload these securities on their customers.

Nevertheless, in 2007, when the financial markets began to implode, these securities began to accumulate on the wire-houses’ books, and brokers regarded them nervously. They encouraged their sales divisions to push ARS aggressively, even though insiders knew the auctions were becoming tenuous. Another sign of some distress in the market was the steady increase in interest rates, which, in the case of SLARS, eventually reached 7.35 percent (compared with 2.07 percent for two-year CDs.) For most investors, higher interest rates reflect higher risk. And yet, in the six months leading up to the market failure, the Hawaii treasury’s holdings in SLARS went from $427 million to over $1 billion, and from just 14 percent of the state’s portfolio to nearly 30 percent.

Of course, the state of Hawaii wasn’t the only investor surprised by the failure of the ARS market. Thousands of individuals and hundreds of institutional investors were caught off guard. A diverse group of government entities – states, counties, water-district boards, et al. – now found themselves stuck with these now long-term investments. Although most individual investors eventually recouped their investments through settlements with the wire houses that underwrote the auctions and government regulators, institutional investors have been obliged to write down their ARS as part of the “mark to market” standards of generally accepted accounting practices. In the summer of 2008, for example, the state acknowledged a $114 million impairment on its certified annual financial report as a result of its SLARS holdings. Though Hawaii may have the largest holdings, it hasn’t taken the worst blow. Jefferson County, Ala., is verging on bankruptcy due to the failure of the auctions.

Closer to home, Maui County found itself stuck with more than $30 million in SLARS when the market crashed. Like the state, Maui seems to have relied on assurances by a broker, in this case, Merrill Lynch, that these were highly liquid securities. Also like the state, Maui invested heavily in SLARS in the months leading up to the market failure.

Different Responses

Despite the similarities between Maui and the state, there have been striking differences in how they responded to the SLARS debacle. For example, the state continues to defend its investment. “The one thing that gets lost in this whole discussion about ARS,” says Scott Kami, “is that the securities themselves are very sound investments. There hasn’t been any default on them, and we continue to get all our interest paid when it comes due.” Moreover, he says, the yield on the state’s ARS, approximately 1.9 percent, is higher than that earned by the state’s other investments. He points out the yield on 30-day CDs is almost zero.

Kawamura takes another tack. “I think people have put too much emphasis on the write-down,” she says. “Everyone thinks we’ve lost money. We have not.” She acknowledges that accounting principles required the state to estimate an impairment on its SLARS holdings. She also admits that if the state were to sell its holdings today, it would likely incur an additional $250 million loss. But Kawamura views these as purely paper losses. “That’s assuming that you’re going to sell,” she says. “Of course, we haven’t sold, and we don’t intend to.”

But Maui County treasurer Suzanne Doodan is not convinced by the state’s arguments. “I spouted those same lines for the first few months,” she says. “But these are no longer short-term instruments; you have to compare them to 30-year investments.” So, while the state’s 1.9 percent yields on SLARS may look good compared to current rates for bank repos or short-term CDs, they’re low even compared to the 4.75 percent yield on a 30-year U.S. Treasury note. SLARS might have been attractive as short-term investments, but they are liabilities as long-term investments.

This difference in perspective led Maui to pursue a different strategy than the state. This January, the Maui County filed a federal lawsuit against Merrill Lynch, the broker that sold them the SLARS. (To see Maui’s lawsuit filing, click here to download the PDF file.) Like other institutional investors around the country, Maui alleges Merrill sold SLARS as “cash equivalents” even though it knew, or should have known, these investments were unsuitable for Maui’s needs.

The state declines to discuss whether it’s pursuing legal action related to SLARS. “We’re obviously letting our attorneys take care of reviewing our options,” says Kawamura. Tung Chan, commissioner of securities at the Department of Commerce and Consumer Affairs, acknowledges receiving complaints “against these companies – Citi and Merrill – related to ARS.” DCCA policy, though, is not to disclose the name of the complainant. It remains to be seen if the state, in steadfastly defending its investment in SLARS, has lost its opportunity for legal recourse.

“I wonder if they missed the date to file,” Doodan says. “I think it’s a two-year statute of limitations.”

A Better Way

There are other important differences between Maui and the state, according to Doodan. “To my knowledge, the state has only used two brokers for years and years and years,” she says. “In contrast, we go out to at least five, six, seven, eight brokers. And every few years, we go out and solicit new brokers.” It’s also interesting, she notes, that, while Maui has suspended doing business with Merrill, the state continues to use the same broker who sold them the SLARS as bond underwriters. (This same broker, Pete Thompson, of Morgan Stanley Smith Barney, played a key role in persuading the Legislature in 1998 to add SLARS to the list of acceptable investments for the state treasury.)

There is another difference between Maui and the state. To coordinate its investments and cash-management obligations, Maui uses sophisticated, Web-based software called QED. This program was specifically designed for treasury operations and automates many basic functions of a treasury. It continuously updates the status of investments, including the current value of securities. It also provides templates for more than 600 different reports, most of which can be produced almost instantaneously. This ease of reporting simplifies the supervision and oversight of the county treasury. That’s probably why more than 40 states and thousands of counties and smaller government entities use QED.

For its part, the state relies upon a software program called Microsoft Dynamics, which is primarily a program for enterprise solutions or customer contact management. Although it has been adapted to be used for financial purposes, it doesn’t address many of the specific needs of a state treasury. As one expert put it, “This is like hunting an elephant with a shotgun.” This may help explain the treasury’s failure to routinely produce the reports called for by its own investment policies. It may also explain why the state’s investment activities are largely tracked on manual worksheets or even handwritten calendars.

Most state treasuries are far more transparent and seem to sustain much more oversight than Hawaii’s. New Mexico – an apt comparison with Hawaii because of its population of 2 million people and treasury of about $5 billion – offers an excellent model for an efficiently run treasury. “I can tell you,” says chief investment officer Sheila Duffy, “we have a lot of oversight in New Mexico. And we like it.”

Structurally, that oversight takes the form of two standing committees. The Treasury Investment Committee, Duffy says, consists of treasury officials and two securities experts from private industry. The other oversight group, the Board of Finance, supervises the broader activities of the state treasury, which corresponds roughly with Hawaii’s Department of Budget and Finance. Neither group is passive.

“We have a once-a-month report, a book really, that we deliver to the Treasury Committee” and to Board of Finance, Duffy says. This substantial report – produced automatically using QED software – summarizes the treasury’s existing investments, including asset details, yields, and trends compared to a benchmark. These reports and the minutes from committee meetings are available on the treasury’s Web site, along with numerous other reports and resources. In contrast, although Hawaii’s state treasury policy requires monthly status reports for the director of the Department of Budget and Finance, this report hasn’t been prepared since 2007, according to the state auditor. Moreover, there’s no outside authority to review such a report.

The Cure

How can Hawaii improve its often informally structured, poorly supervised and cloistered state treasury? And what can we do about its extraordinary burden of SLARS?

As for the auction rate securities, the answer may be nothing. “For now, our liquidity issue is covered,” says Kawamura, by which she means that, as the treasury’s longer-term investments mature – and they’re allowed by statute to carry some investments out to five years – these are gradually replaced with the SLARS. And the state seems intent on either holding onto them until maturity – another 35 years, in some cases – or waiting until it’s possible to sell them at par. That might seem farfetched. After all, the allegations of fraud, negligence and collusion that have been leveled at the wire houses have stigmatized SLARS as an investment. But some believe the SLARS market will revive; Kami said as much in his Dec. 27 testimony at the state Legislature. Even Maui County finance director Kalbert Young holds out hope.

“I would point out,” Young says, “since the SLARS market failed in February 2008, there’s been a slow return of activity in this market.” He doesn’t mean the actual resumption of successful auctions – not yet, anyway – but that the underlying securities have started looking increasingly attractive to investors. “We’ve been getting calls from other institutions interested in buying our ARS,” he says. “Not at par, of course, but better than it was. Even Merrill Lynch was willing to purchase some.” Nevertheless, Young says, “we still want to pursue our legal filings.”

Improving Hawaii’s treasury operations may prove easier. It’s simple enough to look to the examples of other states, like New Mexico and New Jersey, that have modernized their treasuries. Software solutions typically come with extensive consulting services and are cost effective. (QED costs less than $100,000 a year, after the initial setup.) But the most important lessons probably come from history.

After the disastrous 1994 bankruptcy of Orange County, when the county treasurer’s wild, unsupervised speculation in risky derivatives cost the county over $2 billion, the California state auditor issued some familiar-sounding recommendations: Have a Board of Supervisors approve the treasury’s investment policies; appoint a committee to oversee investment decisions; require frequent, detailed reports from the treasurer; and establish stricter rules governing the selection of brokers and investment advisers.
Those sound a lot like the recommendations of the Hawaii state auditor. They’re also suspiciously close to the kinds of best practices employed in New Mexico. In other words: boring, boring, boring.

Risky Strategies

State’s mix of risky & safe, traditional investments

CASh

Demand Deposits1
$229,770,000

Cash with Fiscal Agents
$5,980,000

U.S. Unemployment Trust
$265,499,000

Investments

Investments Time Certificates of Deposit2
$618,192,000

U.S. Government Securities
$528,130,000

Student Loan Auction Rate Securities3
$1,006,975,000

Repurchase Agreements4
$1,151,620,000

Total Investments
$3,304,917,000

Total Cash and Investments
$3,806,166,000

1. The state routinely failed to reconcile bank statements. In addition, funds were often left in sub-accounts that did not earn interest.

2. At least five times, the state exceeded the 50 percent limit on CDs from a single issuer.

3. The state’s portfolio of SLARS remains at roughly 30 percent of its total investments.

4. Repurchase agreements exceeded the 70 percent statutory limit in four out of 12 months.

Source: State auditor’s report

 

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Using Lasers to Measure the Wind

BY DENNIS HOLLIER

Chris Sullivan
Program Manager and senior Aerospace Engineer 
Photo: Kevin Blitz, Oceanit

Idea

Engineers used to rely on meteorological towers to measure wind speed. But “met towers” only give you data for one location; they don’t tell you anything about wind velocities around a valley or along a ridge. Wind 3D, a product being developed by Oceanit, creates three-dimensional maps of wind velocities within a radius of three miles.

Technology

Wind 3D uses LIDAR — light detecting and ranging — a laser technology that bounces light off particles in the air, or even off air molecules themselves, to measure wind velocity. “It’s quite mind boggling,” says principal investigator Chris Sullivan. “The design of the system is to get back like one-billionth of the light that you sent out.”

History

LIDAR isn’t new, but Oceanit innovations have created a smaller, cheaper and more reliable package. According to marketing manager Ian Kitajima, Oceanit originally developed LIDAR systems under government contract to help unmanned airplanes drop propaganda leaflets accurately. Later, they used similar technology to measure cloud heights above airports and aircraft carriers.

Market

Oceanit believes the first market for Wind 3D will be wind prospectors who want to correctly site expensive wind turbines. “If you can get 5 percent to 10 percent better efficiency based on the layout, over a 20- or 30-year period, that could be tens of millions of dollars,” Kitajima says.

 

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Roadblocks on the Road to Hawaii’s Smart Grid

BY DENNIS HOLLIER

The Kaheawa wind farm is not being fully used because of 
limitations imposed by an aging power grid on Maui.
Photo: David Croxford

High on a ridge overlooking Maalaea Bay, a small group of students from the Horizons Academy scramble out of vans into the vast open space at the top of the Kaheawa wind farm. They gape for a moment in the brilliant morning light. It’s an impressive sight: the giant white turbines of Kaheawa – 20 in all – standing majestically along the ridge that slopes to the sea, as astonishing as the heads of Easter Island.

“Cool,” says one of the young students.

Noe Kalipi, a spokeswoman for First Wind, the company that built the wind farm, tells the students that each turbine is 168 feet tall. Taken together, the 20 turbines have a capacity of 30 megawatts, or more than 10 percent of Maui’s peak load. That combination of majesty and power capacity makes the Kaheawa wind farm a symbol of the state’s rush to meet the goals of the Hawaii Clean Energy Initiative: 70 percent clean energy and 40 percent renewables by 2030.

Cool, indeed.

But Kaheawa poses as many questions as it answers. How do you integrate variable electricity generation from wind farms and photovoltaic systems into the electrical grid without compromising reliability? How do we pay the enormous cost of modernizing the grid to accommodate these renewables? And how do we monitor and regulate these changes to make sure the grid is ready for the 21st century? Most experts believe that the answer to these questions lies in a collection of new technologies and practices known collectively as the “smart grid.” In fact, Maui Electric Co. (a division of Hawaiian Electric Industries) has joined the Hawaii Renewable Energy Institute, the U.S. Department of Energy, General Electric and a few other partners in a smart grid pilot project in Wailea. But it’s not clear that MECO (or the rest of the state) is fully ready for the smart grid.

How “Smart” Works

There are many definitions of a smart grid. “No two people can agree on what that means,” says Robbie Alm, senior vice president of HECO. But for the purposes of MECO and what they want out of the Wailea pilot project, the smart grid is all about communication. In some cases, that communication empowers consumers with smart meters and advanced metering infrastructure, which let utility customers monitor their energy use in real time. In combination with time-of-use rates, smart meters may reduce peak load on the grid by encouraging consumers to move some of their consumption to off-peak times, when rates are cheaper.

Probably more important is to have more data about the grid itself. “For example,” says Chris Reynolds, MECO’s superintendent of operations, “if we could see that power was being injected into the system from a PV (photovoltaic) system, then we’d know what was going on. Then we could find ways to mitigate that if it should drop off all of the sudden.”

Speaking to Power

It sounds easy enough. The problem is that even the traditional grid – a model that’s nearly 100 years old – is surprisingly complicated. Sure, its basic elements are familiar: a power plant that generates electricity, high-voltage transmission lines that carry the power long distances, substations and transformers that step the voltage down to useful levels, and a network of distribution lines to deliver electricity to the end user. This generic view of the electrical grid makes it seem almost mechanical: add fuel – oil, coal, bagasse – to the hoppers at one end, and 120-volt electricity comes out the wall sockets on the other. In its particulars, though, the grid is complex; more like an organism than a machine, it’s full of fidgets and sensitivity. The utility is constantly monitoring its vital signs, especially frequency and voltage.

Reynolds points out that the pulse of the modern grid throbs at the remarkably consistent frequency of 60 hertz. Maintaining this frequency depends upon a fairly steady balance of power generation and load. If MECO loses a generator, or the wind dies suddenly at Kaheawa, the frequency falters.

Most utilities handle these problems with what’s called “spinning reserve,” having extra generators up and running and ready to come online. “In place of spinning reserve, MECO uses load-shedding,” Reynolds says, basically cutting power to prearranged customers. “At 59.3 hertz, there are some pump leads at HC&S that will come off-line. Below 58.7 hertz, then we’ll start opening up distribution points on our customers.” In other words, a 2 percent drop in frequency can mean localized blackouts. It can also fry customers’ electronics.

The traditional grid has evolved tools to deal with normal fluctuations in load. MECO’s power plant at Maalaea, for example, isn’t just one generator; it’s 21 generators of various sizes and types. They range from small, “fast-start” generators to deal with sudden outages, to enormous combustion turbines that are much more efficient, but take longer to start. An automatic system controls the generators’ output based on variations in load.

These controls work fine for a grid dominated by consistent power, like diesel generators or hydroelectric, but they’re not responsive enough to handle Maui’s increasing suite of wind and PV power. Instead, MECO has to limit renewables.

For example, through a process known as curtailment, the utility routinely dials back power generation at Kaheawa. Sometimes curtailment at the wind farm is partial; sometimes it is 100 percent. Similarly, MECO restricts the installation of PV systems to less than 3 percent of the system’s peak load, or less than 10 percent of the load on any one circuit. Although these strategies run counter to the utility’s own preferences, probably nothing short of a smart grid will ease the restrictions.

Technical Problems

One of the challenges facing MECO’s smart-grid aspirations is an aging infrastructure. Over the past several years, the utility has modernized its systems, particularly by improving its SCADA, the supervisory control and data acquisition system it uses to control critical elements on the grid.

But the utility still has many substations that haven’t been integrated into its SCADA system, and the system has no means to see beyond the substations to monitor the load of its customers (or the production of most independent PV systems). Also, many of MECO’s generators are aging and inefficient – the oldest, a steam generator in the Kahului plant, was first put online in 1947 – meaning MECO’s high-voltage transmission lines carry 69,000 volts in some areas and 23,000 volts in others. These are all challenges on the journey from existing infrastructure to smart grid.

But the greatest technical challenge is isolation. On the Mainland, most local grids are linked to one another in a super-grid. It’s possible, for example, for a customer on the East Coast to buy electricity from a power provider in Texas or even Canada. That’s important because this interconnectedness makes it easier for utilities to provide some of the ancillary services that are essential to an effective electrical system. As Carl Freedman, one of Hawaii’s most respected experts on utility regulation, likes to point out, an electric company provides customers much more than kilowatt-hours of electricity.

“For example,” Freedman says, “they also have to provide reliability,” a quality that includes things like operational and spinning reserves. Operational reserves ensure the grid has the capacity to supply the maximum load. Freedman explains: “If somebody turns on a 1,000 horsepower motor or turns off a 1,000 horsepower motor, operational reserves mean it isn’t going to shut lights off and destabilize the grid.” Spinning reserves, on the other hand, represent the utility’s ability to handle the loss of a generator (or wind on a wind farm). “On Oahu,” he says, “they have a spinning reserve sufficient for the loss of their largest unit. In other words, they would have enough units up and spinning so that they could lose that unit without dropping load.

“Spinning reserves and operational reserves are both identifiable services,” Freedman says, as are basic utility functions like voltage regulation, transmission and power generation. “On the Mainland, there’s a huge market for all this stuff. If you don’t have something, you can go out and get it.” Freedman points out how this simplifies the way a utility operates. “Each utility, for example, needs to carry sufficient capacity – or contracts for capacity – to meet its loads. But they don’t need to provide the emergency capacity of the largest load like we do here, because they can buy that. In fact, they can buy it for free by having a bilateral agreement with somebody else, saying, ‘You cover me, and I’ll cover you.’ ”

This highlights the challenges facing MECO and HECO as they build their smart grids. Because they’re island grids, they’re completely isolated. Freedman notes: “Each one of these systems has to supply all the ancillary services: all the generators, all the reserve capacity, all the reliability. We have to do it all on each system. So, the job of a smart grid here is a tall order.”

Capital Problems

Not all the challenges facing the smart grid are technical. Rebuilding something as complex as the grid – even a small one like MECO – will be fabulously expensive. “As an example,” says Chris Reynolds, “the meter that’s on a typical home costs about $25. For the smart grid demonstration project in Wailea, we’re looking at a cost of about $400 per meter.” He adds that MECO has about 67,000 meters.

Freedman takes an even broader perspective. “According to DBEDT,” he says, “we’re about to spend $16 billion – that’s billion with a ‘B’ – on capitalization for this energy transition.” He notes that, although the goal is to reduce our $7 billion annual expenditure on fossil fuel, that’s still a fantastic upfront investment. “The question is how are we going to capitalize this. This is a major issue for the state that hasn’t been addressed by anyone, really.”

It’s certainly hard to see how the Hawaiian Electric companies can afford it. “I don’t know what we’re counting in the smart grid,” Freedman says, “but if you include the (undersea, interisland) cable, then you’re talking a billion dollars just to hook up Lanai and Molokai. If you’re talking, like the utilities, about hooking up Maui as well, then you’re talking several billion dollars. Well, the whole capitalization of all the electrical infrastructure right now is something on the order of $3 or $4 billion.” Even if, as now seems likely, the state decides to finance the construction of the cable, Freedman points out, ratepayers will have to repay the debt. It’s still a capital liability on the utilities books.

One of the ironies in this smart grid bagatelle is that many of the policy initiatives intended to promote more renewables further aggravate the capital problems for the utility. For example, the financial arrangements that underpin distributed generation – power-purchase agreements, net-energy metering, feed-in tariffs –all appear on the utility’s books as liabilities. Each, after all, is a commitment to purchase power from customers. The feed-in tariff, at least, also shows up on the income side of the books because the customer still buys the same amount of energy as before. With net metering, the customer’s PV output simply rolls his meter backwards, reducing his bill.

Also, most of the utility’s assets – and collateral – traditionally were in its physical plant: generators, power lines, substations. “Looking forward,” Freedman says, “it looks like they’re not going to be increasing generation anymore. The new generation is going to be in renewables, it’s going to be distributed, and loads are going to met by energy efficiency. And none of those things have the utility’s own capitalization.” Hawaiian Electric Industries is publicly traded; it’s hard to see how these changes in capitalization won’t affect the company’s market valuation. “In the long run,” Freedman says, “the utility’s business model is being challenged a little bit by the whole move to renewables.”

A local smart grid is thus far from inevitable, even with Hawaii’s incomparable resources for renewable energy; even with an ambitious agenda for reform in the Hawaii Clean Energy Initiative; and even with a cadre of utilities and citizens committed to the idea of a clean, distributed power generation.

Up at the Kaheawa wind farm, the students from Horizons Academy gather in the scant shade of a giant turbine to pose for a group photograph. Squinting into the late morning sun, the children smile for the camera. It’s supposed to be a picture of Hawaii’s future – the children and the energy that will power their adult lives – but that future is not yet fully in focus.Kaheawa Wind Farm

• Minimum: As little as 6 mph of wind will turn the long, elegant blades of the Kaheawa turbines.

• Maximum: When the wind reaches 55 mph, the blades feather and each turbine stops spinning.

• RPMs: Regardless of the wind speed, the turbines top out at 21 rpm – slow enough for nene to fly through in formation.

• Best wind: At 23 knots, the optimum wind speed, each turbine produces 1.5 megawatts of electricity.

source: first wind inc.

 

P.A.C.E.: Supercharging the Solar-Energy Industry

Many homeowners and businesses want solar energy to lower their electric bills but can’t afford the upfront cost – as much as $25,000 for a standard residential installation. But a new form of funding called PACE – property-assessed clean energy – offers a nearly painless solution.

How PACE Works

People who want to purchase clean-energy technology, such as solar water heating or photovoltaic systems, for their homes or businesses will be able to borrow from a special revolving fund established by the state. In return, they agree to pay the money back (plus interest and administrative costs) through an added assessment on their property taxes. In most scenarios, PACE funding will have no effect on the availability of federal or state tax credits.

How It’s Funded

To establish the PACE revolving fund, the state would issue general-obligation bonds. These would be guaranteed by the incremental increase in property taxes. In theory, PACE shouldn’t add any costs to the state budget. It’s even possible that federal grants would pay for the administrative costs of setting up the program and establishing a certification process.

Who Would Be Eligible?

One of the charms about PACE funding is that it’s tied to the house, not the homeowner’s credit. As long as you can afford to keep up with the property taxes, you would be eligible to borrow money for any qualified clean-energy system. What’s more, when you sell your home or business, the obligation to pay goes with the property. That makes sense, because an investment like a PV system adds value to your home, but is worthless to you when you sell.

Will It Happen Here?

The Sierra Club and Blue Planet Foundation are advocating strongly for PACE. It also enjoys broad support in the Legislature and with Gov. Linda Lingle. Legislation introducing the program, HB 2643, has already passed unanimously in the state House, but it still faces challenges in the Senate and in conference. Advocates such as Sen. Kalani English warn that, given the state’s fiscal troubles, it may take more than one session to pass.

 

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