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+--- Thread: Drill baby drill (/showthread.php?tid=8535)
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Drill baby drill - Bullwinkle - 03-01-2011
Sounds like an expansion of geothermal is on the front burner
http://www.hawaiitribune-herald.com/articles/2011/02/28/local_news/local02.txt
"PGV currently supplies about 17 percent of the Big Island's power needs, Kaleikini said.
It costs PGV between 11 cents and 12 cents to produce each kilowatt-hour of electricity, which it then sells to Hawaii Electric Light Co. for 16 cents based on current oil prices, he said."
comment: End users are billed at 37 cents - not a bad markup
RE: Drill baby drill - mdd7000 - 03-01-2011
Here's a thought:
If PGV didn't have all of the taxes and fees (royalties) to pay, how much cheaper could they produce the electricity? Yes, they actually pay a royalty fee to the state because the state claims they "own the steam". This is despite the fact that PGV returns the steam back into the ground.
"PGV typically pays about $2 million to $3 million a year in royalties – about 10 percent of the company’s revenue. Of that, the state takes 50 percent, Hawaii County gets 30 percent and 20 percent goes to the Office of Hawaiian Affairs."
http://www.hawaiibusiness.com/Hawaii-Business/November-2010/Geothermal-039s-Second-Chance/index.php?cparticle=2&siarticle=1
Looks like everyone has their hand in the cookie jar.
edit:typo.
RE: Drill baby drill - Rob Tucker - 03-01-2011
As things are currently set up by the PUC the cost of production at PGV has little or nothing to do with the price of electricity to the consumer. Cost of production is cost of production. The electric rates are currently tied by the Public Utilities Commission to the cost of petroleum no matter what the source of the electricity is.
So the place that changes can be made to tie the electrical rates to the cost of production (plus overhead and profit plus taxes and royalties) is at the Public Utilities Commission. We need to decouple petroleum spot prices from alternative energy sources and allow the most efficient to compete.
It is not inappropriate for a commercial venture exploiting a public resource to pay royalties and certainly not inappropriate to pay taxes. I pay taxes, you pay taxes, they pay taxes.
RE: Drill baby drill - mdd7000 - 03-01-2011
Rob, taxes on profits - sure. But taxing what is, in effect, water when they put it back?
If their water can be taxed - what about people with wells? Shouldn't they have to pay a royalty for taking water from the state too?
RE: Drill baby drill - Rob Tucker - 03-01-2011
I would guess that if they commercially sell water from a private well they will also pay a tax on that income. If they commercially sell water they no longer have a "private well".
RE: Drill baby drill - mdd7000 - 03-01-2011
quote:Exactly.
Originally posted by Rob Tucker
... We need to decouple petroleum spot prices from alternative energy sources and allow the most efficient to compete....
Many other states allow companies such as PGV to sell electricity, direct to the consumer, paying the company that owns the lines a transmission fee, bypassing the traditional electric company and the other fees. There are even energy companies that don't own any production facilities, that buy electricity in bulk, then resell to individual consumers, using the existing transmission lines.
RE: Drill baby drill - Rob Tucker - 03-01-2011
The petroleum tie in was provided years ago as an incentive to a unique alternative energy development. It seems to have been a successful incentive. I do think that the success of the venture will lead, and is leading, to expansion of alternative energy sources such as geothermal. The state has clearly said so. Hopefully the time is approaching when the petroleum incentive can be abandoned and a reduction in electrical rates will be achieved... and still be profitable for the electrical utilities. The value of local resources versus imported resources is becoming very clear.
RE: Drill baby drill - punaticbychoice - 03-01-2011
Rob, mdd7000, you have located the most serious set of problems limiting
energy self sufficiency of any sort at least here in Hawaii.
We must be more imaginative simply because of where we are, and the very
different set of energy resources that we can use here.
Do you think we could find some useful parallels between the use geothermal
here on this island and Iceland?
RE: Drill baby drill - Rob Tucker - 03-01-2011
There are parallels of course but in examining geothermal development history it becomes very clear that the conditions in Iceland, California, Hawaii, etc. are very different and techniques and technical problems become unique to each environment. What works in Iceland or California may not be the best method here.... that's why Puna Geothermal Venture is in itself a pioneering venture and not just a replication of what and how they do it in Iceland or elsewhere.
RE: Drill baby drill - punaticbychoice - 03-01-2011
That's why I want PGV to have the chance to develop Hawaii appropriate
methods in utilizing the resource here.