FINAL CERTIFICATION OF THE HECO/MECO/HELCO
INTEGRATED RESOURCE PLANNING PROCESS:
CERTIFICATION OF KEY PHASES III, IV AND V
Phase III: Resource Planning Analyses
Phase IV: Development of Action Plans
Phase V: Final Integrated Resource Planning Report
Hawaiian Electric Company, Inc. (HECO)
Maui Electric Company, Ltd. (MECO)
Hawaii Electric Light Company, Inc. (HELCO)
Docket No. 2012-0036
By Carl Freedman, IRP Independent Entity
July 29, 2013
This Final Certification (Final Certification) provides an evaluation of the final three key
phases of the IRP planning process conducted by the HECO, MECO and HELCO utility
companies (HECO Companies). This planning process is the first implementation of IRP
under a revised and revitalized IRP Framework (Framework)1
. In accordance with the
Framework, the Independent Entity (IE) must certify, at specified points in the planning
process, that the planning process is being conducted consistent with the Framework.
The Framework specifies that the IE shall:
certify that the planning process, up to the date of the certification, was
conducted consistent with the framework. Each certification shall include
such information as may be specified by the Commission and shall be
provided to the Commission no later than ten (10) days following the utility's
completion of each of the following key phases; establishment of Scenarios
to be evaluated, establishment of planning assumptions, end of the
analyses resulting in the Resource Plans for the Scenarios, development of
the Action Plan, and filing of the Integrated Resource Planning Report. The
Commission may require a similar certification for other steps in the
process. [Framework III.C.2.b.(6) at page 6]
The HECO Companies filed a Notice of Completion of the first two key phases of the IRP
process with the Commission on December 21, 2012. The IE’s corresponding
Certification of Phases I & II of the HECO/MECO/HELCO IRP Process (Phase I & II
“A Framework for Integrated Resource Planning” dated March 9, 1992, Revised: March 14,
2011 adopted by the Commission by Decision and Order dated March 14, 2011 in Docket No.
Certification), dated December 31, 2012, was timely filed with the Commission on
January 2, 2013.
The HECO Companies filed the final Integrated Resource Planning Report (IRP Report)
with the Commission on June 28, 2013. The filing of the IRP Report marks the
completion of the final three key phases of the IRP process.2
By Order No. 31311, dated June 21, 2013, the Commission amended the IRP process
schedule to provide for an additional IRP Advisory Group meeting, established a
comment period for comments by Advisory Group members and determined that the IE’s
certification of outstanding phases should be provided within ten days of the additional
Advisory Group meeting. By subsequent Order No. 31359, dated July 15, 2013, the
Commission established July 29, 2013 as the filing date for the Final Certification.
SCOPE AND APPROACH FOR THE FINAL CERTIFICATION
The scope of the Final Certification includes all pertinent aspects of all five key phases of
the HECO Companies’ IRP process. The Final Certification is explicitly required to
address the final three key phases of the IRP process: (3) the end of the analyses
resulting in the Resource Plans for the Scenarios, (4) the development of the Action Plan,
and (5) the filing of the Integrated Resource Planning Report. In addition, the Final
Certification provides final evaluation regarding the certification of the provisional findings
of the Phase I & II Certification.
The applicable standards used in the Final Certification include the pertinent sections of
the Framework, notably including whether the “Principal Issues” identified for the IRP
process are meaningfully addressed.3
In particular, the Final Certification examines
The date of completion of each key phase of the IRP process is determined by protocols
established by the IE. After consultation with Commission staff, the IE provided a memorandum
to the HECO Companies by email transmission and posting to the IE web site, Protocols for
Completion of Each Key Phase of the IRP Process, dated November 28, 2012. This
memorandum was provided as an attachment to the IE’s initial certification: Certification of
Phases I & II of the HECO/MECO/HELCO IRP Process, filed with the Commission on December
31, 2012. The protocols established by the IE’s memorandum require the HECO Companies to
provide written notice to the Commission and the IE upon completion of each key phase of the
IRP process. The filing of a Notice of Completion is the basis for determining an exact date of
completion of each key phase of the IRP process.
The HECO Companies did not provide any Notice of Completion regarding completion of
the third or fourth key phases or regarding the filing of the IRP Report. The IE therefore interprets
the filing of the IRP Report to implicitly signify the simultaneous completion of the last three key
phases of the IRP process.
The Framework includes the identification and definition of “the principal issues to be
addressed in the planning process” (Principal Issues) as the first “step” in the Specific Planning
Guidelines. [Framework V.C.1 at page 17]. The HECO Companies have identified the Principal
Issues to be addressed in the IRP process in Chapter 4 of the IRP Report titled: Principal Issues
to Address. The content of the companies’ Chapter, Principal Issues to Address is derived
whether the IRP process was conducted consistent with the Framework, including
whether the IRP Report complies with Framework requirements and whether the Principal
Issues are meaningfully addressed.
The approach taken by the IE to determine compliance with the Framework included
several line by line examinations of the Framework provisions and the identified Principal
Issues. The IE’s findings for each pertinent provision are documented in two later
sections of this Final Certification.
The scope of materials and subject matter examined documenting the IRP process
includes notes and direct experience from all of the Advisory Group meetings,
presentation slides and other materials distributed to the Advisory Group, the IRP Report
including Appendices, as well as supplementary spreadsheets provided by the HECO
Companies documenting the analyses presented in the IRP Report.4
Several clarifications regarding this Final Certification should be noted:
• This Final Certification is not intended to be a comprehensive review of the merits
or accuracy of the analyses, conclusions or content of the IRP Report and Action
Plans. This is an evaluation of compliance with Framework requirements and, as
noted above, determination whether the Principal Issues are meaningfully
addressed. This inevitably includes some evaluation and determinations regarding
the merits of the IRP Report, Action Plans and the supporting analyses. The fact
that the Final Certification addresses some of the merits of subject matter should
not, however, be interpreted as any attempt at a comprehensive effort.
More specifically, the Final Certification does not attempt a comprehensive
evaluation or determination regarding the reasonableness or merits of the various
elements in the HECO Companies’ Action Plans. The Framework and Principal
Issues include several requirements regarding the merits of the Action Plans,
including requirements that the Action Plans must represent a reasonable course
of action, must provide “the greatest value and flexibility across as many of the
evaluated Scenarios and Resource Plans as reasonably practicable”, and must be
supported by meaningful supporting analysis. As far as any comprehensive
treatment, beyond determining compliance with Framework requirements and
addressing the Principal Issues, the Final Certification focuses on whether the
primarily from the language in the Commission’s Order No. 30534: IDENTIFYING ISSUES AND
QUESTIONS FOR THE HAWAIIAN ELECTRIC COMPANIES’ INTEGRATED RESOURCE
PLANNING, dated July 19, 2012 in Docket No. 2012-0036 (Order Identifying Issues and
Questions). There appear to be no intentional differences in meaning between the two
documents. Where there may be incidental differences in meaning, it is understood that the
meaning in the Commission’s Order will be applied.
All written materials distributed to the Advisory Group are documented on a publically
accessible web site (IRPIE.COM) managed by the IE and are ultimately forwarded to the
Commission’s Document Management System.
Action Plans are supported by sufficient, meaningful analysis in accordance with
the more specific requirements and guidance of the Framework and Principal
Issues. The Final Certification does include some probative examination and
evaluation of the merits of the analyses and conclusions in the IRP Report and
Action Plans, but a comprehensive treatment of the merits is not attempted and
would, in any case, require adequate opportunity for discovery and the
participation of interested parties.
• The Final Certification does not attempt to determine the reasonableness or
diligence of the HECO Companies’ efforts to provide a compliant IRP Report and
Action Plans. The Final Certification is a straight-ahead evaluation of compliance
with Framework requirements and Principal Issues (and merits of subject matter to
the extent examined) without regard to whether the requirements are reasonable
or whether there is justifiable cause where shortcomings are identified.
• Although not specifically cited, the Final Certification includes several concerns
identified in comments by Advisory Group members in the final set of Advisory
Group comments (provided as attachments) and comments offered throughout the
IRP process. No attempt is made to characterize or restate all of the comments
provided by the Advisory Group. Omission in the Final Certification does not imply
disagreement with the comments provided. The IE expects that the Commission,
as previously indicated, will review the Advisory Group comments, first hand, with
SUMMARY OF FINDINGS
Several principal findings in this Final Certification are briefly summarized below.
Compliance with each of the pertinent Framework provisions and each of the Principal
Issues is documented in two following sections. As indicated in the later detailed
sections, the IRP Report and Action Plans are compliant with many Framework provisions
and provide substantial analysis addressing the Principal Issues. For purposes of brevity,
the summary of findings below focuses on identified shortcomings of the IRP process,
IRP Report and Action Plans.
The IE cannot certify that the HECO Companies’ planning process was conducted
consistent with the Framework. As explained below, several aspects of the IRP process,
the IRP Report and the Action Plans, are not compliant with specific Framework
requirements and do not meaningfully address several of the Principal Issues.
• The conclusions asserted in the IRP Report, that the HECO Companies can meet
and exceed Renewable Portfolio Standards (RPS) requirements economically, and
that this can be accomplished without inter-island energy transmission are based
on several presumptions that are not supported by analysis or probative
examination in the IRP Report.
o It has not been demonstrated that the extensive amounts of variable
renewable generation assumed in the final resource plans can be
accommodated on the utility systems reliably, without substantial
curtailment and without substantial (and currently unaccounted) costs.
o It has not been demonstrated that the extensive amounts of assumed
distributed renewable generation assumed in the final resource plans can
be interconnected with the utility distribution systems reliably and without
substantial (and currently unaccounted) cost.
o It is not clear and it is not addressed whether the extensive amounts of
economical renewable generation resources assumed on the HECO system
can be sited on the Island of Oahu restricted only by utility system economic
• The rate and bill impacts of the Action Plans are understated and downplayed in
the IRP Report but represent substantial concerns for all of the HECO Company
o Rates and bills for all customer classes for all of the HECO Companies are
projected to increase substantially over the initial five-year Action Plan
o Concerns regarding customer exit in response to higher rates (and further
exacerbation of rate impacts) have not been sufficiently addressed or
dispelled in the IRP Report.
• The IRP process fell substantially behind schedule, contributing, at least in part, to
several shortcomings in the IRP process.
o There was no opportunity for Advisory Group input regarding the
determination of the final resource plans or the formulation of the Action
Plans. The final resource plans and Action Plans were presented for the
first time in the final IRP Report.
o The HECO Companies did not determine, rank or prioritize final resource
plans based on any clear or identified criteria. Criteria were not determined
with input from the Advisory Group as required by the Framework.
o The HECO Companies’ consideration of Advisory Group comments was
o The amount of analysis, progress and work performed by the HECO
Companies in the final weeks of the IRP process was impressive.
Reviewing the resulting amount of new previously un-presented material in
the IRP Report was a challenge for the IE and the Advisory Group. There
was very limited opportunity for clarifications regarding the new material
Addressing the Principal Issues
Discussion regarding the extent to which the IRP Report addresses each of the Principal
Issues is provided in a later section. In many respects the IRP Report provides
meaningful analysis addressing the Principal issues. Several exceptions are summarized
• The consideration of costs and rate impacts in the IRP Report has several
o The HECO Companies did not enlist the participation of the Advisory Group
in determining meaningful methods to measure or present rate impacts (as
o The Companies did not enlist input from the Advisory Group to consider
whether the IRP Report and Action Plans result in affordable energy service
o Except for presentation of several metrics and charts showing bill and rate
impacts, the affordability of energy services is not explicitly or substantially
addressed in the IRP Report.
o Rate and bill impacts presented in the IRP Report are unduly optimistic.
Rate impacts are underestimated in several respects and are presented in a
manner that de-emphasizes concerns.
o The IRP Report does not meaningfully address the concerns expressed in
the Principal Issues regarding rate impacts on “captive” customers “who do
not have a renewable energy device or have implemented energy efficiency
measures could face high cost and rate impacts if utility sales decrease for
any of several possible causes”.
• The IRP Report does not identify the nature, amount or costs of necessary
ancillary services to accommodate the amounts of variable renewable generation
assumed in the final resource plans and Action Plans.
• The net costs and associated rate impacts of implementing the RPS are not
meaningfully determined in the IRP Report. The analyses of the final resource
plans do not include the necessary measures and costs of incorporating the
assumed renewable resources on the utility systems reliably and without
• The analyses of inter-island and inter-utility system transmission in the IRP Report
are indeterminate. Meaningful analysis would require more detailed modeling and
appropriate analysis design and assumptions.
• Substantial benefits of smart-grid implementation are identified in the IRP Report
but the required analyses of costs and benefits are not provided.
• Meaningful analysis of strategies to comply with environmental air quality
regulations is provided. Further analysis is required regarding consideration of
generation unit retirement options and analysis of several substantial uncertainties.
• The analysis of energy efficiency measures and programs in the IRP Report is
o No specific energy efficiency measures or programs are being identified,
characterized or analyzed. Simplified generalizing assumptions are used to
characterize the merits of alternate intensities of energy efficiency
implementation and attainment of the EEPS.
o Although analysis demonstrates that increased implementation of energy
efficiency programs substantially lowers total customer costs, the
Companies’ conclusions regarding further program implementation focus
negatively on rate impacts.
• It is not clear that the Action Plans represent “the greatest value and flexibility
across as many of the evaluated Scenarios and Resource Plans as reasonably
practicable” or necessarily represent a reasonable course of action.
o As discussed in several sections of this Final Certification, several aspects
of the Action Plan are not supported by sufficient meaningful analysis. The
Action Plans (and the IRP Report more generally) do not present an overall
well-analyzed, robust course of action based on clearly laid out supporting
plans and alternate plans.
o There is no explicit analysis that demonstrates how the Action Plans are
optimal or represent greatest value.
o It is not explained and it is not clear whether or how the formulation of the
Action Plans and determination of the final resource plans were determined
based on the identified planning objectives.
• It is not clear that the Action Plans provide substantial value in providing context
and framing for later incremental decisions, based on the best and current
available information. The Action Plans do not identify how, when or by what
criteria decisions between the possible alternate preferred, contingency, parallel or
secondary plans will be made.
IRP Framework Requirements
To the extent not addressed in the general issues or regarding the Principal Issues
above, compliance with several Framework requirements is summarized below:
• The HECO Companies’ consideration of advisory group input generally was not
exemplary but was minimally compliant.
• The HECO Companies did not determine, rank or prioritize final resource plans
based on any clear or identified criteria. Criteria were not determined with input
from the Advisory Group as required by the Framework. The IRP Report does not
identify whether or how the planning objectives and metrics were used to formulate
or determine the final resource plans.
• It is not clear and it is not described how the Action Plans were formulated. It is
not clear whether or how the planning objectives were utilized in formulating the
• Generally, the IRP Report fails to consistently identify and describe uncertainties in
assumptions and weaknesses in analysis methods.
• The scope of resource options considered and analyzed in the process does not
include “all appropriate, available, and feasible resource options”.
o Several resource options, including resource options identified in previous
IRP plans, by advisory group members and/or listed in the Framework are
not explicitly included in the resource options characterized for analysis.
o Resource options were not screened (as required) based on any of the
specific screening criteria identified in the Framework or according to other
criteria established with input of the advisory group.
• The IRP Report does not evaluate customer-sited distributed generation strategies.
It remains unaddressed what investments in utility system infrastructure or
expenditures towards mitigating system operating protocols are sufficient and
justified to accommodate additional variable renewable distributed generation
o Customer-sited distributed generation was considered in the analyses only
as an assumption, as a subtractive component in the demand forecasts in
the planning scenarios. This approach does not produce meaningful
evaluation of the merits or detriments of distributed generation resources.
o The system upgrades and associated costs necessary to effectively
interconnect distributed generation have not been identified or included in
the analyses of the final resource plans or projections of rate impacts.
• The costs of providing the ancillary services necessary to accommodate additional
variable generation resources will be evaluated, either in absolute terms or in
terms of comparing alternate means to provide necessary ancillary services.
Uncertainty Regarding the Feasibility and Cost of the Final Resource Plans
The HECO Companies’ Action Plans for the HECO, HELCO and MECO systems are
based on four final resource plans, including a preferred plan, a contingency plan, a
parallel plan and a secondary plan (final resource plans). Each of the final resource plans
assumes large penetrations of economical variable renewable energy resources.
Three overall conclusions asserted in the HECO Companies’ IRP Report are: (1) that the
Companies can meet and exceed Renewable Portfolio Standard (RPS) requirements, (2)
that this can be accomplished economically and (3) that this can be accomplished without
need for inter-island undersea energy transmission.
These conclusions are based upon at least three foundational presumptions: (1) that it is
feasible to accommodate the extensive amounts of variable renewable generation
assumed in the final resource plans for each utility system reliably, without substantial
costs and without substantial curtailment, (2) that the extensive amounts of assumed
distributed renewable generation can be interconnected with the utility distribution
systems without substantial cost and (3) that the extensive amounts of economical
renewable generation resources assumed on the HECO system can be sited on the
Island of Oahu restricted only by utility system economic criteria.
As discussed in more detail in three sections below, none of these presumptions is
supported by analysis or probative examination in the IRP Report. Although it is possible
that the assumed amounts of renewable generation might ultimately be sited and feasibly
incorporated in the utility systems as presumed, this is far from certain and is subject to
reasonable doubt. It is certain, however, that in order to site and accommodate the
assumed amounts of renewable generation without substantial curtailment, substantial
system operation and infrastructure improvements would be necessary that are yet
unidentified and would incur costs that are not accounted for in the final resource plans or
projections of rate impacts in the IRP Report. In this respect, the costs and rate impacts
associated with the final resource plans and Action Plans are understated.
The uncertainties regarding the conclusions in the IRP Report cited above need to be
more clearly explained and need to be considered by Hawaii’s decision makers. Before
the Legislature raises the RPS requirements based on the findings of the IRP Report (as
has already been publicly suggested) the conditional nature of the Report’s conclusions
should be well understood. In decisions regarding any approvals of the Action Plans
proposed in the IRP Report, the Commission should carefully consider the uncertainties
and limitations in the nature and scope of supporting analysis.
Feasibility and Cost of Accommodating Extensive Variable Renewable Generation.
The final resource plans for the HECO, HELCO and MECO Maui Island systems include
extensive amounts of variable renewable generation resources. The inclusion of these
resources in the final resource plans is the basis for meeting (and exceeding) the RPS
requirements economically in the supporting analyses.
Table A. This table, prepared by the IE, shows the amounts of variable renewable
generation nameplate capacity assumed in each of the final resource plans for the HECO,
HELCO and MECO Maui Island systems along with the amounts of variable generation
assumed in several scenarios of the Hawaii Solar Integration Study, Final Technical
Report for Oahu, dated December 7, 2012 and Final Technical Report for Maui, dated
December 19, 2012.
The magnitudes of assumed variable generation assumed on these utility systems
(shown on Table A. above) are extreme and unprecedented. On the HECO utility
system, for example, at the end of the planning period (in the year 2033) the final
resource plans include a range of 1099 MW to 1309 MW of variable renewable
generation capacity. This is a very large proportion of the 1334 MW peak system
demand projected for that year. The proportions of variable generation assumed for the
MECO system are more extreme, substantially exceeding annual peak demand for each
of the final resource plans.
As characterized by the HECO Companies at the July 10, 2013 Advisory Group meeting,
accommodating the assumed amount of variable renewable generation is “a new frontier”
that has not yet been figured out. There is essentially no examination or discussion in the
IRP Report regarding whether it is feasible to operate the mix of resources presumed in
the final resource plans in the later years of the planning period. This challenge certainly
has not been addressed in the analyses supporting the IRP Report.5
analyses of the resource plans, final resource plans and Action Plans do not appear to
produce credible or accurate results regarding the incorporation of variable renewable
generation in several important respects.
(1) The supporting analyses appear to substantially underestimate the expected amount
of curtailment of variable renewable generation. For the HECO system, for example, the
amount of curtailment of variable renewable resources reported and accounted in the
analyses of the final resource plans is zero. This is not a credible result, and is not
consistent with actual experience on the existing utility systems6
or the findings of several
recent more detailed studies, including the Hawaii Solar Integration Study (HSIS) for the
HECO and MECO Maui Island systems.7
These studies include substantially more
detailed modeling of variable generation on the utility systems than the analyses
presented in the IRP Report. The HSIS for HECO and MECO indicate that substantial
curtailment of variable renewable generation would occur assuming amounts of variable
generation substantially lower that what is assumed in the final resource plans.8
The Companies confirmed at the July 10, 2013 Advisory Group meeting that the development
of the IRP Report did not include an examination of the daily load patterns for utility generation
resources expected in the later parts of the planning period.
Both the MECO and HELCO systems currently experience curtailment due to excess
generation conditions regularly at proportions of variable generation much lower than what is
assumed in the final resource plans.
These studies are described generally in the IRP Report at p. 8-7 and pp. 8-11 to 8-12.
For the one scenario considered in the HSIS for the HECO system that approximates the
amount of solar variable generation assumed in the final resource plans (over 700 MW) the
amount of predicted daytime curtailment exceeds 200 MW. (HSIS Scenario 4A, shown on Table
The underestimation of curtailment by the Strategist model can be at least partly
explained by the fact that it does not realistically simulate the pronounced and
unprecedented bimodal daily pattern of loads that would need to be served by the utility
generation system in the later years of the planning period in the final resource plans.9
The Strategist model, as configured in the analyses of the resource plans, final resource
plans and Action Plans, is not sensitive to the sequence of hourly loads and is blind to the
bimodal daily pattern of utility generation requirements.10
assumptions, including assumptions regarding cycling of utility generation units, are not
realistically simulated in the model. Since the model does not differentiate between low
daytime loads and low nighttime loads, the units that are assumed to cycle daily are
essentially modeled as if they cycle twice daily. It is true that utility generation units would
need to ramp up and down for two cycles daily to accommodate the mix of resources
assumed in the final resource plans, but it is not expected and it is probably not feasible
for some cycling units, particularly baseload units converted to cycling duty, to cycle two
Said another way, the Strategist model does not sufficiently constrain the simulation of
utility system operation in daytime hours to accurately reflect expected generation unit
operation constraints. This results in underestimating excess generation conditions,
underestimation of renewable generation curtailment, and underestimation of utility
system operation costs. These inaccuracies affect the costs, rate impacts and attainment
of the RPS that are presented in the IRP Report for the final resource plans and Action
(2) The analyses in the IRP Report do not sufficiently account for the system operation
needs and necessary ancillary services to accommodate the extensive amounts of
The planning and supporting analyses in the IRP Report do not consider or account for the
fairly extreme bi-modal nature of the pattern of daily loads that will need to be served by utility
generation resources later in the planning period (and throughout the remainder of the study
period). On the HECO system, for example, over 700 MW of solar generation is assumed in later
years of the planning period that would lower daytime utility system generation requirements to
levels that are substantially lower (about half) of existing or projected night time minimum loads.
Contributions of wind generation would add further random extremity to the daily pattern of utility
generation load requirements. On the MECO and HELCO systems, the solar generation
component of variable renewable generation is proportionately smaller but the larger proportion of
assumed wind resources would produce more extreme, albeit less regular, utility generation load
Configuration of the model to consider daily subperiods could improve results. Analysis of at
least several resource plans, using a sequential hourly or sub-hourly dispatch model to examine
resource commitment, dispatch and curtailment issues, demonstrate system operation feasibility
and provide production cost benchmarking, would be appropriate.
For the HECO system, the simulated benefits of allowing the Kahe units 1, 2, 3 and 4 to cycle,
as assumed in the final resource plans, are substantially overestimated.
variable renewable generation on the utility systems. This results in several substantial
First, the costs of operating the utility system are methodically underestimated. The
analyses of the resource plans do not identify the necessary supporting ancillary needs,
do not assume any proxy or assessment of costs to provide supporting ancillary needs
and do not make any realistic assessment of resulting renewable energy curtailments.
The spinning reserve margins assumed in the analyses are not realistic or sufficient
proxies for the operating or other costs that would be necessary to accommodate the
assumed amounts of variable renewable generation.
Second, the analysis and determination of the most economical and appropriate firm
resources in the IRP Report does not sufficiently consider the ability of some firm
resources to economically provide necessary ancillary services. The analyses do not
account for the fact that the operation of the utility systems in the later parts of the
planning period in the final resource plans would be substantially different from current
operations. The current concept and role of baseload generation in the operation of the
utility systems in the later parts of the planning period would be substantially eclipsed by
the needs for utility generation cycling and ramping in a pronounced bimodal daily load
pattern. In this context, the evaluation of the ability of utility generation resources to
effectively and economically provide ancillary services should be a primary consideration
in the determination of the most appropriate firm generation resources. As discussed
above, the Strategist model does not accurately account for the nature of expected future
system operation needs.
The analyses supporting the IRP Report should not be considered sufficient to support
any conclusions that further investments in combustion turbine technologies (including
conversion of the CT-1 unit on the HECO system to a combined cycle unit) are
appropriate for the utility system generation needs in the later years of the planning
period. Other resources characterized in the IRP would appear to be more appropriate
for the expected system operations in the later years of the planning period. The internal
combustion engine (ICE) resources, for example, provide superior quick-start, ramping
and substantially more economical spinning reserve capabilities than combustion turbine
units. These ancillary attributes have not been sufficiently or appropriately accounted for
in the analyses supporting the resource plans, final resource plans and Action Plans.
Prior to any determination of prudence for investments in combustion turbine technologies
there should be a more thorough examination of the utility system needs, considering
expected penetrations of renewable resources, and using appropriate modeling tools and
Feasibility and Cost of Interconnecting Extensive Distributed Generation
Large amounts of renewable distributed generation (DG) are presumed in each of the
final resource plans. Although distribution-system-level constraints are known and
acknowledged in the IRP Report and are currently being experienced on the HECO
Companies’ systems with much lower levels of DG penetration, there is no evaluation or
discussion regarding whether or how the presumed amounts of DG could be
accommodated on the utility systems. The distribution system infrastructure costs of
accommodating the presumed amounts of DG are not explicitly identified and are not
included in the characterization of the final resource plans or Action Plans.
Feasibility of Siting Extensive Renewable Generation on the Island of Oahu
The IRP Report concludes that inter-island transmission of energy is not necessary to
meet and exceed RPS requirements. This presumes that extensive amounts of
renewable generation can be sited on the Island of Oahu. The IRP Report does not
examine or evaluate associated siting or transmission restrictions, public acceptance
issues or, generally, whether the installation of the presumed amounts of renewable
resources on Oahu is feasible.
Without addressing the question of feasibility of “on-island” renewable resource
implementation, it is not possible to reach a final determination regarding the question:
Whether inter-island transmission is necessary to meet RPS requirements? The
determination of feasibility is also necessary to address the more comprehensively
framed question that is a principal subject for examination in the IRP process: Whether
inter-island transmission investments are necessary or prudent to meet RPS
requirements and best serve public interests?
The IRP Report suggests that decisions regarding whether an inter-island cable system is
required or economic can be answered by “going to the market” by issuing one or more
RFP’s. It is not clear, however, how this approach will answer necessary questions about
the amount of renewable generation resources that are likely to become available over a
long-term planning period. Responses to an RFP may certainly provide valuable and
ultimately necessary information regarding the price and current availability of on-island
renewable generation options. The amount of renewable generation that might be
available over the long-term, considering projects that might be available in the future and
perhaps ultimately supported by appropriate transmission system and infrastructure
support, will not be determined by responses to an instant RFP.
The “take-it-to-the-market” approach may be an important part of obtaining valuable
information on current resource availability and pricing, but it is not a substitute or
alternative to long term resource planning. One purpose of resource planning is to frame
subsequent resource acquisition decisions in the context of overall integrated system
needs considered over a long term time frame. The objective is to ensure that later
discrete incremental resource acquisition decisions can be made in a meaningful context.
Is a proposed resource a necessary part of a well-considered integrated plan to meet
system and customer needs?
Whether extensive amounts of renewable generation could be installed on Oahu is a
problematic uncertainty. A reasonable approach for long range planning regarding this
matter might include investigation of possible outcomes considering known constraints,
assessment of probabilities (if possible), consideration of measures to mitigate constraints
and evaluation of the relative costs and values of alternate outcomes.
An important consideration would be whether acquisition of projects in the near term
might eclipse more economical opportunities that could develop with integrated inter-utility
transmission. For example, HECO’s analysis of the economics of inter-island
transmission is based on the amount of economically produced energy (or capacity) that
can optimally be transferred between islands. If “space” on either utility grid is limited by
sub-optimal projects, the overall economics of inter-connection of utility systems is
affected. An incremental take-it-to-the-market approach may not produce an optimal long
term result. Any such long-range determinations, however, require careful planning
analysis and forward-looking estimates of the economics and feasibility of siting
renewable generation projects. This is not easy, but it is long range planning.
The IRP Report is simply silent on how or whether any determination was explicitly made
that sufficient cost-effective resources can be sited on the Island of Oahu, in making the
determination that Hawaii can meet and exceed RPS requirements without inter-island
transmission of energy.
OBSERVATIONS REGARDING THE IRP PROCESS
Framing Breadth and Purpose
In the most general terms, there seems to be a difference between how the HECO
Companies interpreted and implemented the purpose of the IRP process and a broader
purpose and scope of issues and questions framed by the Commission in its Order
Identifying Issues and Questions. The issues and questions identified by the Commission
encompass the development of information to inform several important over-arching
policy questions, including: the affordability of utility rates; the costs of meeting the State
Renewable Portfolio Standards (RPS) and Energy Efficiency Portfolio Standards (EEPS);
the prudence of substantial investments in transmission and fuel supply infrastructure,
assessment of the need and economics of possible inter-island transmission systems,
and analysis of investments and alternatives to facilitate the incorporation of variable
renewable generation technologies. The scope of the HECO Companies’ analyses
seems to be more narrowly focused within the bounds of a work plan and approach using
a specific scenario planning approach and a specific resource analysis model (Strategist)
to analyze resource planning issues.
The HECO Companies have been resistant to supplementing the work plan and approach
that the Companies originally presented at the very beginning of the planning process
prior to the identification of the Principal Issues. Early in the process it was pointed out to
the Companies that the particular scenario planning process approach adopted by the
Companies was time consuming and added problematic complexity. It was also stressed
that the Strategist model would not cover the full scope of the necessary analysis of the
Principal Issues and that other types of analysis would be necessary. At an Advisory
Group technical session on October 30, 2012, it was agreed (but only after several hours
of encouragement and argument by the IE and advisory group) that the Companies would
perform some basic limited analysis of energy efficiency implementation and would do
some supplementary studies in addition to and parallel with the Strategist model.
Beginning with the first presentation of the resource plan analyses at the April 2, 2013
Advisory Group meeting and with the final filing of the IRP report on June 28, 2013, it
became clear that the scope of analyses remains primarily limited to the scope of what
issues can be addressed using the Strategist model. The hopefully anticipated added
depth and scope of the expected supplementary studies was not realized, and several of
the Principal Issues remain unaddressed.
IRP Process Schedule
The IRP process schedule ran substantially behind schedule, particularly beginning with
the analyses of the resource plans.
In the original IRP process schedule filed with the Commission by the HECO Companies
on May 30, 2012, the initial presentation of preliminary results of the resource plan
analysis was scheduled for a January 2013 Advisory Group meeting. A second Advisory
Group meeting was scheduled for March 2013 to review analysis results and obtain
Advisory Group feedback. At the encouragement of the IE, an additional Advisory Group
meeting date was scheduled for February 2013 to allow additional opportunity for
Advisory Group review and consideration of Advisory Group input.
In January 2013, the HECO Companies reported to the IE that the resource analyses had
not progressed sufficiently to provide useful information. Consequently, the January 2013
Advisory Group meeting was cancelled. In February 2013 it was again reported that
preliminary results of the resource plan analyses were not available for presentation. The
agenda of the February 25, 2013 Advisory Group meeting was adjusted to include only a
brief report by the HECO Companies regarding the amended schedule and the status of
progress on the resource plan analyses. The bulk of the February 2013 Advisory Group
meeting was dedicated to discussion regarding improving the characterization of
qualitative metrics. In March 2013 it was again determined that preliminary results of the
resource analyses would not be ready to present by the time of the March 2013 Advisory
Group meeting. The Advisory Group meeting was postponed and rescheduled on April 2,
At the April 2, 2013 Advisory Group meeting the preliminary results of resource analyses
were first presented in “raw” form without explanatory or interpretive documentation.
Additional resource plan analyses were presented by the Companies at a technical
session on April 8, 2013. An additional technical session was held on April 22, 2013 to
provide explanation and clarifications regarding the analyses.
At the Advisory Group meeting on May 1, 2013 the HECO Companies provided a
projected slide presentation explaining how the resource analyses addressed the
identified Principal Issues. Several more-recent resource plan analyses were presented
in the form of projected slides.
The Companies first presented material regarding the Action Plans at the Advisory Group
meeting on May 30, 2013 in the form of presentation slides that explained a conceptual
outline of the draft Action Plans. The Action Plans and the final resource plans (including
the preferred plan, contingency plan, parallel plan and secondary plan) were first provided
in the final IRP Report filed on June 28, 2013.
As a result of the delayed schedule, the three-month period originally scheduled for
review of the analyses of resource plans and iterative consideration of Advisory Group
comments was compressed into a few weeks late in the IRP process. There was no
opportunity for Advisory Group input regarding the determination of the final resource
plans or the formulation of the Action Plans. Perhaps also because of the delayed
schedule, the HECO Companies did not determine, rank or prioritize final resource plans
based on any determined with input from the Advisory Group as required by the
Framework. Clearly the compressed schedule at the end of the IRP process did not allow
for adequate consideration or response to Advisory Group comments.
The amount of analysis, progress and work performed by the HECO Companies in the
final weeks of the IRP process was impressive. Reviewing the resulting amount of new
previously un-presented material in the IRP Report, however, was a challenge for the IE
and the Advisory Group. There has been very limited opportunity for clarifications
regarding the substantial volume of new material presented in the IRP Report.
COMPLIANCE WITH SPECIFIC FRAMEWORK PROVISIONS
The Framework includes several sections and provisions that are not directly relevant to
evaluating the IRP process, Action Plans or the IRP Report. A subset of the Framework
provisions is listed below with several sections and some language removed that either do
not specify certifiable standards or are not do not otherwise pertain to the Final Certification.
Framework provisions are in bold italic type.
The definitions in the Framework are being applied consistently in the IRP process.
II. Goal and Governing Principles
B. Governing Principles (Statements of Policy)
1. The development of Scenarios, Resource Plans and the Action Plan is the
responsibility of each utility. The utility shall develop Resource Plans and an
Action Plan in consultation with Advisory Group(s), the public, and the
Independent Entity, subject to the oversight and approval of the
The HECO Companies developed Scenarios and Resource Plans “in consultation” with
the Advisory Group with oversight by the IE. The Action Plans, however, were first
presented in the IRP Report filed on June 28, 2013 and were not developed with
consultation or any other form of input from the Advisory Group, the public or the IE.
The IRP process and IRP Report are not in full compliance with this Framework provision.
2. Resource Plans and the Action Plan shall comport with applicable federal,
state, and county laws, formally adopted state and county plans, and other
applicable administrative and regulatory requirements.
As far as yet determined, the Action Plans appear to comport with this provision in the
sense that there is no explicit intent to not comply with the noted applicable laws, plans or
Several resource plans are analyzed that represent strategies that are not compliant with
State Renewable Portfolio Standards (RPS), Energy Efficiency Portfolio Standards
(EEPS), or anticipated air quality regulations. These non-compliant resource plans are
formulated for purposes of analysis, not implementation.
The HECO Companies have chosen the “Stuck in the Middle” scenario as a primary basis
for characterizing and presenting several attributes of its Action Plans. The Stuck in the
Middle scenario presumes that EEPS standards will not be met (assuming 75%
compliance). It does not seem to be the intent of the Action Plans to fail to meet the
EEPS requirements, but the final resource plans (preferred plans, contingency plans,
parallel plans and secondary plans) for all of the utilities are characterized as failing to
meet the EEPS requirements.
3. Resource Plans and the Action Plan shall be developed upon consideration
and analyses of the short and long-term costs, effectiveness, benefits, and
risks of all appropriate, available, and feasible resource options and the
adequacy and reliability of energy services.
The scope of resource options considered by the HECO Companies does not include “all
appropriate, available, and feasible resource options”. Several resource options are
identified in the Framework, Principal Issues and by advisory group members that are not
characterized by the companies for analysis and that could be considered appropriate,
available and feasible. This is discussed in more detail below in the context of more-
specific language in the Framework at section V.C.6.
The IRP Report is not in compliance with this Framework provision.
4. Resource Plans and the Action Plan shall consider the plans' impacts on the
utility's customers, the environment, culture, community lifestyles, the
State's economy, and society.
The IRP Report identifies a spectrum of potential impacts on the utilities’ customers, the
environment, culture, community lifestyles, the State’s economy and society.12
It is not
clear, however, whether, how or to what extent most of these impacts were considered in
the analyses of resource plans, selection of the final plans (preferred, contingency,
parallel and secondary plans) or the formulation of the Action Plans. The IRP Report
includes substantial analysis and some discussion of some impacts, such as costs and
“fairness”, but there is no presentation, description or discussion in the IRP Report
regarding how most of the identified impacts addressed by this governing principle were
considered in the selection of the final plans or formulation of the Action Plans. The
Action Plans do not include elements to address most of the identified impacts.
5. Resource Plans and the Action Plan shall consider the utility's financial
integrity, available sources of capital, ownership structure, size, and physical
The resource plans and Action Plans take into account the utility characteristics identified
in this governing principle.
6. Integrated resource planning shall, where appropriate and applicable,
consider governmentally established energy policies in effect at that time.
The IRP process is compliant with this governing principle.
7. Integrated resource planning shall be an open and transparent public
process that provides opportunities for public participation and feedback
and creates broad-based awareness of the complex and sometimes
See in particular Chapter 3: Objectives and Metrics and Chapter 17: Advisory Group
Qualitative Metrics Considerations.
conflicting objectives and issues the utility and the Commission must
The IRP process is being conducted as an open process that is consistent with this
principal. Consistent with the Framework provisions, an advisory group has been
established with meetings that are open to attendance by the general public with
oversight by the IE. Provisions have been made to encourage and document comments.
The HECO Companies held two series of public meetings including meetings on each of
the affected islands.
In the later stages of the IRP process, due at least in part to time constraints resulting
from the utilities getting behind schedule, the development of the final resource plans and
Action Plan were less open and transparent than the earlier phases of the process and
there was very limited opportunity for public participation, awareness and feedback.
8. Integrated resource planning shall be focused on planning analyses across
a range of Scenarios to guide the utility in developing a reasonable and
prudent Action Plan.
Scenarios were developed and used for planning analyses consistent with this principle.
9. Integrated resource planning shall consider generation, transmission and
distribution infrastructure requirements and associate[d] capital and
operating costs, including operational changes, grid upgrades, system
capacity additions or replacements, and technological advances.
The IRP process and resource planning analyses included the considerations listed in this
principle with the exception that: some distribution infrastructure requirements and some
necessary operational changes (and associated capital and operating costs) were not
considered in the resource plan analyses supporting the Action Plans.
The Framework identifies roles and, in some cases, specific duties in several sections
pertaining to the Commission, Utility, Independent Entity, Consumer Advocate, Public
Benefit Fee Administrator, Advisory Group and the Public. Except as noted with regard to
other Framework requirements, the process was conducted consistent with the Framework
provisions in this section.
IV. The Planning Process
A. Major Steps
B. The Planning Cycle
C. The Docket
6. If time permits, the utility may conduct public meetings or provide public
forums at various phases of its integrated resource planning process for the
purpose of obtaining the input of those in the public who are not or may not
be represented by a member of, or the interests of a member of, the Advisory
The HECO Companies were compliant with this non-mandatory provision . The HECO
Companies held two series of public meetings with meetings on each of the affected
islands (and three meetings on the Island of Hawaii) in each series.
7. Unless extended for excusable neglect by Commission order, the utility
shall file its Integrated Resource Planning Report and associated Action Plan
within one year after the selection of the Advisory Group(s) by the
Commission. To encourage public awareness of the filing of the utility's
proposed Action Plan, a copy of the Action Plan and the supporting analyses
shall be made available for public review at the Commission's office and to
the extent applicable, at the office of the Commission's representative in the
county serviced by the utility. The utility shall also post electronic copies of
the Action Plan and the supporting analyses online on its website. The
utility shall note the availability of the documents for public review at these
locations in its published notice. During the pendency of the docket, the
utility shall make copies of the executive summary of the Action Plan
available to the general public, upon request, at no cost, except the cost of
The HECO Companies filed the IRP Report within one year after the selection of the
Advisory Group by the Commission.
8. Within seven (7) days of the filing of its Integrated Resource Planning
Report, the utility shall cause to be published in a newspaper of general
circulation in the State a notice informing the general public that the utility
has filed its Integrated Resource Planning Report and proposed Action Plan
for the Commission's approval.
The HECO Companies published the required notice on July 7, 2013 (nine days after the
filing of its IRP Report on June 28, 2013).
D. Submissions to the Commission
1. The utility shall file its Integrated Resource Planning Report as follows.
a. The utility shall include in its filing a full and detailed description of
the key phases of its integrated resource planning process. The utility
shall fully describe, as applicable:
(1) The planning objectives and principal issues that have been
used and considered to provide guidance or be the basis for
decisions made in the integrated resource planning process.
The HECO Companies’ IRP Report is compliant with this provision.
(2) The Scenarios developed to reflect possible futures dealing
with uncertain circumstances and risks facing the utility and its
customers, which were used as the basis for the Resource
Plans analyzed, including the rationale used to select and
formulate the various Scenarios.
The HECO Companies’ IRP Report is compliant with this provision.
(3) The assumptions and the basis of the assumptions underlying
the Scenarios and Resource Plans, and the key drivers of
uncertainty that may have a significant impact on the
The HECO Companies’ IRP Report is compliant with this provision.
(4) The risks, trends, expected events (if any), and uncertainties
associated with the Scenarios and Resource Plans.
The HECO Companies’ IRP Report is only partially compliant with this provision.
Generally, the IRP Report does not consistently identify and describe uncertainties
in assumptions and weaknesses in analytical methods. This includes some major
uncertainties and many details, only some of which are identified in this Final
Certification. As noted elsewhere in this Final Certification, for example, several
crucial fundamental uncertainties regarding the resource plans have not been
identified or described. These include uncertainties regarding whether and how
the extensive amounts of renewable resources assumed in the final resource plans
can be accommodated reliably on each utility system and whether the amount of
renewable resources assumed on the HECO system can feasibly be sited on the
Island of Oahu.
(5) The forecasts made and any assumptions underlying the
The HECO Companies’ IRP Report is compliant with this provision.
(6) The resource options or mix of resource options considered in
the development of the Resource Plans for the Scenarios.
The HECO Companies’ IRP Report is only partially compliant with this provision.
See discussion regarding provision V.C.6, below.
(7) The needs of the utility system, such as identification of supply-
side or transmission additions. The proposed procurement
method for resources should be identified.
The HECO Companies’ IRP Report is only partially compliant with this provision.
See discussion regarding provision IV.D.1.a.(4) above. The needs and of the utility
system to accommodate the presumed amount of variable renewable generation in
the final resource plans is not identified or fully discussed.
(8) A detailed description of the analysis or analyses upon which
the Resource Plans and Action Plan are based, the data, the
source of the data, and the methodologies used, which may
include without limitation: revenue requirement calculations,
estimates of the potential impact of the plans on rates, bills and
customer energy use, external costs, identification of the risks
and benefits, renewable portfolio standards and energy
efficiency portfolio standards compliance, reliability impacts,
and sensitivity analysis.
The HECO Companies’ IRP Report is only partially compliant with this provision.
See discussion regarding provision IV.D.1.(4) above. Sensitivity analyses
appropriate to address many uncertainties have not been provided or discussed.
b. The utility shall include in its filing a full and detailed description of
the Action Plan, which shall fully describe, among other things:
(1) An implementation schedule that shows the resources,
programs, actions, or phases of resources, programs, or actions
to be implemented in each of the five (5) years of the Action
The IRP Report is generally compliant with this provision. As noted in the final
comments provided by the Consumer Advocate, the level of granularity of detail
provided in the Action Plan is not consistent between utilities and within the Action
Plans of each utility. The costs and scheduling of some Action Plan elements are
identified in much greater detail than other elements. As a general matter, the
nature and scope of any approval of an Action Plan by the Commission should be
clarified including clarification regarding the nature of approval of details provided
or omitted from the Action Plans.
(2) The estimated expenditures required by the utility to support
implementation of each option or phase of such option.
See discussion of provision IV.D.1.b(1) immediately above.
(3) The steps anticipated in order to realize and implement the
supply-side and demand-side resources included in the
See discussion of provision IV.D.1.b(1) immediately above.
(4) How the Action Plan was developed based on the Resource
Plans and Scenarios analyzed.
One substantial shortcoming in the HECO Companies’ IRP process is ambiguity
regarding how the Action Plans were developed based on the analyses of the
resource plans or planning objectives developed and presented earlier in the
The Action Plans were first described, in general prospective terms, in presentation
slides at a meeting of the Advisory Group on May 30, 2013. The Action Plans
were first disclosed in the filing of the IRP Report on June, 28, 2013. The IRP
Report includes some description of how some aspects of the Action Plans were
developed and some deductions can be inferred from the text and analysis details.
Several important ambiguities remain that are not described.
For example, the Action Plans are formulated and organized around four
objectives that were first presented at the May 30, 2013 Advisory Group meeting.13
It is not clear and it was not explained how these four principal objectives were
related to or derived from the objectives and metrics established earlier in the
process with input from the Advisory Group.14
With the exception of some isolated
citations to the planning objectives regarding specific details, the IRP Report does
not discuss how the Action Plans were derived using the planning objectives
identified earlier in the IRP process.
Each of the Action Plans is founded upon four final resource plans, including a
preferred plan, a contingency plan, a parallel plan and a secondary plan.15
is no discussion of how these final resource plans were selected, whether or how
the planning objectives were used, whether any methodical process was used for
determination, or what each of the plan designations means.16
c. The submissions should be simply and clearly written and, to the
extent feasible and practicable, in non-technical language. Charts,
graphs, and other visual devices may be utilized to aid in
understanding the Scenarios, Resource Plans, the Action Plan, and
the analyses made by the utility. The utility shall provide an executive
summary of the Scenarios, Resource Plans, analyses, and Action Plan,
and shall appropriately index its submissions.
The HECO Companies’ IRP Report is compliant with this provision.
The four objectives are the same for each Company: “Lower customer bills”, “Clean energy
future”, “Modernized grid” and “Fairness.”
The Framework provides that the utility shall identify planning objectives at the outset of the
IRP process with input from the Advisory Group. (Framework V.C.4.a at page 17). The planning
objectives are to be used for decision-making throughout the IRP process. (Framework V.C.4.b).
To the extent practicable the IRP Report is required to summarize how the planning objectives are
used throughout the process. (Framework V.C.4.d).
The MECO Action Plan includes four final resource plans for each of the three island
In addition to requirements for a full description provided in this provision, the Framework
includes a process step “Determination of Resource Plans” that requires prioritization of the final
resource plans based on criteria established with the advice of the Advisory Group. (Framework
V.C.9 at page 20). As discussed below regarding that provision, this step was not executed
consistent with this Framework requirement in the HECO Companies’ IRP process.
V. Planning Guidelines
A. Purpose of the Planning Guidelines
B. General Planning Guidelines.
1. The implementation of planning is the responsibility of each utility provided
that each utility shall:
a. comply with the planning guidelines and other provisions identified in
this framework and any specific orders by the Commission; and
Compliance with this very general provision is the subject of comments regarding
compliance with the other more-specific Framework provisions and Principal Issues.
b. consider the input, comments and suggestions provided by Advisory
Group members and the general public, to the extent feasible.
The HECO Companies have asserted at several stages of the IRP process that all of the
input from the Advisory Group and the public has been considered. It is clear that some
Advisory Group input has resulted in modifications to the planning process, particularly
modifications to the companies’ stated planning objectives and metrics.
Several opportunities to respond to Advisory Group comments were encouraged by the
IE. In one instance, the IE offered Advisory Group members a broad opportunity to
request responses regarding members’ comments in writing and the utility voluntarily
provided written responses. At most Advisory Group meetings, members have had an
opportunity to request responses regarding the Advisory Group comments. Outside of
these responses to specific requests, the HECO Companies have not volunteered or
provided responses to most of the comments from Advisory Group members.
The HECO Companies may have “considered’’ the input of the Advisory Group in a
minimal and perfunctory meaning of the term. As a generalization based on observations
over the duration of the IRP process, however, it would be also be accurate to state that
the Companies have ultimately ignored much of the input, comments and suggestions
provided by the Advisory Group members. Advisory group comments at meetings often
appeared to be greeted with dismissive argument, without acknowledgement of the
comments’ merit or substance.
The term “consider”, used as a standard in this Framework provision, could be interpreted
with varying levels of required rigor. In the extreme, if a utility employee reads a
comment by an Advisory Group member and merely ponders the comment for six
seconds, has the utility met its burden to consider the comment? Does the utility have
any burden to demonstrate in some discernable way that it has considered the comments
by the Advisory Group? Does a general assertion that the utility has considered all
advisory group comments suffice to meet the companies’ burden to demonstrate
compliance with the Framework provision?
The term “consider” is used as a standard in several Framework provisions. The
appropriate meaning can be derived, in some instances, by context. In a Framework
provision that pertains to analyses, for example, the term should be interpreted to require
analysis of anything that is required to be considered. The interpretation in this case,
regarding consideration of advisory group input, is more ambiguous from context but falls,
in accordance with specific Framework provisions, largely to the discretion of the IE. The
IE is given several “gatekeeper” duties in the Framework including determining what
issues and concerns identified by the Advisory Group must be addressed by the utility
[Framework V.B.2.b], ensuring that the utility provides consideration of input, guidance
and recommendations from Advisory Group members [Framework III.C.2.c.(3)] and
reporting to the Commission any failure by the utility to provide necessary planning
information to the Advisory Group [Framework III.C.2.b.(5)].
The IE was deliberately permissive throughout the IRP process and has not formally
required the HECO Companies to respond to most comments submitted by the Advisory
Group members. One important consideration, regarding what is “feasible”, is the amount
of time required to provide extensive responses to Advisory Group input in light of the
rigorous schedule and work load carried by the utilities in the IRP process. The utilities
have been substantially behind schedule throughout the third and fourth quarters of the
The HECO Companies could certainly have made a more diligent effort to actively and
more comprehensively respond to Advisory Group input. Advisory Group members who
take the time and effort to provide written comments deserve to know whether their
comments have been understood and, to the extent any suggestions are made and not
followed, whether the suggestions are simply being ignored or whether the companies
disagree with the suggestions. This criterion was often not met. Several Advisory Group
members have provided substantial suggestions that have not received any answer or
In response to an inquiry by the IE (dated May 6, 2013) regarding a specific list of
Advisory Group comments, the HECO Companies provided a matrix of comments and
responses in Appendix D of the IRP Report. The Companies responses in this matrix are
cursory and not constructively responsive.
The HECO Companies’ compliance with this Framework provision was only minimal.
2. Analysis supporting the Integrated Resource Planning Report shall:
a. provide meaningful support for the reasonableness of the Action Plan;
Several concerns regarding the merits of the analyses and support for the
reasonableness of the Action Plans are identified in this Final Certification. These
concerns are discussed in the context of more specific Framework requirements and in
discussion further below regarding whether the Principal Issues have been addressed in
the IRP Report. In sum, this Final Certification asserts that the analyses supporting the
IRP Report do not provide meaningful support for the reasonableness of the Action Plans.
Ultimately, this provision provides a fundamental standard for evaluating the IRP Report
and Action Plans in following proceedings that provide the opportunity for more thorough
discovery and more careful examination than is practical in the preparation of this Final
b. address those issues and concerns identified by the Advisory
Group(s) and the general public that the Independent Entity
determines have merit, to the extent feasible.
The IE has explicitly identified several issues and concerns in several documents
provided in the IRP process.17
These documents include several issues and concerns
identified by Advisory Group members. The IE has not provided any formal statement
directing the HECO Companies to address specific issues or concerns explicitly citing this
provision of the Framework.
The HECO Companies have addressed at least some (but by no means all) of the
concerns identified by the Advisory Group members and the IE on a voluntary and
cooperative basis, including providing responses to several requests for information by
the IE and several substantial changes to planned analysis methods based on
discussions at Advisory Group meetings.
Discussion of the extent to which the analyses supporting the IRP Report address the
issues identified by the Advisory Group members and the IE is provided throughout this
Final Certification in the individual sections that specifically address specific Framework
requirements and Principal Issues.
C. Specific Planning Guidelines
The process for developing utility Scenarios, Resource Plans and Action Plan,
to the extent applicable, shall include the following.
1. Identification of principal issues.
The identification of Principal Issues was completed with the issuance of a final draft
“chapter” titled Principal Issues, dated October 19, 2012, most recently provided as
Chapter 4 of the IRP Report.
The Commission’s Order Identifying Issues and Questions provided a list of issues that
must, at a minimum, be addressed in the IRP process. The issues identified in the
Commission’s Order were incorporated in the companies’ Principal Issues with
reformatting and with some rephrasing but without intentional substantive change. No
additional Principal Issues were added beyond those identified by the Commission. In
order to avoid extensive concern about the precise language in the final draft chapter, it
In particular, the First Quarterly Report on the Status and Evaluation of the
HECO/MECO/HELCO IRP Process, dated October 22, 2012; the Certification Of Phases I & II Of
the HECO/MECO/HELCO IRP Process, dated December 31, 2012; and IE Interim IRP Process
Status Report and Statement of Concerns, dated May 10, 2013.
was clarified and agreed that regardless of any specific differences between the language
in the Commission’s Order and the final draft chapter, the requirements identified in the
Commission’s Order will apply.
The identification of Principal Issues is consistent with the Framework provision.
2. Characterization of existing system and conditions. The utility should
provide a description of the existing utility system, any operational issues
and existing constraints.
The IRP Report includes a description of its existing systems in Chapter 7.
Chapter 16 of the IRP Report includes a brief discussion of operational constraints
regarding interconnection of distributed generation resources, states that (unidentified)
system upgrades will be implemented (at interconnecting customer expense).
The IRP Report does not include a description of the operational issues or system
constraints associated with the extensive amount of distributed and/or variable renewable
generation resources assumed in the final resource plans and Action Plans.
3. Identification of uncertainties and factors that affect utility planning.
Uncertainties and factors that affect utility planning pertaining to forecasts and scenarios
were discussed and identified as a major subject at the Scenario Planning Workshop,
August 20, 21 and 24, 2012. A list of key uncertainties pertaining to the forecasts and
scenarios is provided in Chapter 6 of the IRP Report at page 6-2. A more substantial
discussion of the identification of uncertainties and factors pertaining to the forecasts and
scenarios was provided in a draft “chapter” provided by the HECO Companies titled:
“Summary of the IRP Scenario Planning Workshop” (file dated September 28, 2012).18
Uncertainties and factors that affect utility planning have been identified for the forecasts
and scenario assumptions. Uncertainties regarding several other aspects of utility
planning, including many aspects of the characterization of resources, programs and
measures, have not been explicitly identified and discussed.
The analyses of resource plans explicitly address several key uncertainties. The use of
four final resource plans as the basis for formulation of the Action Plans is specifically
intended to address several specific fundamental uncertainties.
Generally, the IRP Report does not consistently identify and describe uncertainties in
assumptions and weaknesses in analytical methods. This includes some major
uncertainties and many details, only some of which are identified in this Final Certification.
As noted elsewhere in this Final Certification, for example, several crucial fundamental
uncertainties regarding the resource plans have not been identified or described. These
include uncertainties regarding whether and how the extensive amounts of renewable
resources assumed in the final resource plans can be accommodated reliably on each
This document was provided for review by the Advisory Group after the September 24, 2012
Advisory Group meeting but was not provided in the IRP Report.
utility system and whether the amount of renewable resources assumed on the HECO
system can feasibly be sited on the Island of Oahu. These uncertainties are crucial to
consider in an appropriate and meaningful interpretation of the analysis results but they
are not discussed or highlighted in the IRP Report.
4. Identification of planning objectives.
a. At the outset of the planning process, the utility, with input from its
Advisory Group, shall identify planning objectives that can be used to
provide guidance and basis for decisions to be made throughout the
planning process. The Commission may specify planning objectives
or criteria to be considered in the planning process.
Planning objectives and measures of achievement have been identified with input from
the Advisory Group. Several progressive drafts of proposed “Objectives and Metrics”
were presented by the HECO Companies at Advisory Group meetings. Drafts were
presented at IRP Advisory Group Meeting #1 (in matrix form), Meeting #2 (in the form of
presentation slides), Meeting #4 (with revisions shown in text and matrix form in “chapter”
format and presentation slides), and in “final” form at Meeting #6 and are provided in the
IRP Report in Chapter 3.
In addition to the development of the objectives and metrics presented in Chapter 3,
several Advisory Group members took initiative, with the assistance of the IE and the
participation of the HECO Companies, to identify and characterize qualitative metrics,
particularly to address the planning objectives regarding the environment and cultural and
community values. Several Advisory Group meetings were dedicated, all or in large part,
to developing qualitative metrics. The resulting qualitative metrics, as edited and
formatted by the IE, are presented in Chapter 17 of the IRP Report.19
b. Objectives shall be used to provide guidance or the basis for
decision-making throughout the integrated resource planning process.
Some of the objectives and metrics were used consistently and transparently throughout
the process as a basis for evaluating resource plans. The analyses of resource plans
made extensive use of several metrics including: total resource costs, RPS attainment
percentage, and amount of renewable energy curtailment.
How most of the other objectives were used in decision-making in the IRP process is not
clear and is not discussed in the IRP Report. It is not clear, generally, how the final
resource plans were determined or, more specifically, whether and how the entire
spectrum of objectives and measures of attainment were used in the analyses of resource
plans and the formulation of the Action Plans.
Several Advisory Group members, including the Consumer Advocate, have made comments
and suggestions to further amend and improve the qualitative metrics that have not (yet) been
incorporated in the metrics presented in Chapter 17.
c. The utility should provide measures of the achievement of the
planning objectives to the extent practicable.
Summary charts showing the attainment of most of the quantitative metrics associated
with the analyses of resource plans were presented in spreadsheet format accompanying
presentations at several Advisory Group meetings in the month of April. Similar charts
are provided for the final resource plans in Appendix P of the IRP Report.
d. To the extent practicable, the Integrated Resource Planning Report
shall summarize how the planning objectives were used throughout
See discussion regarding provision V.C.4.a immediately above.
5. Determination of planning Scenarios and forecasts.
a. Each utility, with input from its Advisory Group(s), shall develop a
manageable range of Scenarios to guide utility planning.
b. The utility, with input from its Advisory Group(s), shall develop a
range of forecasts of the necessary planning analysis parameters over
the planning time frame. Forecasts may be developed for each
planning Scenario, may be developed based on the assumptions
associated with each Scenario or may be based on independent
criteria as may be appropriate for and consistent with the planning
analysis. Forecasts assumptions may be developed before or after
Scenarios are developed.
Planning scenarios and forecasts for the planning process were determined with input
from the Advisory Group. The process for the development of the scenarios and the
resulting scenarios and forecasts are presented in Chapters 5 and 6 and Appendix E of
the IRP Report.
Numerous concerns and many suggestions for amendments regarding the scenarios and
forecasts were made by Advisory Group members. Although there seems to be obliging
acceptance, there does not seem to be a great level of understanding or enthusiastic
support of the identified scenarios or the choices of which forecasts and projected
assumptions are associated with each of the scenarios.
One substantial issue and concern identified early in the IRP process and reiterated at
several stages by the Consumer Advocate and the IE, is the need for a base case or
reference planning scenario. The planning scenarios identified for the IRP process were
deliberately generated with extreme high and low bounds regarding many individual
planning assumptions and forecast projections. Probabilities are not assigned or
considered with respect to the planning scenarios. Without some assumptions regarding
any probabilities of occurrence and without any base case or reasonably likely planning
scenario, determining the most economic resource alternatives or the alternatives with the
most value is problematic. The HECO Companies have been opposed to identifying a
base case scenario, arguing that this is not consistent with scenario planning principles.
At the end of the IRP process, however, faced by a need to formulate, characterize and
present the final resource plans and Action Plans, the HECO Companies adopted the
“Stuck in the Middle” scenario to serve as a base case. This is problematic and remains
an issue of concern.20
6. Identification of resource options.
a. The utility shall consider all appropriate, available, and feasible
resource options in the development of the reasonable range of
Scenarios and associated possible futures. Options may include:
energy efficiency demand-side management programs; demand
response and load management programs; distributed generation
resources; smart grid measures; measures to mitigate constraints to
the incorporation of as available or variable renewable generation
resources; alternative renewable fuels; energy storage resources;
alternative measures to provide ancillary services; and retirement or
protective storage of existing generation units and related facilities.
According to a strict interpretation, the scope of resource options considered and
analyzed in the HECO Companies’ IRP process does not include “all appropriate,
available, and feasible resource options.” Several resource options, including resource
options identified in previous IRP plans, options suggested by advisory group members,
options identified in the Principal Issues and options listed in this Framework provision are
not explicitly included in the resource options characterized for analysis. Currently
omitted or excluded options include but are not limited to:
o any specifically identified energy efficiency measures or programs
o sea water air conditioning options
o customer-sited combined heat and power options
o hydrogen storage (explicitly identified in the Principal Issues)
o pumped hydroelectric storage
o demand response programs beyond those already planned by the HECO
o specific measures to mitigate constraints to the incorporation of as available or
variable generation resources (other than battery storage options)
o alternative measures to provide ancillary services and retirement or protective
storage of existing generation and related facilities
See, for example, final comments by the Consumer Advocate, dated July 17, 2103, (provided
as an attachment to this Certification) at pages 4 – 6.
o coal-fueled resources21
Some logical reasons were offered by the HECO Companies regarding why some of
these options are not being explicitly included in the analyses but the options were not
“screened out” based on the provisions in section d. below.
The IRP process was not conducted consistent with this Framework provision.
b. The utility shall include among the resource options to be considered
in Section V.C.6.a. immediately above, the options currently in use,
promoted, planned, or programmed for implementation by the utility.
The IRP process is appears to be conducted consistent with this issue.
c. The utility shall also include among the resource options to be
considered in Section V. C. 6. a. above, the resource options that are
or may be supplied by persons or entities other than the utility.
Customer-sited distributed generation options were not considered in the analyses except
as components of the forecasted demand projections in the characterization of the
scenarios. These resource options are not being characterized in accordance with
Sections V.C.6.e. or V.C.6.f or V.C.6.g below.22
No costs, benefits, underlying
assumptions, or uncertainties have been identified.
The IRP process was not conducted consistent with this Framework provision.
d. The utility shall, upon review of the range of Scenarios to be analyzed,
screen out those options that are not reasonably appropriate to
Hawaii, are not reasonably expected to be available to address the
identified range of Scenarios, or are clearly infeasible. The utility, with
the input of the Advisory Group(s), may establish such other criteria
for screening out clearly infeasible options.
The utility has not conducted any screening process that is discernable or consistent with
this Framework provision. No screening criteria have been discussed or established with
input from the Advisory Group.
The IRP process was not conducted consistent with this Framework provision.
Coal resources were discussed briefly as a potential “missing” resource option at one Advisory
Group meeting (in the context of omission of any projection of coal fuel prices) but there did not
seem to be any support stated by any Advisory Group members in attendance to include this
option in the IRP analyses. Although this option was not “screened out” by any methodical
process, its omission was supported by at least some minimal discussion by the Advisory Group.
An Oahu small rooftop solar photovoltaic resource option is characterized as a utility-owned
resource in the Supply-side Resource Unit Information Forms, IRP 2013, dated October 15, 2012,
provided most recently as part of Attachment 6 of the Notice of Completion. Much of the
information regarding this utility-owned resource could be used as a basis to characterize
customer-sited distributed generation options.
e. The utility shall identify the assumptions underlying any resource
option or the cost or benefit of any option or any analysis performed.
f. The utility shall also identify risks and uncertainties associated with
g. The utility shall further identify any technological limitations,
infrastructural constraints, legal and governmental policies or
requirements, and other constraints that impact any option or the
The underlying assumptions, uncertainties, and other constraints regarding the extensive
magnitude of variable generation resources presumed to be available for the Oahu utility
system and the infrastructural constraints regarding the large penetrations of variable
renewable generation on all of the utility systems were not identified or discussed in the
h. The utility shall consider measures, strategies, and programs to
address limitations and constraints that may negatively impact its
ability to achieve the objectives identified.
Several measures have been identified to address some limitations and constraints
consistent with this provision. Battery storage options, for example, are being considered
to address infrastructure constraints that negatively impact the ability of the utility systems
to accommodate variable renewable resources. There is no meaningful consideration,
however, of the magnitude or feasibility of necessary measures, strategies or programs to
accommodate the large penetrations of variable renewable generation resources
presumed in the final resource plans upon which the Action Plans are based.
a. The utility may utilize any technically or commercially reasonable
model or models in performing the technical analyses required to
develop Resource Plans for the Scenarios developed.
b. Each model used shall be fully described and documented.
A basic explanation of the Strategist model used by the HECO Companies for the
analyses of the resource plans and final resource plans is provided in Appendix M of the
c. The Independent Entity, an Advisory Group member representing that
group (as determined by the Independent Entity) and the Commission
or its designee may review a utility's modeling program,
documentation and input, output, and diagnostic files, provided that
such person (i) certifies in writing that it is not a competitor of the
utility or the company providing the modeling program; and (ii)
executes any reasonable, appropriate confidentiality or other
agreements required by the utility or the model vendor.
The IE appointed an Advisory Group member to represent the Advisory Group consistent
with this provision. The Advisory Group representative along with the IE, Commission
staff and Consumer Advocate staff were allowed access to input, output and diagnostic
files used in the analysis of the resource plans and final resource plans.
a. The utility, with input from its Advisory Group(s), shall develop
Scenarios to guide the utility's integrated resource planning process.
Such Scenarios shall reflect possible futures dealing with uncertain
circumstances and risks facing the utility, other stakeholders, and the
The HECO Companies developed scenarios and forecasts generally consistent with this
provision. See discussion above regarding provision V.C.5.
b. The utility, with input from its Advisory Group(s), shall develop a
reasonable scope and number of Resource Plans for the Scenarios
developed. One or more Resource Plans may be developed for each
Scenario. A sufficient number of Resource Plans will be developed
and analyzed to ensure that the results of the utility planning process
are meaningful and will address the scope of the identified issues.
However, the number and scope of Resource Plans developed and
analyzed will consider the limitations of utility planning resources and
the planning process schedule.
The HECO Companies developed an extensive number of resource plans included
resource plans developed for the identified planning scenarios. The number of resource
plans developed was not an issue in the IRP process. Whether the Principal Issues are
meaningfully addressed is discussed regarding other more specific provisions of this Final
c. The utility shall analyze all options in the Resource Plans on a
consistent and comparable basis. The utility may use any reasonable
and appropriate means to assure that such equal consideration is
The resource options in the resource plans were examined on a consistent and
d. In addition to addressing risks and planning uncertainties through
consideration of Scenarios, the utility may utilize sensitivity analysis
to determine the extent to which uncertainties affect analysis results
The HECO Companies did not make extensive use of sensitivity analyses to address
uncertainties. Several outstanding uncertainties could and should be addressed by
further analysis, including sensitivity of conclusions regarding fuel and resource pricing
and availability, potential amounts of customer system exit, costs and regulatory
allowances regarding timing of compliance with air quality regulations, etc.
e. Notwithstanding the above, the utility shall compare the options on a
present value basis. For this purpose, the utility shall discount the
estimated annual costs (and benefits, as appropriate) using
reasonable and appropriate discount rates, assumptions and
procedures. The utility shall fully explain the rationale for its choice of
discount rates, assumptions and procedures.
The analyses presented in the IRP Report make extensive use of discounting and
presentation of costs on a net present value basis. There is no discussion or explanation,
however, of the basis or rationale for the choice of discount rates. The discount rates
used in the analyses were not questioned and were not an issue or concern raised during
the IRP process.
Several related assumptions regarding escalation of future prices for construction of
generation resources were questioned and are matters of substantial concern. See, for
example, the discussion of renewable generation cost escalation assumptions in the
discussion of Principal Issue 14. Inter-Island and Inter-Utility System Transmission.
f. The analyses shall identify the resources to be acquired through
available procurement mechanisms. The analyses shall consider and
identify, to the extent feasible, those resources which the utility
proposes to acquire through its available resource procurement
mechanisms, including any competitive bidding, feed-in tariff, bilateral
contract negotiation, net energy metering, demand response tariffs, or
other approved, applicable, or proposed procurement mechanisms.
The HECO Companies identify the procurement mechanisms for resources included in
the Action Plans in Chapters 18: Competitive Bidding and Resource Acquisition, Chapter
19: Action Plans and the Action Plans for the HECO, HELCO and MECO utilities in
Chapters 20, 21 and 22 respectively.
g. The utility shall conduct planning analyses to determine, evaluate,
and compare the merits of the resources, programs, and actions in the
The HECO Companies’ IRP process and IRP Report are compliant with this provision.
h. In its integrated resource planning process, the utility may use
information, data, analyses and results from relevant planning studies
conducted by the industry, utility, or others, as part of other regulatory
dockets or general planning processes. The analyses conducted as
part of the integrated resource planning process may in turn be used
in other general planning processes or studies.
The HECO Companies’ IRP process and IRP Report are compliant with this expository
9. Determination of Resource Plans.
The utility shall rank or descriptively prioritize the final Resource Plans
(i.e. , preferred plan, secondary plan, parallel plan, contingency plan)
based upon such criteria as it may establish with the advice of its
The HECO Companies have identified four final resource plans, including a preferred
plan, contingency plan, parallel plan and a secondary plan, for each of the five utility
systems. The IRP Report does not refer to, explain or discuss any ranking or
prioritization of the final resource plans. No criteria or explanations are provided
regarding the selection of the final resource plans. There was no discussion with or
advice provided by the Advisory Group regarding criteria, definitions or the meaning of
designation, ranking or prioritization of the final resource plans.
The IRP process and IRP Report are not compliant with this provision.
10. Determination of Action Plan.
a. Based on its analyses, the utility shall develop its Action Plan, which
shall identify those resource options or the mix of resource options or
specific actions that the utility anticipates will enable it to reasonably
attain the planning objectives in light of the uncertainty regarding the
The HECO Companies developed Action Plans for each utility. It is not clear or explained
how the formulation of the Action Plans was based on the analyses. The Action Plans
provide some explanation of how some of the specific actions will enable attainment of
some planning objectives. There is no comprehensive or methodical explanation
regarding how each of the specific actions will enable attainment of all of the planning
Only one or, in some cases, two of the planning scenarios are used in characterizing the
development of the Action Plans. The IRP Report does not sufficiently explain the need
or reasons for the use of a limited set of the planning scenarios or the basis for selecting
the specific scenarios for the development and characterization of the Action Plans.23
b. The utility shall review the Resource Plans to identify common
themes, resources, programs, and actions that demonstrate robust
value to balance costs and risks, and provide the greatest value and
Several shortcomings of using the “Stuck in the Middle” scenario (or any single one of the
identified planning scenarios) as a base or reference case have been noted by the IE and the
Consumer Advocate in concerns noted throughout the IRP process. The HECO Companies have
been opposed to developing and utilizing a base case or reference case scenario.