Business/In Brief • Mar. 13, 2014

Geothermal power expansion on hold

HILO – Hawaii Electric Light Co. is putting the brakes on an effort to expand geothermal power on the Big Island after an independent observer criticized the utility for lacking sufficient planning.

The state Public Utilities Commission assigned Boston Pacific Co. to be the independent observer. In a letter to the PUC, Boston Pacific said the utility was “putting the cart before the horse.”

Boston Pacific said that HELCO should study whether there’s a need for the project and identify alternatives.

That’s prompting HELCO to wait until a power supply improvement plan is completed before moving forward with the effort to seek up to 50 megawatts of additional geothermal power, Hawaii-Tribune Herald reported Wednesday. The plan is expected to be completed by April 21.

Boston Pacific said HELCO conducted a request for proposals “without first knowing whether there is a need for the project being solicited.”

HELCO President Jay Ignacio said in a statement that completing the power supply improvement plan will “give us an opportunity to clarify for the PUC, the independent observers and bidders what we are seeking with the (request for proposals).”

The statement also said, “We are seeking low-cost energy that also ensures reliability and also is sensitive to community and environmental concerns. We believe we can get that through a geothermal facility.”

HELCO’s response letter to the PUC said it will modify the request for proposals to include changes such as revised operational and technical requirements.


City weighs tax hike on vacation rentals

HONOLULU – Honolulu’s city council is considering raising taxes on residential vacation rentals.

The measure up for first vote Wednesday would create a new tax category for homes that rent short-term rooms, the Honolulu Star-Advertiser reported.

Bed-and-breakfasts and short-term rental vacation homes presently pay property taxes of $3.50 per $1,000 of assessed value, the same as other residential owners. Hotels and resorts, meanwhile, pay nearly four times that rate – $12.40 per $1,000. The council last year rejected a plan to raise the taxes of short-term rental homes to match those of hotels, as owners objected.

Council Chairman Ernie Martin, the bill’s author, said the measure would put short-term residential rentals on something closer to equal footing with hotels.

“Both endeavors are primarily business activities,” he told the newspaper. Martin added that he intends to introduce companion measures that would make way for more rentals to operate legally in the city while cracking down on illegal rentals.

The city now counts about 48 legal bed and breakfasts in the city and 810 legal transient vacation units. Martin said he believes twice that many rental operations operate illegally in the city.

Vacation-rental owners said raising taxes would cut into already-thin profits.

“We work hard just to be able to break even at the end of the year,” said Tonic Bille, president of the B&B TVU Association of Oahu.