MECO cancels request for three diesel generators

Utility looking for ways to provide reserve power

Maui Electric Co. is suspending its request to install three temporary diesel power generators at its Kuihelani Substation while the utility looks at other ways of providing reserve energy.

On March 9, the state Public Utilities Commission approved MECO's request to suspend its application until August. However, the commission had concerns that MECO runs "an ongoing risk of inadequate reserve capacity" this year, especially with the closure of Hawaiian Commercial & Sugar Co., whose mill helped provide MECO with power over the years.

"While the loss of HC&S has lowered the level of backup generation reserves that we would otherwise have had, Maui Electric is aggressively pursuing other options to ensure that we continue to provide reliable power to our community," MECO spokeswoman Shayna Decker said Thursday.

These options include expanding MECO's demand response program and repurposing the utility's existing battery energy storage system -- options MECO wants to look at instead of the diesel generator proposal.

In March 2016, the PUC approved MECO's request to build a new $13 million substation at Kuihelani to help meet the growing demand for electricity in Central Maui. In September, MECO proposed the installation of three used diesel generators at Kuihelani as a way to make up for the energy lost by the closure of HC&S "and for various uncertainties" in the future, Decker said.

HC&S had been providing MECO with up to 4 megawatts of firm, scheduled energy, in addition to 12 megawatts of emergency power. Firm power is electricity that is guaranteed to be available when needed.

"These proposed units (at Kuihelani) were a temporary generation option until permanent renewable energy could be installed," Decker explained.

However, the utility decided to suspend that request while it takes a closer look at the potential of its demand response program.

Customers who enroll in demand response programs get financial incentives for using less electricity when demand is at its highest, such as when people are coming home at the end of the day. The program is "designed to help keep the electric grid stable and prevent unplanned outages" when demand is high, Decker said. The PUC is currently reviewing MECO's proposal to expand its demand response program.

"A key component to the success of the proposed demand response programs is participation from large commercial customers, such as the County of Maui," Decker said. "We'll continue our discussions with the county and others to determine how they can participate and partner with us in ensuring reliable power."

Without demand response, MECO expects to have 0.5 megawatts less than the amount of firm power it should have, according to its analysis. With demand response, MECO would have 0.5 megawatts more than needed. Demand response could help increase the utility's reserves over the years, giving it up to 11 megawatts more than the amount of power it needs by 2022.

However, MECO expects its reserves to drop significantly in 2023 because of its proposal to retire four units at the Kahului Power Plant. MECO is awaiting PUC approval to seek out companies that could generate 40 megawatts to make up for the loss of the retired units.

While the PUC was concerned about MECO having enough energy, it supported the utility's goal of seeking out different energy sources.

"The commission takes very seriously the need to ensure that electric utilities in the state can meet the everyday and emergency needs of their customers," the PUC said in its order suspending MECO's application for diesel generators. "That being said, the commission is in favor of further evaluation to determine whether MECO's reserve capacity shortfall may be addressed by means other than the burning of additional fossil fuel, provided that MECO customers are not at risk."

The suspended application does not affect the Kuihelani Substation, which is supposed to start construction later this year.

* Colleen Uechi can be reached at cuechi@mauinews.com.