Status Report—DBEDT’sEnergy Program

Maurice KayaStrategic Industries Division

January 17, 2008

22

Clean Energy Must Remain aPriority for the State

• Energy Security• Energy Costs at $100/bbl oil• Implications of Carbon Regulation• Continue Investment in Energy Efficiency• Achieving Full Potential of Renewable

Energy• Sending Right Signals to Markets

33

Strong, Robust Energy ProgramNeeded

• State Policies Require Proper Execution• Need Appropriate Organizational Structure• Need Reliable Source of Funding• Necessary Authority for Success• Ability to Attract and Retain Qualified

Personnel

44

Expectations are Increasing

• Execution of Energy for Tomorrow

• Lead by Example

• Interagency Wheeling Docket/PUC intervention

• Senior Staff on NGA Task Force

• Consultations with Renewable Energy Developers

• Biofuels Program Coordination

• Greenhouse Gas Policies

55

Success Story: Lead by Example

• Energy Star Bldgs—5 certified• LEED Bldgs—3 completed, many under

design, architect/engr trained• DAGS developing statewide performance

contract RFP using DBEDT info• DOT/FTZ issued a RFP for solar PV, as

much as 34 MW• State Capitol assessment• Institutional Commitment by agencies

66

Status Report: Biofuels• Act 240, 2006—Biofuels Assessment Proj.

– Contractor: Black and Veatch, UH, Stillwater Assoc.– Feedstock assessment by Jan 2008– Technology and crop assessment by Jul 2008– Stakeholder engagement, integration, overall completion through

Jul 2009• Act 253, 2007—Bioenergy Master Plan

– Funding released– RFP drafted, to be issued early 2008

• Act 130, 2007—Non-Ethanol Gasoline– Formal Report Submitted to Legislature– Non-blended gasoline available on all islands except Maui

77

Status Report: GHG Task Force

• Task Force Appointed (Act 234)• Staffed jointly by DBEDT and DOH• 3 Meetings of the TF to date• Assessment Stage—Testimony of Experts• Seeking Release of Funds• Preliminary work plan developed• Will seek contract support for inventory,

policy analysis, and program management

88

Current Challenges for DBEDT’sEnergy Program

• Personnel

• Finances

• Keeping Up with Expectations

• Institutionalizing and Sustaining Program

99

Personnel Issues

• Level of existing staffing inadequate to addressworkload, assignments and expectations—seeTable 1 staff analysis, new starts

• Expect staffing issues to be exacerbated by staffretirements

• Historically energy staff have been cutback, withpositions recently frozen and reallocated to otherfunctions within DBEDT

1010

Table 1 Staff Analysis—NewStarts

Legis

Session

Fiscal

YearFiscal Year - New Requirement

FTE

Estimate/Request FTE Authorized

Additional FTE

Needed

Biofuels Study 0 0 0.3

Renewable Hydrogen 3 0 2

LBE Efficiency 2 2 0

FY 2007 Total FTEs 5 2 2.3

Greenhouse Gas Reduction Limits 2 0 2

Biofuels Master Plan 1 0 1

One-Stop Renewables Permitting 0 0 0.2

Certify Sustainable Palm Oils 0 0 0.2

Report No Ethanol Gas 0 0 0.1

FY 2008 Total FTEs 3 0 3.5

FY 2007, and FY 2008 TOTAL FTEs 8 2 5.8

20072006

20082007

1111

Finances• Rapidly diminishing PVE (“oil overcharge”)

funds—see Figure 1– 4 years remaining at current expenditure rate– Of SID’s FY08 budget, 66.6% and 14 filled Energy

Program positions out of 20 total are supported by PVEfunds.

• Just to maintain current services would requireconverting $1.94mm of MOF to general funds within 4years

• Impacts besides $--e.g. state ethanol/biofuels, energyemergency preparedness, utility policy, renewablehydrogen programs implemented using PVE fundedstaff

1212

Figure 1 Federal PVE Depletion ChartPetroleum Violation Escrow Fund Balances

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

2004 2005 2006 2007 2008 2009 2010 2011Fiscal Year

Beginning Balance Total Revenues Personal Services Other Operations Total Expenditures

1313

SID StrategicObjective—Supplemental Funding

through Grants• “Stretch” PVE dollars

• Leverage appropriated federal funds fromformula grants

• High early success rate of competitive awards

• Support from Congressional delegation

• Federal special project award now gone

• Increased competition among states

1414

Trend Comparisons of Annual (FY) Funding Levels fromAwards of Competitive Federal Grant Funds to

Hawaii State Energy Program

$411,238

$561,481

$514,635

$352,891

$493,768

$476,223

$537,097$553,768

$569,680

$512,689

$470,561$453,623

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

2001 2002 2003 2004 2005 2006 2007

Fiscal Year

Com

petit

ive F

edera

l Gra

nt A

ward

s -

Annual A

vera

ges (

$ D

olla

rs)

5-Yr Moving Annual Average

(1995-2007)

3-Yr Moving Annual Average(1995-2007)

Shorter run averages reflects increased competition for reduced

levels of grant funding -- a recent reality expected to continue.

Longer run averages reflect Hawaii's larger historic grant

awards, and past availability of more federal funds.

USDOE SEP Special

Projects Grants Cycle

Discontinued as Annual

Program in 2006.

Note: Both five-year and three-year moving averages are based on the grant funding awards over the 13 fiscal years, 1995 through 2007.

1515

$2,237,686 $2,565,935 $2,751,541$2,124,859 $2,240,095 $2,378,643

$2,995,209$2,298,355

$1,129,324$1,279,438$1,382,798

$1,160,057 $927,599$1,198,347

$1,398,347

$1,143,447

$800,000

$11,030,000

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

2001 2002 2003 2004 2005 2006 2007 2008

Fiscal Year

Fed

era

l, a

nd

Sta

te G

F -

Bu

dg

ete

d &

No

n-B

ud

gete

d

Annual Non-Budgeted*

Annual Budgeted

Annual Federal (USDOE)

Fede

ral,

and

Stat

e G

F-B

udge

ted

& N

on-B

udge

ted

Annual Non-Budgeted GF*

Annual Federal (USDOE)

Annual Budgeted GF

DBEDT SID Annual Operating Budget – Federal (USDOE), andState GF Funds – Budgeted, and "Non-Budgeted"* Appropriations

Fiscal Years 2001 through 2008

*Non-Budgeted GF; i.e., Legislative appropriations via separate bills; e.g., Act 234, SLH 2007 – Greenhouse Gas Reduction Bill, etc.

2007 – Energy for Tomorrow

• Biofuels Study

• Renewable Hydrogen

• LBE Efficiency

2008• Greenhouse Gas Limits

• Biofuels Master Plan

• 1-Stop Renewables Permitting($0 - Unfunded Mandate)

• Certify Sustainable Palm Oils($0 - Unfunded Mandate)

• Report No Ethanol Gas($0 - Unfunded Mandate)

New RequirementsNew Funding

Staff Resources:Net lossloss 1 position…

1616

Additional FTE Are Essential To Implement Priority Energy Initiatives --Restoration of Previously Authorized Levels Minimum to Meet New Requirements

*Non-Budgeted GF; i.e., Legislative appropriations via separate bills; e.g., Act 234, SLH 2007 – Greenhouse Gas Reduction Bill, etc.

$2,237,686 $2,565,935 $2,751,541$2,124,859 $2,240,095 $2,378,643

$2,995,209$2,298,355

$1,129,324$1,279,438$1,382,798

$1,160,057 $927,599$1,198,347

$1,398,347

$1,143,447

$800,000

$11,030,000

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

2001 2002 2003 2004 2005 2006 2007 2008

Fiscal Year

_

Annual Federal (USDOE) Annual Budgeted Annual Non-Budgeted*

28

26 26 26

21

27

2423

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

___________________________________________________

0

5

10

15

20

25

30

35

40

Sta

ff &

FT

E P

os

itio

n (

Co

un

t #

)

Pers on Staff (Count #)

26.3

28.8

Needed FTE + Pers On Staff

Fede

ral,

and

Stat

e G

F-B

udge

ted

& N

on-B

udge

ted

Staf

f & F

TE P

ositi

on (C

ount

#)

Annual Non-Budgeted GF*Annual Federal (USDOE) Annual Budgeted GF

1717

What Do We Need?

• Personnel—6 additional FTEs– Biofuels Program Manager

– Renewable Hydrogen Prog. Mgr.

– Energy Economist/PUC lead

– Energy Research Statistician

– Greenhouse Gas TF Program Manager

– Project Assistant/Researcher

1818

What is in DBEDT’s BudgetRequest (MOF)

• Biofuels Program Manager (U)• Renewable Hydrogen Prog Mgr (B)• Energy Economist/PUC Lead (U)• Energy Research Statistician (U)

• Energy Permit Facilitator (U)– Ref: Report on SCR 164, Streamlining

Permitting

1919

What Do We Need?• Funding

– $1.2 MM to complete Biofuels Master Plan

– $ 0.7 MM to complete GHG program effort

– $ 0.3 MM for contract support, PUC dockets

– $ 0.3 MM for technical contractor forLBE—Perf. Contracts, Commissioning, LEEDstudies

– $0.1 MM for technical support for sustainablebio-oils

2020

Funds in DBEDT Budget Request

• $0.7 MM for Bioenergy (U)• $0.3 MM for PUC Docket support (U)• $0.2 MM for LBE (U)

Note: (1)U funds represent transfer fromEnvironmental Response Revolving Fund.(2) Positions and funding for GHG not inadmin budget.

2121

Conclusions

• SID energy staff has been “stretched” for several years• Need to address staffing, or

– Division performance expectations will not be met– Quality and timeliness of outputs will deteriorate

• Must address near-term depletion of PVE funds• Timely to address appropriate organizational questions

as well• Transition being given the support and attention it

needs