^^Kaua' i Island

^•^Utility CooperativeYour Touchstone Energy* Cooperative ^

...April 11,2017

The Honorable Chair and Members of the Hawaii Public Utilities Commission

465 South King Street Kekuanaoa Building, Room 103 Honolulu, HI 96813

Re: Docket No. 2007-0008 - In the Matter of Public UtilitiesCommission Instituting a Proceeding to Examine Hawaii’s Renewable Portfolio Standards Law, Hawaii Revised Statutes (“HRS”) §§ 269-91 - 269-95, as Amended by Act 162, Session Laws of Hawaii 2006: Kauai Island Utility Cooperative’s (“KlUC’s”) 2016 Annual Renewable Portfolio Standards (“RPS”) Status Report

Dear Commissioners and Commission Staff:

Please find enclosed KlUC’s Annual RPS Status Report for the year ending December 31, 2016 (“2016 RPS Report”).

As shown in the attached 2016 RPS Report, renewable energy resources and energy savings supplied 41.66% of KlUC’s net electricity sales during the 2016 calendar year. This exceeds the year 2016 RPS goal of 30.0% to be achieved by each electric utility as established by HRS § 269-92(a)(1), as amended.

The attached 2016 RPS Report also includes a breakdown of the renewable energy resources on Kauai comprising the 41.66% RPS for 2016 and the RPS reached in 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014 and 2015. Also included in said report is a discussion of KlUC’s commitment to continue to increase the growth of renewable energy and energy savings on Kauai.

The power of human connections*4463 Pahe 'e Street. Suite / • Lihue, Kaua 'i. HI 96766-2000 • (808)246-4300 • www.kiuc.coop

KIUC is an equal opportunity proviOer and employer

The Honorable Chairman and Members of the Hawaii Public Utilities Commission

Page 2

We thank you for your consideration of this matter. If you should have any questions concerning this report, please call me at (808) 246-8208.

Very truly yours,

Michael V. Yamahe, P.E. Chief of Operations

Enclosure

cc: Kent MoriharaConsumer Advocate (3)Mr. Joseph ViolaMr. Dean MatsuuraMr. Jay IgnacioMs. Sharon SuzukiThomas W. Williams, Jr.. Esq.Craig I. Nakanishi, Esq.Mr. David Bissell Mr. Timothy Blume Mr. Warren S. Bollmeier, II Mr. Henry Q. Curtis

Kauai Island Utility Cooperative Renewable Portfolio Standards (RPS) Status Report

Year Ending December 31, 2016

KlUC RPS Results for 2016

Kauai Island Utility Cooperative (KlUC or Company) achieved a Renewable Portfolio Standard (RPS) percentage of 41.66% for calendar year 2016. This exceeds the State of Hawaii’s 2020 RPS requirement of meeting 30% of KlUC’s net electricity sales with electrical energy generated and/or displaced by renewable resources.^ All of KlUC’s 2016 RPS of 41.66% was be met by electrical energy generated using renewable energy as the source.^

KlUC met the electrical energy needs of its customers with a combination of Company-owned fossil fueled generation, Company-owned renewable generation, and both non-firm and firm renewable power purchases.^ In addition to this generated electricity, Photovoltaic (PV) systems and Demand Side Management (DSM) measures, including Solar Water Heating (SWH), also supplied some of KlUC consumers’ energy needs, while at the same time, displacing fossil-fuel generated power. As of January 1, 2015, these sources are no longer counted toward KlUC’s RPS. The portion of the RPS met by electrical energy generated using renewable energy as the source was 182,904 megawatt-hours (MWh), which is greater than the 2020 30% RPS requirement of 131,726 MWh.'^ Exhibit A, attached hereto, illustrates how KlUC met the energy needs of its approximately 37,000 accounts.

KlUC’s 2016 RPS percentage of 41.66% is 14.34% more than KlUC’s 2015 RPS percentage of 27.32%. This is due to the following:

1. A full years’ production from the 12-megawatt MWac KRS1 Anahola Solar project, which began operation in October 2015.

2. The addition of the 6.7 MWac Green Energy Team Biomass project, which achieved In-Service on January 11, 2016.

3. Significant addition of customer-sited solar systems.

' Hawaii Revised Statutes (HRS) § 269-92(a)(3).

^ See HRS S 269-92rbl

^ KlUC has ten non-firm power purchase contracts to purchase electrical power from Gay &Robinson (G&R) (hydro), McBryde Resources (hydro), Kekaha Agriculture Association (KAA) (hydro). Green Energy Team (hydro), Pioneer Seed (solar), Kapaa Solar (solar), McBryde Resources (solar), MP2 Hawaii (solar), KRS2 Koloa (solar), and KRS1 Anahola (solar). KlUC also has one firm purchase power contract. Green Energy Team (biomass).

“ 131,726 MWh is 30% of KlUC's 2016 sales of 439,088 MWh.

KlUC Future RPS Activities

While KlUC has already exceeded the 2020 and 2030 RPS goals of 30% and 40%, respectively, the Company is committed to even further increasing the growth of renewable energy and energy savings. To accomplish this, KlUC is undertaking the following:

1. On September 9, 2015, KlUC signed a PPA with SolarCity for the purchase of electricity generated from the Kapaia Solar and Battery facility. The Commission approved the PPA on February 26, 2016. The project has completed construction and is expected to achieve COD in early April 2017. This facility is expected to increase KlUC’s annual RPS by about three percentage points in 2017 and five percentage points in the first full year of production in 2018 (i.e. to approximately 45% in 2017 and 47% in 2018).

2. On July 3, 2014, KlUC signed a PPA with Gay & Robinson for the purchase of electricity generated from a new hydroelectric facility. The Commission approved the PPA on March 14, 2016. The project is expected to begin construction in 2017 and to be in service by 2019. This facility, given a full year of production in 2019, is expected to increase KlUC’s annual RPS by about five percentage points (i.e. to approximately 52% in 2019).

3. On December 30, 2016, KlUC signed a PPA with AES Distributed Energy for the purchase of electricity from a new solar and battery facility to be located in Lawai. Assuming all necessary permits and regulatory approvals are obtained to allow construction to begin in late in 2017, the facility is expected to achieve COD before the end of 2018. This facility, given a full year of production in 2019, is expected to increase KlUC’s annual RPS by about eleven percentage points (i.e. to approximately 63% in 2019).

4. KlUC continues to investigate additional solar plus storage projects that, if successful, could provide an additional five to seven percentage points toward KlUC’s annual RPS in 2019.

5. KlUC continues its efforts in securing a long-term water lease from the Department of Land and Natural Resources for the Waiahi hydro-electric facilities, to ensure that existing hydroelectric resources continue to contribute to KlUC’s RPS.

6. KlUC continues its efforts in securing a long-term water lease from the Department of Land and Natural Resources for a new West Side hydro­electric facility that, if successful, could provide an additional ten to twenty percentage points toward KlUC’s annual RPS In 2020.

7. In addition to large utility-scale renewable energy projects, KlUC also recognizes the importance of small-scale PV, SWH, and DSM systems, despite not being able to count these projects toward future RPS goals. To this end, KlUC is also continuing its residential energy efficiency programs, commercial retrofit program, and its SWH programs.

Conclusion

KlUC’s 2016 RPS percentage of 41.66% surpasses the 30% by 2020 RPS requirement by 11.66% and the 40% by 2030 RPS requirement by 1.66%. With current renewable energy sources and the future activities identified above, KlUC is on target to exceed the next RPS requirement of 70% by 2040. KlUC recognizes the benefits that renewable energy and energy savings provide to the visitors, residents, and commercial sectors of Kauai, as well as the positive impacts on global environmental, societal, and economic issues. As such, KlUC will continue to evaluate, promote, and incorporate renewable energy and energy savings to meet the needs of its members, the Kauai community, and the State.

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