• f ., n;;t .. ' J I ·~j~ . .. ~ .... -

Hawaii Geothermal/Inter-island Transmission Project Open PROPOSERS Conference

LEAD ORGANIZATION

1 ABB Energy Ventures, Inc. a. Mike Shevade

Assist. V.P.

49 American Line Builders, Inc. a. Dave Frame

Chairman

51 Brian Tolley Corp. Ltd. a. Brian H. Tolley

Managing Director

6 Dow Chemical U.S.A. a. Walter T. Haenggi

Geological Consultant

17 ERC Environmental & Energy Services Co. a. Dr. John F. Walter

Vice President b. Gordon Chapman

53 Ebasco Services Inc. a. Keith L. Sipes

Mgr., Power Services

58 Federal Gulf Corp. a. Cecil L. Smith

President b. Charles w. Smith

Attendees

SUPPORT ORGANIZATION

42 GIE a. F. Pergola

Commercial Director b. L. B. Parziale

Sales Mgr.

lilii'

06/08/89 Sheet 1 of 6 205m

Hawaii Geothermal/Inter-island Transmission Project Open PROPOSERS Conference

LEAD ORGANIZATION

9 Fluor Daniel a. Douglas H. Cortez

President b. William G. Hickey

Mgr., Projects

D6/08/89

Attendees

Sheet 2 of 6

SUPPORT ORGANIZATION

10 C. Itoh & Co. (America) Inc. a. Leon Brinew

Dir. of Marketing

Pacific Resources, Inc. a. Edward J. Lui

Business Development

Euprotech Corp. a. William J. Pietrucha

Dir. Power Projects

Works and Dev. Ser. Corp. (NZ) Ltd. a. Tom R. King

Investigations Engr. b. David J. Bunting

Inter. Consultancy Mgr.

Domenic J. Falcone Assoc. Inc. a. Dom Falcone

Consultant

Public Affairs Consultants -Hawaii a. Wallace S. Amioka

General Partner

Amer. Piping & Boiler Co. a. Ray Howard

V.P.

Chatsworth Consultants a. C. Graham Coxhead

Principal

205m

Hawaii Geothermal/Inter-island Transmission Project Open PROPOSERS Conference

LEAD ORGANIZATION

24 Mission Power Engineering Co. a. Edan D. Prabhu

Project Mgr. b. Dan Chase

Financial & Geological Analyst

29 Mitsubishi International Corp. a. Katsuhiko Kobayashi

Attendees

Mgr. Machinery Di v. "B"

06/08/89 Sheet 4 of 6

SUPPORT ORGANIZATION

25 California Energy Co. a. Philip H. Essner

V.P. Land

27 R. A. Patterson & Associates a. Ralph Patterson

Consultant

28 Sumitomo Corp. of America a. Takahiro Moriyama

Product Mgr. -Elec. & Mach.

Servco Pacific, Inc. a. Gary Doi

V .P., Properties

Hawaiian Dredging & Construction Co. a. Dave O'Day

Project Mgr.

Fuji Electric Corp. of America a. Hisao Ohno

General Mgr.

205m

Hawaii Geothermal/Inter-island Transmission Project Open PROPOSERS Conference

LEAD ORGANIZATION

30 Mitsui & Co. (U.S.A.), Inc. a. None

55 Morrison Knudsen Corp. a. None

54 Nippon Credit Bank, Ltd. Los Angeles Agency

a. Nobuyoshi Nagaya General Manager

59 Ormat Energy Systems, Inc. a. Maurice Richard

Regional Develop. Mgr.

35 PG&EE/Bechtell Power Corp. a. Alastair D. Campbell

Project Mg r. b. James M. Dunstan

Project Engineer c. Eric w. Grenfell

06/08/89

Attendees

Sheet 5 of 6

SUPPORT ORGANIZATION

31 Sargent & Lundy a. Thomas J. Murray

Div. Head T&S Div.

b. Gary R. Russ Mgz:., Northwest Reg.

c. Mark W. Conroy Proj. Mgr., T&S Div.

32 DesignPower New Zealand Ltd. a. James B. Randle

Mgr. Engineering

Mitsui~ Co., Ltd. a. S. Sakano

Gen. Mgr. Elec. Sales Sec.

MK-Ferguson Co. a. Jack E. Fabregas

· V .P. Marketing

39 Mitsubishi Heavy Ind., Ltd. a. Masayuki Kubo

Mgr., Power Systems

EFP Systems, Inc. a. James T. Kuwada

President

205m

Hawaii Geothermal/Inter-island Transmission Project Open PROPOSERS Conference

LEAD ORGANIZATION

34 Parsons Hawaii a. Madison E. Oliver

General Mgr. b. George Krasnick

Project Mgr.

41 Pirelli Cable Corp. a. John T. Barteld

V.P., Corp. Marketing b. Ugo C. Arnaud

Attendees

SUPPORT ORGANIZATION

42 GIE a. B. Parziale

Proposal Mgr. b. M. Bianchi

V.P., Submarine Systems Area Mgr. (Pacific)

44 Siemons Energy & Automation, Inc. a. None

3 True Geothermal Energy Co. a. Allan G. Kawada

Attorney

06/08/89 Sheet 6 of 6

Pacific Factors, Inc. a. Howard W. Wilson

President

205m

Page 1:

QUESTION:

ANSWER:

QUESTION:

AWlWER:

• ,,...,

Attachment 5 STATE RESPONSES TO ORAL QUESTIONS

How many Federal agencies accepted the State's invitation to join the interagency permit group?

(draft of revised reply) All of the following Federal agencies were invited to participate in the Interagency Group and with the exception of the Environmental Protection Agency, have attended all of preliminary meetings convened by the Department of Land and Natural Resources; u.s. Army Corp of Engineers, u.s. coast Guard, u.s. Navy, National Park Service, u.s. Geological survey, Environmental Protection Agency, National Marine Fisheries service, and u.s. Fish and Wildlife Service.

The EPA's non-attendance at these meetings should not construed to mean non-participation by that Federal agency, but rather as indicated by the local EPA administrator, a problem resulting from limited staffing of the Honolulu District Office. Furthermore, they have stated that in the majority of cases their environmental concerns would be addressed in the permitting process regulated and administered by the corps of Engineers. The EPA office has requested to be kept on board (in a non-attending capacity) and be kept apprised of any geothermal/cable activity through regular correspondence with the Interagency Group.

Are different options for the overland portion of the interisland transmission system going to be surveyed in the Master Development Plan.

In June 1989 DBED will award a major contract for planning services relating to the geothermal cable project. These services include, somewhat in time sequence; preparation of a Master Development Plan; a public participation program; analysis of alternative overland transmission corridors; and the preparation of a programmatic Environmental Impact Statement. The overland transmission corridor analysis will reach the point of recommending alignments. We will have the planning consultant address the right of way acquisition in this analysis. In addition, affected State agencies have initiated a legal and programmatic review to ascertain to what degree the State can directly participate in addressing the corridor issue, including exercising the power of eminent domain.

1989

Attachment 5 STATE RESPONSES TO ORAL QUESTIONS

Q There has been difficulty in the past in Hawaii with the seauence of permits? Which permits do you get first? Which permits depend on first getting other permits?

A There is presently no formal written procedure on the seauence of permits. However, one of the major benefits of Act 301 is that it sets up an interagency group that can work out the permit seauence issues.

Q

A

How many Federal agencies accepted the State's invitation to join the interagency permit group?

All Federal agencies that we asked are on board. They are U.S. Army Corp of Engineers, U.S. Coast Guard, U.S. Navy, National Park Service, U.S. Geological Survey, Environmental Protection Agency, National Marine Fisheries Service, and U.S. Fish and Wildlife Service.

Q Describe the relationship between DBED and DLNR?

A They are both cabinet level. They do cooperate. DBED is the advocate for the geothermal/cable project. DLNR is responsible for permitting. The Department of Land and Natural Resources manager State-owned land, land regardless of ownership that is in the Conservation District, wildlife, minerals including the geothermal resources, water, flood control, aauatic resources, forestry, aauaculture, natural area reserves, state parks, outdoor recreation and historic sites. As a natural resource manager, some of the DLNR functions are regulatory.

Q When will the hydrogen sulfide standards be established by the Department of Hea 1 th?

A We intend to send these rules to the Governor for approval in September or October, 1989.

Q Is there a Geothermal Resource (,ll.:">)

SubzoneC established on Maui?

A Yes, there is a 4,108 acre GRS in the Haleakala Southwest Rift.

Q >ii 11 there be a copy of Act 301 in the documents room?

A Yes, as well as a copy of the draft Administrative Rules relating to Act 301 .

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Q

A

Q

A

Q

A

Are different options for the overland portion of the interisland transmission system going to be surveyed in the Master Development Plan.

In June 1989 DBED will award a major contract for planning services relating to the geothermal cable project. These services include, somewhat in time sequence; preparation of a Master Development Plan; a public participation program; analysis of alternative overland transmission corridors; and the preparation of a programmatic Environmental Impact Statement. The overland transmission corridor analysis will reach the point of recommending alignments. We will have the planning consul tan~ address the right of way acauisition in this - .,., ..-#!-analysis. :r,., «.e..,, =r, .. -. .¢1 'f:' C'i~ a.PI'~ c.:-fd S-f-.,. -f-._ ""-'!~c.-~ .,..,. ._ / >-f · -f-e.l Gt /<.-..e.f Ja,,.._l' .J.7,_, ?~"'"MJt-..-, _-r; c.- V'C-V't e.l:') -f-> ... .J. c;..e..,.. ... ,,.,., 2 ,jJ:.-r -;./ r~ "-r;.e-. ~+ .... ~~ """'" _d/r~~#.in !.;~'"'-"' ...,.~•-1'-e. '"'~•' .,t. ~.f.J"'~.>I·..., '1#._.. c..,..,.., cloY' '~,jwe...../ "'1t:-f1tad,,A ~&.,...(..fl, t'AL f'o <Z. •

Is there any value that any islands could assi n to theca e, aside from;?t~·~7 transmitting geothermal energy from the Island of Hawaii to Oahu via ~-... ; ... Maui?

We do have a plan for Maui Electric Company to link the Islands of Maui, Molokai and Lanai with an undersea cable. That effort is somewhat independent of the Hawaii to Oahu via Maui system which is driven by the need to get the Big Island's geothermal energy to the Oahu market. However in the long-term there probably will De other benefits to be gained by tying the state together.

_Is there any uncertainty about obtaining $15 mill ion from the federal government for a drilling program, and when will the drilling start?

We have $3 million of State funds available now, the last Legislature appropriated $2.6 million which will be available after July 1, 1989 and we will include another $3 million reouest in the budget that will be considered by the legislative session that convenes in January 1990 and is scheduled to adjourn in April 1990. In addition, we are working through the U.S. Congress -not the U.S. Department of Energy - for $15 million (probably in increments of $5 million annually for 3 successive years} for our geothermal resource verification and characterization program.

With the initial $3 million in State funds, we expect the University of Hawaii to commence drilling this year up to 6 scientific observation holes with 4 throughout the Geothermal Resource Subzones in the Kilauea East Rift and l or 2 on Maui.

We have no specific plans beyond the initial scientific observation holes. We will be asking the private sector for recommendations. One option is to use the public funds to share the risks of additional exploration that is primarily financed by the private sector.

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•,

Q Has the State undertaken any studies to estimate the cost of this project insofar as their estimate of what the delivered power would be?

A Yes, the most comprehensive concerning economics was, "Undersea Cable to Transmit Geothermal-Generated Electrical Energy from the Island of Hawaii to Oahu: Economic Feasibility," prepared by Decision Analysts Hawaii, Inc. in February 1988. This is the so called Plasch report since Dr. Bruce Plasch prepared it. This analysis necessarily made a lot of assumptions especially relating to capital costs which were estimated to cost $1.68 million. "Preliminary Analysis: Legal, Institutional and Financial Aspects of an Inter-Island Electrical Transmission Cable" prepared by Gerald A. Sumida from a local law firm and Alan L. Hills, then of Prudential-Bache Securities, Inc. was published in April 1984. A follow-on report, "Alternative Approaches to the Legal, Jnsti tutional and Financial Aspects of Developing an Inter-Island Electrical Transmission Cable System whose principal author was Gerald A. Sumida assisted by others from a local law firm and Alan L. Hills, then with First Interstate Cogeneration Cogeneration Capital Associates, was published in 1986. Mr. Hill, now with Cogeneration Capital Associates of Larkspur, Ca 1 iforni a prepared a report for DBED in July 1988, "Hawaii Geotherma 1 Project: Overview of Status, Development Approach and Financial Feasibility Assessment." All of these reports addressed both the geothermal and the cable aspects of Hawaii's project. All are available in the public documents room. Extra copies of the April 1986 and July 1988 documents are available. Call Jerry Lesperance at (808) 548-4020 or Fax him at (808) 531-5243.

Q Has any investigation been carried out regarding reinjection in this fields?

A HGP-A is 43% steam and 57% brine, by weight. The liauid phase is super-saturated with silica. The brines are disposed in surface ponds. Ormat intends to use the approach successful in Coso, California, recombine the condensate from the steam phase with the brine, and reinject that along with the noncondensible gases. The Ormat wells show a higher ratio of steam to brine than HGP-A.

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SENT B't:xerox Telecopier 7020 , 3-es :11 :zeAM 00\IIALD->

RFP(draft1)7/3/B9

QU~STION; How many Federal agencies accepted the State's invitation to join the interagency permit group?

ANSWER: (draft of revised reply) All of the following Federal agencies were invited to participate in the Interagency Group and with the exception of the Environmental Protection Agency, have attended all of preliminary meetings convened by the Department of Land and Natural Resources: u.S. Army Corp of Engineers, u.S. Coast Guard, u.s. Navy, National Park Service, u.s. Geological survey, Environmental Protection Agency, National Marine Fisheries Service, and u.s. Fish and Wildlife Service.

The EPA's non-attendance at these meetings should not construed to mean non-participation by that Federal agency, but rather as indicated by the local EPA administrator, a problem resulting from limited staffing of the Honolulu District Office. Furthermore, they have stated that in the majority of cases their environmental concerns would be addressed in the permitting process regulated and administered by the Corps of Engineers. The EPA.office has requested to be kept on board (in a non-attending capacity) and be kept apprised of any geothermal/cable activity through regular correspondence with the Interagency Group.

Ref: Page 1

QUESTION:

ANSWER:

Ref: Page 2

QUESTION:

ANSWER:

ATTACHMENT 3

STATE RESPONSES TO THE WRITTEN QUESTIONS

Has the State begun its "slim hole" test? When will the next phase of testing begin?

To date, DLNR has issued (3) geothermal well drilling permits (SOH 1, 2, and 4) for the University of Hawaii's Scientific Observation Hole Project. The county of Hawaii Planning Commission has completed public hearings on the matter and is currently scheduling mediation proceedings between the applicant and objecting parties,

Will the State exercise its power of eminent domain on behalf of the Developer in the event of impasse in negotiation with land owners?

Perhaps. This reponse assumes the question refers to land owners who will be affected by the transmission corridor. Section 277.3 of Hawaii Revised Statutes provides that the State's "Director of Transportation in the name of the State and subject to the approval of the Governor may for the purposes of this Chapter acquire, by purchase or eminent domain, private property in fee simple, or lesser interest therein, including leases, all property necessary for the establishment, maintenance, operation, management and control of energy corridors." A bill to give a State agency more directly concerned with the geothermal/ cable project authority relating specifically to geothermal energy transmission corridors failed in the 1989 legislative session, partly because the Department of Transportation already has this authority in Chapter 277, HRS. The State is seeking Attorney General's opinion that energy corridors as used in Chapter 277 specifically include electric transmission corridors. If that decision is negative, the State Administration will seek, in the 1990 legislative session which adjourns in April 1990, an amendment to chapter 277 that specifically includes electric transmission corridors within the meaining of energy corridors.

Attachment 3 Ref: Page 2

QUESTION:

ANSWER:

Ref: Page 3

QUESTION:

ANSWER

What authority does the State of Hawaii have to resolve impasses in negotiations between developers and the holders of geothermal resource leases? If this authority differs for privately held, State-owned, Hawaiian Crown, and federal properties, please describe the State's authority in each case.

The State of Hawaii does not have the authority to resolve impasses in negotiation between developers and the holders of geothermal resources leases. The State can only encourage settlement but not to intervene in all cases. The State can intervene if the lease is not being worked productively within a reasonable period of time, or other conditions of a lease are not being honored similarly! if conditions of State issued permits are bein violated, the State will intervene. State intervention involving federal properties would be unlikely.

Will the state mandate the permitting schedules to be adhered to by the DLNR, DOH, and other State agencies for receipt and issuance of permit approvals? If yes, when is this legislative action to be taken? Will the State guarantee this mandate prior to submission of bids?

Act 301, session Laws of Hawaii 1988, requires that State and county agencies participate in a consolidated permitting process in which all state and county permitting agencies affected by a geothermal/cable system development project must sit down and participate in coordinating and consolidating their permitting efforts. However, the Act invalidate the jurisdiction or authority of any agency under existing law. This means that the schedule for issuance of permits cannot be mandated by the State under Act 301 the process shall take place according to existing statutes; however, Act 301 provides that the permitting process will be approached in a coordinated and consolidated manner. The administrative rules for implementing Act 301 should be in place by August, 1989.

Attachment 3 Ref: Page 4

QUESTION:

ANSWER:

QUESTION:

ANSWER:

When will the consolidated permit form be issued?

A preliminary draft of the consolidated permit application form is being prepared and a final version will be available for distribution when the Act 301 administrative rules are promulgated. It should be noted that all application forms currently used by each respective agency will be incorporated in its entirety in order to facilitate the review and processing of such applications by the members of the consolidated permit application and review team. The Act 301 implementing regulations should be adopted by the end of August, 1989.

To what extent and with what legal rights will the State of Hawaii intervene on behalf of the successful developer in any actions which are likely to occur by environmental and social groups such as the Pele Defense Fund.

Subject to a legal opinion from the State Attorney General's Office, on a case-by-case basis whether State interest is affected the state may directly intervene in cases involving a private party/developer in any legal action or quasi-judicial proceeding.

ATTACHMENT 3

STATE RESPONSES TO THE WRITTEN QUESTIONS

Chapter 3:

Q. There is some indication of geothermal potential in the southwest rift zone of Kilauea. Does the State intend to designate additional geothermal subzones in that area? If so, what is the timetable?

R. There is currently a pending designation of 8,090 acres in the Kilauea Southwest Rift zone. Total acreage in geothermal resource subzones will be approximately 26,000 acres.

A procedural question relating to this designation is currently being reviewed by the Attorney General's office. The question is whether a request made by a group opposing geothermal development for a formal contested case hearing before the Board of Land and Natural Resources should be granted since a similar request involving the Southeast Rift was already disposed of by the Board and Courts.

Q. Would the State be willing to underwrite at least a portion of the resource risk associated with the first increment of development?

R. The state has approximately $6,000,000 in hand to support the geothermal program. The administration plans to ask for another $3,000,000 from the next session of the legislature. The State also plans to ask for $15,000,000 in Federal funds for the next Federal fiscal year. Approximately $3,000,000 is earmarked for the slim hole program. It is presently considered that some of the additional money would be used for additional slim hole drilling but the majority would be used to drill exploratory wells that could be converted to production wells.

Q. Has the State begun its "slim hole" test? When will the next phase of testing begin?

Q.

To date, DLNR has issued (3) geothermal well drilling permits ~~ (SOH 1, 2, and 4) for the University of Hawaii's Scientific r Observation Hole Project. The County of Hawaii Planning ~ Commission has completed public hearings on the matter and is ~ currently scheduling mediation proceedings between the ' ~ aJ?plicant ~nd objecting parties. \!:l"lllits shoold ce issoed by {\ ~,d .'rttgasg c.J\.(f Air permitting requires that hydrogen sulfide standards be ~

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R.

Q.

R.

Q.

established by the Department of Health. When will these standards be in place?

The Air Quality standards in the September/October, regulations are available

under Chapter 60 should be adopted 1989 time frame. The draft now.

Will the State exercise its power of eminent domain on behalf of the Developer in the event of impasse in negotiation with ~~-r

land owners? .t>( j fi · r~L.er.J 7; (•,../ ..... '!er.l~ / -rh :" re~p ~ ~.,_ 44 .5 """-' <>- '""

1111 ,_" " "/duu. '"I ,r" 1

Perhaps. f\. Section 277.3 of Hawaii Revised Statutes proo(l"ides ><f .. ·.~· that the· State's "Director of Transportation in the name of .._-f< the State and subject to the approval of the Governor may for the purposes of this chapter acquire, by purchase or eminent domain, private property in fee simple, or lesser interest therein, including leases, all property necessary for the establishment, maintenance, operation, management and control of energy corridors." A bill to give a State agency more directly concerned with the geothermal;cable project authority relating specifically to geothermal energy transmission corridors failed in the 1989 legislative session, partly because the Department of Transportation already has this authority in Chapter 277, HRS. The tate seeking Attorney General's opinion that energy corridor used in Chapter 277 specifically include electric transmission corridors. If that decision is negative, the State Administration will seek, in the 1990 legislative session which adjourns in April 1990, an amendment to Chapter 277 that specifically includes electric transmission corridors within the meaning of energy corridors.

It is unlikely that the State would use eminent domain powers for the siting of well pads or the geothermal power production facilities.

What authority does the State of Hawaii have to resolve impasses in negotiations between developers and the holders of geothermal resource leases? If this authority differs for privately held, State-owned, Hawaiian Crown, and federal properties, please describe the State's authority in each case.

The State of Hawaii does not have the authority to resolve impasses in negotiation between developers and the holders of geothermal resources leases. The state can only encourage settlement but not to intervene in all cases. The State can intervene if the lease is not being worked productively within a reasonable period of_ :time .. r ,., ?'her_ C,.,n./ri'/.,,.,J ,.,f Q /t!A~C:: ~~-c. ,;'?~-r .l:?e/,, h .. "l,rc..J'. s,,.,,-,_t.,J ,'{ c-,.1,~,(}/'f.S • .; J-ft:i#t'-c.- /J,ul.f, e.J . ,?-cJ""-tfJ 4'C. J,c.,7, liP" Vit~> I• fe.l ~'f•"""- Wtil l"·~cr,_c.-. >"f'•foe, t'¥"f"c,..Je...f: .. .., ,),1/,/flt.l'l' tAre records of pending challenges to existing leases,(....t.,...t_,Pr"/"-ly.> available in the document room? If not, please provitr'e"~~uc!H ~.l,k#/J

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records.

R. We are not aware of any pending challenges to existing leases. There are however, two pending suits filed against the State (one in Federal Court, another in circuit Court) regarding the land exchange between the State and Campbell Estate.

A potential legal question that may arise in the future relates to ownership of mineral rights. The state's position is that mineral rights belong to the State and this has not been challenged.

Q. Are copies of all geothermal resource leases available in the document room? If not, please provide such copies.

R. A complete set of all leases is available in the documents room and in the Geothermal Permit Center.

Chapter 6:

Q. Will the State mandate the permitting schedules to be adhered to by the DLNR, DOH, and other State agencies for receipt and issuance of permit approvals? If yes, when is this legislative action to be taken? Will the State guarantee this mandate prior to submission of bids?

R. Act 301, Session Laws of Hawaii 1988, requires that State and county agencies participate in a consolidated permitting process in which all state and county permitting agencies affected by a geothermal/cable system development project must sit down and participate in coordinating and consolidating their permitting efforts. However, the Act also provides that nothing in the Act shall affect or invalidate the jurisdiction or authority of any agency under existing law. This means that the schedule .tor ~ssuance o£ permits cannot be mandated by the state~ll~·"tne" l)rocess shall take place according to existing statutes; however, Act 301 provides that the permitting process will be approached in a coordinated and consolidated manner. The administrative rules for implementing Act 301 should be in place by August, 1989.

Q. What is the relationship between the State's intent to secure permits and the RFP assignment of responsibility for permitting to the Developer?

R. It is the applicant's responsibility to secure permits for the various activities to be undertaken as part of the 500 MW geothermal/cable project. The letters included in the RFP demonstrate the commitment of Governor Waihee and his administration to the development of geothermal power,

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including steps taken to facilitate applying for permits, making offices, information and personnel available to assist. However, the State is not the applicant, the Developer is the applicant, and therefore it is the Developer that is responsible for securing the permits. The State will prepare a roaster plan and a programmatic EIS. This should reduce the time and effort required on the part of the Developer. If during the course of preparing the EIS it is evident the State can procure some permits, it will.

Q. When will the consolidated permit form be issued?

R. A preliminary draft of the consolidated permit application form is being prepared and a final version will be available for distribution when the Act 301 administrative rules are promulgated. It should be noted that all application forms currently used by each respective agency will be incorporated in its entirety in order to facilitate the review and processing of such applications by the members of the consolidated permit application and review team. The Act 301 implementing regulations should be adopted by the end of ~, 1989 . .R~i'"f,

Q. Have any cognizant federal permitting agencies refused to participate in the interagency permitting group? If so, please identify them.

R. Federal agencies, by Statute (Chapter 196-D, HRS), are not required to participate and, as such, are only invited to participate in the consolidated permit application and review process. To date, all Federal agencies believed to have any interest in geothermal permitting have been invited and no invitee has refused to participate in the Interagency Group.

Q.

R.

To what extent and with what legal rights will the State of Bawaii intervene on behalf o.f the success£ul developer in any actions which are likely to occur by environmental and social groups such as the Pe1e Defense; Fund. 5 f.,. fe- .? /'"t:::l-c-5 .f ~:. c;/.f~~t-~

it:> n .._ G4-J -- 4>7 -Ce-.J .....- J.q s ,, wi>•-f/,t/ I

Subjec to a legal opinion from the State Attorney General's Office . DLNR' s !?osition i>rtJ>_a&t }f ~~pol i kely. that the State ,.,...{ ~ d1rectly 1ntervene 6h ~~ --~-- ~ a pr1vate party/developer in any legal action or quasi-judicial proceeding.

~7; ose

~p o ed'

Q. What is the historical turnaround time for permit appeal submitted to the Hawaii Supreme Court?

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R. On a very generalized basis, considering only the 3 and geothermal cases, the turnaround time for appeals has been 3 years 9 months and 4 years 5 months, respectively. A Pele Defense Fund case in 1987, however, was turned around in only twelve months from the date the appeal was filed until the date the Hawaii Supreme Court unanimously decided in favor of geothermal development. It should be noted that Section 205-5.1, HRS, specifically provides that appeals to certain land use decisions relating to geothermal resource subzones, "shall be made upon the record directly to the (Hawaii) Supreme Court for final decision." In the Pele Defense Fund case, appeal to intermediate courts was not appropriate.

Q. Although this project is endorsed by both HECO and the State administration, we see no evidence of strong public support. Why not?

R. Surveys indicate strong public support for geothermal power. The opposition is always more vocal. One of the tasks for the contractor who will prepare the master plan and programmatic EIS is an extensive public involvement program.

A community survey in September 1987 indicated that 84 percent of the State's residents favored geothermal development. Seventy-seven percent of the residents on the Island of Hawaii, where the development will occur, were in favor.

Another survey, in June 1987, indicated that 73 percent of the State's residents (71 percent of the Island of Hawaii residents) were favorable about the government program to build an undersea cable to send geothermal electricity to Oahu from the Big Island.

Another survey, in October 1986, indicated that 64 percent of the Big Island residents (66 percent in the Puna District) favored 25 MW of geothermal development to serve the Big Island. These percentages slipped to 50 percent (Island of Hawaii)/43 percent (Puna District) favoring up to 100 MW of geothermal to serve the Big Island; and further reduced to 42 percent (Island of Hawaii)/37 percent Puna District) favoring 500 MW for export to Oahu.

The full results of these surveys are available in the Public Documents Room.

Chapter 7:

Q. The Governor's letter indicates that the State will assist in both permitting and financing. Please discuss the relationship of DBED and DLNR in the development of the

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proposed Project. Specifically, will DBED provide assistance in arranging financing, and, if so, in what ways?

R. This has not been determined. It will depend largely on the kind of assistance required, if any, as evidenced by the Proposal. If required, it would most likely be indirect rather than direct. The State is exploring State and Federal options.

Q. since the State has not established guidelines for permit reviews and approvals (or disapprovals) and licensing and permitting approvals are included in a milestone schedule subject to default, it would appear that defaults associated with permit receipt and in-service dates require significant changes to insure prospective developers that their investment in the Project is not forfeited. What action does the State propose to mitigate this concern?

R. Processes for the issuance of permits are established by statutes, ordinances and duly approved rules - these are public processes whose outcomes are determined by the interaction of public officials, concerned members of the public, and the existing laws. There is no guarantee of the outcome of a particular permitting process. The outcome can be anything from denial to approval with many, few, or no conditions attached to the permit. While the State cannot guarantee the outcome of a public process, its policymakers, namely Governor Waihee and his cabinet members, can lend their full support and influence to a positive outcome, as they have done in the letters attached to the RFP.

Q. Has the State applied for PUC declaration of general guidelines under which the PPA would be negotiated, and if negotiated within those guidelines, will the State guarantee PUC approval of the PPA?

R. The State has not asked for PUC cannot guarantee PUC approval. Developer and HECO to develop a to the PUC.

guidelines and the State The State will work with the PPA that will be acceptable

Q. What role will the State of Hawaii play in the PPA negotiations?

R. The State will have a limited involvement in the technical evaluation. The State will have a more active involvement in the commercial negotiations. The amount and manner of involvement have yet to be determined.

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Hawaiian Electric Company '"c. • PO Box 2750 ·Honolulu, HI 96840-0001

Mr. William F. Quinn Chairman Governor's Advisory Board cjo Goodsill, Anderson, Quinn P. o. Box 3196 Honolulu, HI 96801

Mr. Leslie s. Matsubara Deputy Director

& Stifel

Department of Business & Economic Development

State of Hawaii 250 s. King Street, P.H. Honolulu, HI 96813

Mr. William w. Paty Chairman of the Board Department of Land & Natural

Resources State of Hawaii 1151 Punchbowl Street, Room 130 Honolulu, HI 96813

Gentlemen:

July 12, 1989

Subject: Responses to OPC Written and Oral Questions

Attached is a copy of the material sent to representatives of lead companies that attended the OPC. The same information has been sent to companies that received the RFP but did not have a representative attend the OPC. Therefore, the enclosed letters of transmittal are different for each above group.

JFR,JR:ajr Attach. cc: M. Kaya

s. Ono..; G. 0. Lesperance R. K. McQuain

An HEI Company

Sincerely yours,

l.~ff:!::f:;}l Execut~ve Staff Eng~neer

R1chard K. McQuain V1ce Pres1dent Engineermg

Dear

July 7, 1989

Subject: Hawaii Geothermal/Interisland Transmission Project

I would like to thank you for your attendance at our June 5, 1989 Open Proposers Conference for the Hawaii Geothermal/ Interisland Transmission Project. The interest shown in the Project is very encouraging.

As is true of any document of this size, there are some errors in the RFP. Attachment 1 is a compilation of those clari­fications and corrections we know of at this time. I ask that any errors or required clarifications that become evident during your continued review of the RFP be brought to John Richardson's attention. This Attachment 1 also includes a copy of the letter from County of Hawaii Mayor Bernard K. Akana giving support to the project.

We promised to provide you written answers to the questions that were asked. HECO's responses to the questions received before the Conference are included as Attachment 2. The State's responses to the written questions are in Attachment 3. Attach­ments 4 and 5 are the HECO and State responses, respectively, to the oral questions asked during the Conference.

There have been some questions as to the definition of the Project. HECO's desire is that the Project be on the order of 500 MW. This appears to be a reasonable number looking at HECO's capacity requirements between 1995 and 2005 and the amount of time that will likely be required for full Project build-out.

An HEI Company

Page 2 July 7, 1989

The power will most likely be developed in increments. The RFP has used an increment of 125 MW, but this is at the Proposer's discretion. We anticipate that a PPA will be negotiated for the full project. The schedule, costs and technology would be defined only for the first phase or increment, that block of power that will be delivered in 1995. The PPA would contain guidelines and indicies for the subsequent power increments, but the exact details would be incorporated in a PPA amendment.

Several Conference participants indicated a desire for con­fidential meetings with HECO prior to the scheduled September 5, 1989 meetings. We are amenable to such discussions. Such meetings should be set up through John Richardson.

In addition, all proposers, and related parties, are reminded that the governing terms and conditions of the "Request for Proposal for the Geothermal/Interisland Transmission Project" issued by Hawaiian Electric Company, Inc., in May 1989 are as set forth in the request for proposal (RFP) documents. Clarifications to the RFP and/or addenda to the RFP will be made in writing as HECO deems necessary and such clarifications or addenda will be made available to all PROPOSERS (See: section 2.2, page 2-1 of the RFP). Proposers are, therefore, reminded and advised that the RFP and HECO's written clarifications or addenda thereto are the only documents intended by HECO to govern this solicitation.

Again, let me thank you for your interest in this project. We will be of assistance to you in any way we can. If you have not yet responded with the Exhibit 2.1A form, would you please do so at your earliest convenience. Please feel free to contact John Richardson at any time, by phone at (808) 543-4420 or FAX at (808) 543-7898.

Attachments

Very truly yours,

R. K. McQuain Vice President Engineering

Exec. sum.

Page 3-23

Page 3-42

Page 3-46

Page 3-62

Page 3-65

Page 3-71

Figure 3.6B

Table 5.2C

Page 7-7

Page 4-19

Exhibit 4.4B

Exhibit 8.3A

Attachment 1

Clarification and Corrections to the RFP

Letter from the Mayor of the county of Hawaii (attached).

Change "NESC extreme wind load of 145 fps" to

"NESC extreme wind load corresponding to 145 fps"

Before last paragraph, insert:

"For transient voltage control, the Developer must provide a control scheme which will limit overvoltages to 1.3 p.u. for a maximum of 3 cycles, under all fault or load-rejection conditions on either the AC or DC systems."

Same comment as for Page 3-23.

Change last paragraph from "--- converter terminal or a double circuit 138 kV line between ---"

to "--- converter terminal or two double circuit 138 kV lines between ---" as shown in Figure 3.7F.

Change 3.7.2.2a. to read:

"Three phase fault Maximum 12.3 kA Minimum 9.92 kA

Single phase-to-ground fault Maximum 7.6 kA"

In Section 3.9, change the ESCR from 2.5 to 4.7 at minimum load.

The APPROXIMATE GRS BOUNDARIES are shown on the figure as dark dashes in the area of Puu Mahoe.

The table column headings, left to right, are month, 1985, 1986, 1987, 1988.

Change Section 7.1.7 Exhibit 7.1E to Exhibit 7.1D.

In the first paragraph, the 0.4 gravity acceleration factor is used for illustration only. The Proposer may select any seismic level consistent with his seismic risk assessment.

Reference in the second line should be to Exhibit 4.4A.

The last line should continue to read as follows:

"or modify control equipment or control parameters. For example, at what AC voltage level at Maui will commutation failure start to occur?"

/

Office of the Mayor

April 28, 1989

Mr. Harwood D. Williamson, President Hawaiian Electric Company, Inc. P. o. Box 2750 Honolulu, HI 96840-0001

Dear Mr. Williamson:

Mayor

I am writing in support of current efforts by HECO and the State to elicit industry interest in the development of geothermal resources on the island of Hawaii. Knowing the devastating impacts that can be wrought upon our island economies as a result of foreign energy dependency, I can assure you of my interest in achieving our State's energy independence. Orderly development of our abundant renewable resources might be the answer to our State's efforts to achieve energy self-sufficiency. Importantly also for the island of Hawaii and its people, a major energy project, like that contemplated, will increase our tax revenue base, expand employment opportunities for our people, and perhaps allow us to become a major net exporter of an important basic commodity--energy,

Further, I am hopeful that if the geothermal project proceeds forward, there will be other direct and indirect benefits for our Big Island and other forms of economic development will be spawned for our citizenry.

Every effort wil be made by my administration to ensure that those who propose projects will be treated fairly and expeditiously. To that end, I will seek to work with the Hawaii county Council, various citizen groups and the geothermal developers so that all interests will be benefitted by this important project.

We welcome the opportunities that will likely attend the development of Hawaii renewable energy resources. We will be attentive to the impact upon our communities, our way of life and our environment. By working together, I have no doubt that the County and the State, as well as those who develop this wonderful natural resource, will prosper.

I look forward to working with all of you,

/ Bernard K. Akana MAYOR

· r, ___ ,- rr:1. rr _____ ;: r'lc ... .,n

ATTACHMENT 2

HECO Responses to the Written Questions

Chapter 1:

Q. Will HECO disclose the identity of all Proposers, including those on the short list?

R. All those who attended the Open PROPOSERS Conference on June 5, 1989 will receive a list of the attendees. We do not know at this time whether we will disclose the identity of those on the short list.

Q. What weighting system is being applied to the various technical and commercial evaluation factors? Project performance must be weighted very low, since by RFP definition, geothermal power does not meet desirable require­ments. Will HECO amend the RFP to include the appropriate weighting factors? The capacity characteristics described in the RFP are not typical of geothermal power. Will HECO rank in order of importance the characteristics listed in Section 1.6?

R. No. We do have some criteria, but we do not want to influence the Proposer/Developer in their inventiveness of design to meet the capacity characteristics most desirable. Also, after we review the proposals, we may change the weighting or value of the characteristics in evaluating the Proposals. It should be clear from the RFP, however, that reliability and certainty that power will be delivered on the agreed upon date rank very high.

Q. Please clarify the reference to "relative environmental and social impact" in Section 1.6.3 for the Commercial Proposal.

R. It means: "The effect of the geothermal Project, in toto, on surface, subsurface and aquatic resources, as well as cultural, traditional and religious resources." It is HECO's policy to be a good corporate citizen of Hawaii. This includes being sensitive to the environmental concerns of the people and conscious of the environmental and social impacts that a Project of this size will have.

Q. Are there any material testings being carried out at the wellfield? If yes, by who?

R. EPRI Report AP-4342, "Chemistry, Scale, and Performance of the Hawaii Geothermal Project-A Plant," December 1985, in the public documents room, describes the results of a major

overhaul.

Chapter 3:

Q. What is the expected maximum capacity of the wellfield?

R. A significant geotechnical data base identified a deep magma conduit operating in a fractured tensional stress field vulnerable to fresh water and sea water entry along the 23-mile length of the existing GRS. Within a 2.5 mile interval in the KERZ, bracketed by twg s,ooo-foot geothermal wellbores with temperatures above 600 F, the 3 MW HGP-A Generator Facility is operating with a 7-year record of continuous service at 90% availability and a private developer is prepared to establish an additional 25 MW of commercial power production.

These facts indicate the nominal 500 MW for the full Project to be a reasonable possibility for the geothermal resource on the basis of well productivity tested to date. Any creditable estimate of capacity here will require substantial additional drilling and flow testing to obtain critical geothermal reservoir data not now available.

Q. Will HECO clarify what seismic risk assessment in Section 3.1.1 includes other than that the design conform to Zone 3? Also, please clarify what volcanic risk assessment in Section 3.1.2 is to include.

R. The seismic risk assessment should primarily examine the data and implications of the November 1975 magnitude 7.2 earthquake under the southeast coast of Hawaii County. This class of major, tectonic earthquake presents the only significant seismic hazard to intended geothermal develop­ment. The seismic records of this event were studied by the Hawaiian Volcano Observatory and associated ground deformation impacts were discussed in u.s. Geological Survey Profession Paper 1276.

A clarification is indicated for the RFP Appendix A text at top of page A-19. A 0.4 gravity acceleration factor was not selected for facility design. The seismic risk assessment requested should establish the specific gravity acceleration factor applicable for the Project. It may be that the Uniform Building Code designation of Zone 3 may not be applicable to this particular area.

The volcanic risk assessment should specially examine lava flow dynamics and morphology expected at the surface facility areas proposed. Ground deformation and eruptive events are lesser volcanic risks to be recognized.

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Q.

R.

Q.

R.

Is venting steam directly to atmosphere for a short period (less than 24 hours) acceptable?

There are two considerations--noise and H S emissions. Presumably venting would be allowed if st&te and County of Hawaii noise and emission regulations are met.

How far and how much is the nearest water supply for cooling?

It is unclear whether the question refers to the power production facilities or the converter terminal. At the power production facilities, there is well water available about a mile from the northwest edge of the rift zone. Water wells drilled to approximate sea level total depths, and cased with 14" or 16" diameter pipe should afford about 1000 gpm pumped water volumes. Such water wells would drill and complete in about 120 days. Water well construction is regulated by the DLNR.

Permits to use large amounts of water for cooling, however, would likely be difficult to obtain. If a steam cycle were used, condensate should supply sufficient makeup for the cooling towers and the converter terminal. Some other source would have to be used if a steam cycle was not used. On Oahu, cooling water for the converter terminal would have to come from wells on site.

Q. Are the AC collection system parameters on the island of Hawaii left within the discretion of the proposer?

R. Yes, within the limits of the NESC and State and Local codes as described in Section 3.5. HECO will review and evaluate the AC collection system design as presented in the Proposal responses to Exhibits 3.5A through 3.50.

Q. Why cannot the converter terminal proposed for Aniani be sited at nearest 138 KV AC Substation with a short DC line from the cable landing?

R. It could be, as is stated in Section 3.8 and 3.6.2.1. The Aniani Substation is to be located on a 3.6 acre site presently owned by HECO. This site is not large enough to also contain the converter station. The converter station could be located in the general area of the Aniani site with either a short DC line to the converter or short AC lines to the Aniani Substation or both.

Q. Why does the submarine cable route avoid the obvious land route over the islands of Molokai, Maui and Lanai which should offer much cheaper route lengths?

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R. Proposers are at liberty to choose their preferred route with the exception of the island of Hawaii where the RFP requests an off-shore option. It is a question of timejcost trade-offs. With the possible exception of Maui if there is a DC tap, there is no direct benefit to the island populations for allowing overland transmission routings.

For the purpose of HDWC research, DBED and HECO agreed that substantial time and possibly major opposition would be involved with substantial overland transmission on Maui (problems related to routing through developed, historic, and scenic areas) and Molokai (not to be served directly by this project). With the exception of a 15-20 mile segment on Maui to avoid the rough submarine lava flow area off La Perouse, the research program identified a probable commercial cable route with limited overland components. However, as previously stated, Proposers are to make their own assessment.

Available in the Public Documents Room are two relevant reports entitled:

a. 1987 "Submarine vs. Overhead Routing: A cost Comparison for Molokai"

b. 1988 "Feasibility of Using Underground Electrical Cables Along Portions of the Overland Route of an Interisland Cable System in Hawaii"

These reports should assist the Proposer in identifying factors for consideration in evaluation of submarine vs. overland corridors.

Q. There appears to be a conflict between the steady state reactive requirements of Sections 3.6.4.4 a) and b). a) requires a compensation to 0.85 PF and b) to 1.0 PF. Is a) a requirement additional to that required for the converters?

R. Yes, as is stated in Section 3.6.4.4, the Developer must supply sufficient reactive power to correct the converter station to 1.0 PF and, in addition, supply 310 Mvar for reactive requirements of the HECO system. For purposes of the proposal, the HECO reactive banks will also be located at the Waiamanalo converter station.

Q. What is the maximum acceptable or tolerable transient overvoltage and its duration in cycles, i.e., 30% for 3 cycles?

R. In the RFP, there is no overvoltage limit specified for

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conditions of complete load rejection at maximum load. The Developer is required to perform system studies to determine what overvoltage conditions will prevail under various contingencies, such as complete load rejection. This omission, retrospect, is not conducive to obtaining comparative bids, and, therefore, a limit of 1.3 pu for 6 cycles has been established for bidding purposes. The Developer is free to use whatever means necessary to meet this requirement for the AC system on Oahu.

Q. Which AC system conditions and reactive requirements apply for the AC voltage control requirements of Section 3.6.4.4.

R. The converter AC voltage control requirements must, as stated in Section 3.6.4.4, respond and control the AC voltage at the converter bus, within prescribed limits of voltage range and flicker, for any AC load between minimum and peak load. For the Proposal, the reactive supply to be controlled includes converter reactive banks, filters, and HECO system reactive components at the converter station.

For transient voltage control, the Developer must provide a control scheme which will limit overvoltages to 1.3 pu for a maximum of 6 cycles, under all fault or load rejection conditions on either the AC or DC systems. This limit was inadvertantly omitted from the RFP as explained in the answer to the previous question.

Q. The submarine cable report due March 1990 is too late to be used to Proposers.

R. The at-sea test will be conducted in October of 1989. Its objective is to validate our approach to installation of cable in the Alenuihaha Channel, including management of static/dynamic loads and verification of the predictive model to identify touchdown points within required installation tolerances. Although the final report to the U.S. Depart­ment of Energy will not be prepared until March of 1990, the approach taken to cable installation under the HDWC program is well documented (see the bibliography subject area section on Cable Handling Equipment Subsystem and the section on Cable Vessel Subsystem).

In November of 1989, we (and the Proposer) will expect to receive confirmation of success in this approach. In the event we are not successful, the Proposer would know that prior to negotiations. In summary, we do not believe the March 1990 report is an impediment to the Proposer in preparation of a meaningful proposal.

Q. There is no mention of the earth resistivity in the neighbor-

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hood of the line routes or the electrode areas. Is this information available and if not, when could we start to acquire it?

R. Information on the estimated ground resistivity near the Waimamalo and Puna converter stations is presented in Section 3.6.7. There is no recent data on ground resistivities along the proposed transmission line routes. The Developer is free to acquire this information at any time.

Q. What will be the minimum AC system short circuit power (not counting any contribution from the HVDC inverter station or reactive banks) at the 138 KV inverter station bus on Oahu?

R. The short circuit current at minimum load is estimated to be 2370 Mva, 3 phase at Aniani Substation in 1994. The RFP states the Equivalent Short Circuit Ratio (ESCR) ranges from 6 at peak load to about 2.5 at minimum load. The minimum load ESCR should be changed to 4.7 based on the above short circuit Mva.

Q. Short circuit duty at Aniani is stated in section 3.7.2.2 as 12.3 kA for 1994. On page 3-71, Section 3.9, it says that the ESCR varies from 6 to 2.5. Please clarify.

R. Using the short circuit current at Aniani of 12.3 kA, the ESCR is 1.732 x 138 x 12.3 I 500 = 5.8 or approximately 6.0. The ESCR at minimum load is not 2.5 as stated in the RFP, but 4.7 as explained in the answer to the previous question.

Q. Does HECO have control of the site for the Aniani Substation?

R. Yes.

Chapter 4:

Q. Will HECO clarify what seismic risk assessment in Section 3.1.1 includes other than that the design conform to zone 3? Also, please clarify what volcanic risk assessment in Section 3.1.2 is to include.

What is the acceptable Turbo-Generator unit size range? How much deviation from the 25 to 50 MW range is permitted?

R. Both questions relate to the reliability requirements. Exhibits 4.4A and 4.4B require specific reliability information for the major elements of the project. The Proposer will have to either define a target reliability for the Project and apportion the unreliability to the

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various elements or determine the reliabilities of the various elements and combine to determine the Project reliability. Either way, support and justification must be provided for the underlying values used to determine the reliabilities of the elements. Project reliability is to be determined at the point of power transfer to HECO. The Developer is responsible for everything from the geothermal reservoir to that point.

The seismic and volcanic risk assessments are part of the supporting documents for these reliability calculations. Simply meeting the Seismic Zone 3 classification for the power production facilities, for example, would be acceptable if the resulting system reliability satisfied the project reliability target. More likely, some portions of the facilities may be acceptable designed to Zone 3 but critical portions may have to be designed to a stricter standard to meet the reliability target. Again, using the power production facilities as an example, the reliability target might be met designing the easily repairable piping to Zone 3, but the target might not be met if the turbine pedestal failed during the seismic event because it was only designed to Zone 3. Potential seismic events at the KERZ are likely to result in greater seismic forces than those considered applicable to Zone 3. Types of seismic events that could occur are discussed in an earlier question for Chapter 3. The same type of analysis must be performed for the volcanic risk assessment.

The same rationale holds for the selection of turbine size. The Proposer must balance the costs of the turbine facilities and the associated energy gathering systems against the number of units required to meet the Proposers target reliability for the power production facilities. To give an example, if the Developer were delivering 100 MW and it was made up of 50 MW units, most likely a spare 50 MW unit would be required to meet the reliability target. If the 100 MW were made up of 10 MW units, one or perhaps two spare units would be required. Considering the economies of scale, the costs of three 50 MW units would have to be compared to the cost of eleven or twelve 10 MW units. The choice of turbine size is up to the Proposer.

Chapter 5:

Q. The type of firm capacity described in the RFP is not typical of geothermal power. With this in mind, the RFP appears to provide a major qualification affecting HECO's purchase of this type of power.

R. It depends entirely on what is proposed. If the Proposer

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defines the Project as only 100 MW of baseload power, the geothermal production will meet this definition as it will not have to be cycled. If the Project is defined as 500 MW, a portion of this could be designated as baseload capacity, a portion as cycling capacity and perhaps a portion as peaking capacity. Each has different requirements. Geothermal power, as conventionally understood, would have trouble meeting cycling and peaking capacity requirements. If such duty is proposed, the Proposer must either find an alternate use for the cycling and peaking energy during part of the day or find a way to cycle the geothermal resource.

Q. Is the load cycling likely to be a daily as well as seasonal requirement?

R. This is completely up to the Proposer. HECO's load varies daily, seasonally and yearly. Whatever portion of this load the Proposer chooses to meet must be capable of being matched by the proposed Project design. Obviously, the cash flow would be greater the more energy the Developer can sell to HECO.

Q. How firm is the first stage requirement of 125 MW? For example, is 100 or 150 MW acceptable?

Yes. This is clearly described in the final paragraph on page 5-2 and the first full paragraph on page 5-5.

Q. Is the maximum capacity requirement of 500 MW based on expected electricity demand only? What is the expected maximum capacity of the wellfield?

R. The 500 MW is based on neither. It is a value that has been used for some time as a "good" value for a large geothermal project. It also, coincidentally, is about the estimated capacity that HECO will need for the ten-year period 1995 to 2005. Ten years seems to be a reasonable figure to use for build-out of this Project. The Proposer is free to choose any value desired as the maximum size of the Project. The question of the wellfield capability is discussed in Chapter 3 questions and responses.

Q. Please clarify Figures 5.1A and 5.2A. Both appear to show an initial capacity increment in 1995 of about 25 MW, whereas the RFP requests an initial increment of 125 MW. Figure 5.2A uses an hypothetical 50 MW/yr. uniform installation rate whereas Figure 5.1A shows nonuniform increments that total 150 MW in 1998 and a jump of about 150 MW in 2001. Does the stepped line in Figure 5.1A represent HECO's projected system peak (or base load) demand growth or HECO's view of how the project might add increments of capacity?

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R. The question of the initial and full Project size is discussed in the previous two questions. The hypothetical Project development shown on Figures 5.1A and 5.2A is simply that, hypothetical. It is shown only to create some perspective. The stepped line in Figure 5.1A is HECO's estimated capacity requirements.

Q. HECO refers to additional planning required for post 1994 growth. If HECO were to proceed now with the projected 146 MW fluidized bed addition, what would the revised on­line date for geothermal power be and at what MW level?

R. HECO cannot answer the question definitively as there are two contracts under consideration at the Public Utilities Commission. However, HECO is willing to purchase geothermal power now or at any time it can be delivered in almost any amount, constrained only by HECO's load and system stability requirements.

Chapter 7:

Q. Please discuss how the unique characteristics of the proposed project will enter into HECO's evaluation of proposed formulas for the cost of power produced by the Project.

R. This project has a number of unique characteristics, and one of the things we tried to point out in the RFP was what would be ideal characteristics for additional generating capacity.

We know geothermal does not exactly meet those verbatim. Considering the size of our system, it would be ideal if the 500 MW of geothermal could follow system load, have some quick-load pickup, and have some of the other operating characteristics of the balance of our system.

But we are realists. We know geothermal is basically a base load technology, and we do not expect much quick-load pickup capability. But you need to know what our concerns are and the kind of utility you are dealing with.

We are an isolated system and if a generating unit trips off, we have no one to call upon to help restore generating capacity, which is different from interconnected utilities on the mainland. Thus, we need to limit the amount of capacity that is lost at any time, and we tried to point this out in the RFP.

This will be of particular concern during minimum load periods, and this is just one example of what we mean when

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we say we want you to be creative in how you look at this project. You want to base load 500 MW of geothermal on the Big Island and there is a 280-mile DC link to Oahu where we have to be prepared to lose part of the capability of that link with some sort of spinning reserve. We do not want to interrupt service to customers because part of the geothermal capability is lost. Today, our minimum load is about 490 MW, and if you were to suddenly come on line with 500 MW of base load geothermal, there is no load for HECO to put on a machine on Oahu to provide spinning reserve and backup for the geothermal.

So, we encourage you to look at what you can do with the geothermal capability during minimum load periods. Could you incorporate into your proposal, for instance, some pumped storage, so there is some way of using the geothermal generating capability during off-peak hours at night and yet provide HECO even more power during on-peak hours. To what extent can you cut back on the export of geothermal to enable us to meet our off-peak problems? Depending upon the nature of the responses we get, we may have to change some of the ways we now think we are going to evaluate a proposal. We don't want to go into this with some preconceived ideas of, "You have got to fit into this little box, and if you don't fit this box, it won't work." No, that's not the kind of a utility you are dealing with. We want you, the market, to tell us what will work that you want us to consider. We are willing to listen.

This is just an example of the extent to which we invite you to get creative in helping us solve our system problems that make this project unique.

Q. What alternate sources of long-term capacity and energy will HECO consider in evaluating the Proposals? What capital, fuel, and operating and maintenance costs is HECO forecast­ing for such alternative sources?

R. HECO will be considering many different sources of long­term capacity and energy for its alternative plan for the 500 MW requested by this RFP. It is not necessary that a Proposer know what HECO's costs are. Proposers should make the best Proposal they can justify with their financing plan. When HECO receives clear decisions from the Hawaii PUC regarding the power purchase contracts with AES and Kalaeloa, it will be able to firm up the alternative plan that will be the basis for HECO's avoided cost projection. Unfortunately, the decision on Kalaeloa contract is not expected until September or October of 1989.

Q. In evaluating the price of capacity and energy, does HECO

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intend to use a leveled cost of service for each phase of all phases for the term of the PPA? What discount rate will HECO use to compute levelized costs?

R. We have not decided whether we will use a levelized cost of service for each phase of capacity addition of the 500 MW. Again, we want the Proposal to be innovative and suggest how to minimize HECO cost of service and still satisfy the Developer's financial requirements. Until now we have looked at capacity additions in the 125-150 MW range, about 10% of capacity installed. The 500 MW is quite a departure from what we have done in the past and what the PPA will contain and how it will be structured will come out in the negotiations.

As stated in the RFP, the Proposer chooses the discount rate and provides a rationale. The discount rate to be allowed by the PUC may be determined in the AES and Kalaeloa PPA dockets.

Q. Will HECO disqualify a Proposal if the proposed cost of power exceeds HECO's projected avoided costs?

R. No. As indicated in the RFP, we encourage your submitting a Proposal even though the proposed cost of power may appear to exceed HECO's projected avoided costs. We cannot sit down and talk without something substantive before us. It is our expectation that if actual costs for the project exceed HECO's avoided costs, the State will work with the Developer and HECO to find means of financial assistance to reduce the cost to a level at or below HECO's avoided costs.

Q. Will HECO please clarify the conflicting statements in Section 7.1.3 regarding the importance of acquiring geothermal mineral rights? Does HECO intend to give no credit to a Proposal that owns or controls a geothermal resource? Please clarify the extent to which a Proposer must control the geothermal resource in order to be shortlisted?

R. The RFP is clear; we will not consider ownership of the resource so that evaluation is on a "level playing field." Failure to control resource is not a basis for exclusion but control of resource is not sufficient in itself to guarantee an award. However, all other things being equal, control of the resource would likely be a tie breaker.

It is not necessary to control the resource to be short­listed. However, the Proposer must begin negotiations at

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the time of shortlisting so that control is evident at the completion of PPA negotiations.

Q. At the time the PPA is executed, must the Developer control sufficient geothermal mineral resources for 500 MW or just for the Phase I capacity?

R. We want sufficient geothermal resources to cover the energy to be delivered at those times set forth in the negotiated PPA. This specifically includes Phase I. If additional phases are not definitively covered in the PPA, the additional resources do not necessarily need to be controlled, but it would be desirable.

Q. Will HECO assume the exchange rate risk for foreign suppliers of goods and services?

R. No.

Q. In the event of cancellation of the project, will HECO make the Developer whole for all out-of-pocket costs incurred? In the event of delay at HECO's convenience or default on the part of HECO, will HECO compensate the Developer for all additional costs incurred due to the delay?

R. HECO will not be responsible for any costs incurred by the Proposer up to the time of PPA execution. HECO accepts responsibility for any damages due to actions on HECO's part after execution of the PPA. The amount of such damages would be in accordance with the PPA terms.

Q. Will the Developer be granted schedule relief for force majeure events, including permitting and financing delays beyond the reasonable control of the Developer?

R. Most likely yes. The exact language will depend upon contract negotiations.

Q. If a Developer is unwilling to grant HECO a first right of refusal to purchase the project, will his Proposal be disqualified?

R. No, but HECO will look to PPA negotiations for other benefits accruing to HECO in this instance.

Q. Does HECO envisage any factor other than lower load growth that would cause HECO to delay or defer this Project?

R. No. In fact, lower load growth may not lead to a delay in the Project. The message should be clear. HECO wants the geothermal power represented by this project. HECO wants to

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lessen its dependence on oil. We also have some very old units. It becomes questionable to continue spending money on life extension for some of these units.

Q. several questions related to guarantee structure and liquidated damage amounts.

R. HECO does not have any criteria at the present time for the timing or amount of liquidated damages or guarantees. These will be subject to contract negotiations.

Chapter 8:

Q. If the interisland transmission system is constructed, will the MECO generating capacity be considered as in integral part of the HECO system?

R. No. Although the transmission system may interconnect the two utilities, each would be purchasing power from the Developer and generation planning for each system would be independent of the other.

- 13 -

ATTACHMENT 3

STATE RESPONSES TO THE WRITTEN QUESTIONS

Chapter 3:

Q. There is some indication of geothermal potential in the southwest rift zone of Kilauea. Does the State intend to designate additional geothermal subzones in that area? If so, what is the timetable?

R. There is currently a pending designation of 8,090 acres in the Kilauea Southwest Rift Zone. Total acreage in geothermal resource subzones will be approximately 26,000 acres.

A procedural question relating to this designation is currently being reviewed by the Attorney General's office. The question is whether a request made by a group opposing geothermal development for a formal contested case hearing before the Board of Land and Natural Resources should be granted since a similar request involving the Southeast Rift was already disposed of by the Board and Courts.

Q. Would the State be willing to underwrite at least a portion of the resource risk associated with the first increment of development?

R. The State has approximately $6,000,000 in hand to support the geothermal program. The administration plans to ask for another $3,000,000 from the next session of the legislature. The State also plans to ask for $15,000,000 in Federal funds, $5 million per year over a period of three years, starting from the next federal fiscal year. Approximately $3,000,000 is earmarked for the slim hole program. It is presently considered that some of the additional money would be used for additional slim hole drilling but the majority would be used to drill exploratory wells that could be converted to production wells.

Q. Has the State begun its "slim hole" test? When will the next phase of testing begin?

R. To date, DLNR has issued (3) geothermal well drilling permits (SOH 1, 2, and 4) for the University of Hawaii's Scientific Observation Hole Project. The County of Hawaii Planning Commission has completed public hearings on the matter and is currently scheduling mediation proceedings between the applicant and objecting parties.

Q. Air permitting requires that hydrogen sulfide standards be

-1-

established by the Department of Health. When will these standards be in place?

R. The Air Quality standards under Chapter 60 should be adopted in the September/October, 1989 time frame. The draft regulations are available now.

Q. Will the State exercise its power of eminent domain on behalf of the Developer in the event of impasse in negotiation with land owners?

R. Perhaps. This response assumes the question refers to land owners who will be affected by the transmission corridor. Section 277.3 of Hawaii Revised Statutes provides that the State's "Director of Transportation in the name of the State and subject to the approval of the Governor may for the purposes of this Chapter acquire, by purchase or eminent domain, private property in fee simple, or lesser interest therein, including leases, all property necessary for the establishment, maintenance, operation, management and control of energy corridors." A bill to give a State agency more directly concerned with the geothermal/cable project authority relating specifically to geothermal energy transmission corridors failed in the 1989 legislative session, partly because the Department of Transportation already has this authority in Chapter 277, HRS. The State is seeking Attorney General's opinion that energy corridors as used in Chapter 277 specifically include electric transmission corridors. If that decision is negative, the State Administration will seek, in the 1990 legislative session which adjourns in April 1990, an amendment to Chapter 277 that specifically includes electric transmission corridors within the meaning of energy corridors.

Q. What authority does the State of Hawaii have to resolve impasses in negotiations between developers and the holders of geothermal resource leases? If this authority differs for privately held, State-owned, Hawaiian Crown, and federal properties, please describe the State's authority in each case.

R. The State of Hawaii does not have the authority to resolve impasses in negotiation between developers and the holders of geothermal resources leases. The State can only encourage settlement but not to intervene in all cases. The State can intervene if the lease is not being worked productively within a reasonable period of time, or other conditions of a lease are not being honored. Similarly, if conditions of State issued permits are being violated, the state will intervene. State intervention involving federal properties would be unlikely.

Q. Are records of pending challenges to existing leases available in the document room? If not, please provide such

-2-

records.

R. We are not aware of any pending challenges to existing leases. There are however, two pending suits filed against the State (one in Federal Court, another in Circuit court) regarding the land exchange between the State and Campbell Estate.

A potential legal question that may arise in the future relates to ownership of mineral rights. The State's position is that mineral rights belong to the State and this has not been challenged.

Q. Are copies of all geothermal resource leases available in the document room? If not, please provide such copies.

R. A complete set of all leases is available in the documents room and in the Geothermal Permit Center.

Chapter 6:

Q. Will the State mandate the permitting schedules to be adhered to by the DLNR, DOH, and other State agencies for receipt and issuance of permit approvals? If yes, when is this legislative action to be taken? Will the State guarantee this mandate prior to submission of bids?

R. Act 301, Session Laws of Hawaii 1988, requires that State and County agencies participate in a consolidated permitting process in which all State and County permitting agencies affected by a geothermal/cable system development project must sit down and participate in coordinating and consolidating their permitting efforts. However, the Act does not invalidate the jurisdiction or authority of any agency under existing law. This means that the schedule for issuance of permits cannot be mandated by the State under Act 301. The process shall take place according to existing statutes; however, Act 301 provides that the permitting process will be approached in a coordinated and consolidated manner. The administrative rules for implementing Act 301 should be in place by August, 1989.

Q. What is the relationship between the State's intent to secure permits and the RFP assignment of responsibility for permitting to the Developer?

R. It is the applicant's responsibility to secure permits for the various activities to be undertaken as part of the 500 MW geothermaljcable project. The letters included in the RFP demonstrate the commitment of Governor Waihee and his administration to the development of geothermal power, including steps taken to facilitate applying for permits, making offices, information and personnel available to assist. However, the State is not the applicant, the

-3-

Developer is the applicant, and therefore it is the Developer that is responsible for securing the permits. The state will prepare a master plan and a programmatic EIS and is also pursuing the concept of establishing a master development permit process for this project. This should reduce the time and effort required on the part of the Developer. If during the course of preparing the EIS it is evident the State can procure some permits, it will, but these would be limited to general development permits. Site specific land use and technical permits must remain the responsibility of the developer.

Q. When will the consolidated permit form be issued?

R. A preliminary draft of the consolidated permit application form is being prepared and a final version will be available for distribution when the Act 301 administrative rules are promulgated. It should be noted that all application forms currently used by each respective agency will be incorporated in its entirety in order to facilitate the review and processing of such applications by the members of the consolidated permit application and review team. The Act 301 implementing regulations should be adopted by the end of August, 1989.

Q. Have any cognizant federal permitting agencies refused to participate in the interagency permitting group? If so, please identify them.

R. Federal agencies, by Statute (Chapter 196-D, HRS), are not required to participate and, as such, are only invited to participate in the consolidated permit application and review process. To date, all Federal agencies believed to have any interest in geothermal permitting have been invited and no invitee has refused to participate in the Interagency Group.

Q. To what extent and with what legal rights will the State of Hawaii intervene on behalf of the successful developer in any actions which are likely to occur by environmental and social groups such as the Pele Defense Fund.

R. Subject to a legal opinion from the state Attorney General's Office, on a case-by-case basis whether State interest is affected the State may directly intervene in cases involving a private party/developer in any legal action or quasi-judicial proceeding.

Q. What is the historical turnaround time for permit appeal submitted to the Hawaii Supreme Court?

R. On a very generalized basis, considering only the H-3 and geothermal cases, the turnaround time for appeals has been 3 years 9 months and 4 years 5 months, respectively. A Pele Defense Fund case in 1987, however, was turned around in only

-4-

twelve months from the date the appeal was filed until the date the Hawaii supreme court unanimously decided in favor of geothermal development. It should be noted that Section 205-5.1, HRS, specifically provides that appeals to certain land use decisions relating to geothermal resource subzones, "shall be made upon the record directly to the (Hawaii) Supreme Court for final decision." In the Pele Defense Fund case, appeal to intermediate courts was not appropriate.

Q. Although this project is endorsed by both HECO and the State administration, we see no evidence of strong public support. Why not?

R. Surveys indicate strong public support for geothermal power. The opposition is always more vocal. One of the tasks for the contractor who will prepare the master plan and programmatic EIS is an extensive public involvement program.

A community survey in September 1987 indicated that 84 percent of the State's residents favored geothermal development. Seventy-seven percent of the residents on the Island of Hawaii, where the development will occur, were in favor.

Another survey, in June 1987, indicated that 73 percent of the State's residents (71 percent of the Island of Hawaii residents) were favorable about the government program to build an undersea cable to send geothermal electricity to Oahu from the Big Island.

Another survey, in October 1986, indicated that 64 percent of the Big Island residents (66 percent in the Puna District) favored 25 MW of geothermal development to serve the Big Island. These percentages slipped to 50 percent (Island of Hawaii)/43 percent (Puna District) favoring up to 100 MW of geothermal to serve the Big Island; and further reduced to 42 percent (Island of Hawaii)/37 percent Puna District) favoring 500 MW for export to Oahu.

The full results of these surveys are available in the Public Documents Room.

Chapter 7:

Q. The Governor's letter indicates that the state will assist in both permitting and financing. Please discuss the relationship of DBED and DLNR in the development of the proposed Project. Specifically, will DBED provide assistance in arranging financing, and, if so, in what ways?

R. This has not been determined. It will depend largely on the kind of assistance required, if any, as evidenced by the Proposal. If required, it would most likely be indirect rather than direct. The State is exploring state and Federal

-5-

options.

Q. Since the State has not established guidelines for permit reviews and approvals (or disapprovals) and licensing and permitting approvals are included in a milestone schedule subject to default, it would appear that defaults associated with permit receipt and in-service dates require significant changes to insure prospective developers that their investment in the Project is not forfeited. What action does the State propose to mitigate this concern?

R. Processes for the issuance of permits are established by statutes, ordinances and duly approved rules - these are public processes whose outcomes are determined by the interaction of public officials, concerned members of the public, and the existing laws. There is no guarantee of the outcome of a particular permitting process. The outcome can be anything from denial to approval with many, few, or no conditions attached to the permit. While the State cannot guarantee the outcome of a public process, its policymakers, namely Governor Waihee and his cabinet members, can lend their full support and influence to a positive outcome, as they have done in the letters attached to the RFP.

Q. Has the State applied for PUC declaration of general guidelines under which the PPA would be negotiated, and if negotiated within those guidelines, will the State guarantee PUC approval of the PPA?

R. The State has not asked for PUC cannot guarantee PUC approval. Developer and HECO to develop a to the PUC.

guidelines and the State The State will work with the PPA that will be acceptable

Q. What role will the State of Hawaii play in the PPA negotiations?

R. The State will have a limited involvement in the technical evaluation. The State will have a more active involvement in the commercial negotiations. The amount and manner of involvement have yet to be determined.

-6-

ATTACHMENT 4

HECO Responses to Oral Questions

Q. Can HECO exercise its power of eminent domain on behalf of the Developer in the event of impasse in negotiation with land owners?

R. Hawaiian Electric Company cannot exercise its right of eminent domain for the benefit of another private party on Oahu. With regard to the over-land transmission on the island of Hawaii or Maui, it is not in our franchise area, so we cannot use our rights of eminent domain. Although Hawaii Electric Light Company and Maui Electric Company are wholly-owned subsidiaries of HECO, they cannot use their rights of eminent domain for the benefit of HECO. As far as Oahu is concerned, it is our franchise area, and we would utilize whatever means are available to us to help a Developer.

Q. Section 4.5 of the RFP states that, "Based on HECO's overall system reliability requirements, the maximum allowable loss of Project power is about 125 MW. This is independent of whether the loss is in the geothermal wellfield, the electric power production facilities," D.C. converter, terminal components, etc.

What is really meant by that? Are we taking the total energy from the fluid and working out the loss from that point? Where is the start point of that loss calculation?

R. The "loss" that is being referred to is the outage (or loss of use) of any Project (system) component that would reduce the electrical output (capacity) of the Project by more than 125 MW. We are not referring to the energy loss through the system (from the resource wells, through the power plants, and transmission system) which requires an input of more than 500 MWe to get out 500 MWe on Oahu.

Q. The secondary question associated with that is, are you going to take any notice of the total exergy efficiency of the whole system? That is, the total energy efficiency from the fluid and working it all the way through? In other words, if, in fact, a particular turbine-generator system is more efficient that another, will you be taking that into account?

R. We would hope that the total system efficiency gets translated into the price someone is asking HECO to pay.

That is where we would look for system efficiency to be considered. However, the State will undoubtedly be concerned that the resource is utilized in a prudent manner.

Q. There is a statement that HECO would buy the power at competitive rates. Can you elaborate on that? Just what do you mean by "competitive rates." For example, what that means today?

R. HECO's current costs, the most recent filed avoided cost, is more like four to five cents a kilowatt hour. We file it on a quarterly basis, and with the price of oil swinging, it's changed quite a bit recently. Our price of oil changed three dollars a barrel from January to May.

We would look at this project, given the long-term nature of the contract, from a number of different perspectives. We would not necessarily say we are going to just pay the current filed avoided energy costs. We could structure the cost in many different ways, and this is one of the things that we need to explore with the PUblic Utilities Commission. Unfortunately, due to the two open dockets, we are con­strained in exploring that right now.

Q. Would you go against world oil prices? Or would you go against standards on the mainland where it goes from a penny to a dime?

R. We are basically a 100 percent, half a percent low sulfur fuel oil-fired system, and that's really the measuring stick that you have to be concerned about. The comparative basis will be HECO's avoided costs, not cost standards for another utility located on the mainland or elsewhere.

Q. Is there any value any of the islands could assign to the cable aside from geothermal production on the Big Island?

R. Maui Electric Co., a subsidiary of HECO, has a separate project underway that involves connecting the electric systems on the islands of Maui, Lanai, and Molokai together by means of a tri-island submarine cable system. This project will tie together the separate pieces of the MECO system and has only recently become possible by our acquisition of Molokai Electric Co., Ltd.

Given that separate MECO project, the only benefit for the cable system of the geothermal/interisland transmission system, other than development of the geothermal resource, would be a very long-range objective of ultimately tying the electric utilities of the state together.

- 2 -

Q. Once a cable is installed, would there be a value to the Big Island to have such a tie to Oahu, and has this been seriously discussed with them?

R. Yes, once a cable is installed, there is some potential value. It is a complex question and is part of an analysis we will look at, giving credit as appropriate. Right now, we are trying to keep the scope of this project as tying only the geothermal resource on Hawaii to Oahu, and potentially a tap on Maui. The HELCO system would not be tied into this project at this time. Possibly at some time in the future, there could be a tie to the HELCO system, but it is not under discussion at this time.

Q. Has any investigation been carried out regarding reinjection in this field?

R. This question is in the process of being answered by Ormat requesting permits for development of 25 MW of geothermal power for a PPA with HELCO. The design concept that they have submitted to the state and county is for reinjection.

The Lanipuna six well encountered a loss circulation zone at about 4,200 feet and took every bit of fluid that could be put into it from pump-assisted driving of water. It was near the top of the geothermal producing zone in the Kapoho State Wells.

As far as HGPA is concerned, the liquid phase coming out of the wells is supersaturated with silica, and this has caused a number of problems with silica precipitation at the surface.

The Ormat design recombines the condensate from the steam phase with the brine and reinjects that along with the noncondensable gases. Using the characteristics of the wells that have already been drilled allows them to bring the silica down to below saturation at the temperature that they are reinjecting.

The design that may be used in the future on the ERZ will depend a lot on the characteristics of the wells to be drilled.

- 3 -

ATTACHMENT 5

State Responses to Oral Questions

Q. There has been difficulty in the past in Hawaii with the sequence of permits? Which permits do you get first? Which permits depend on first getting other permits?

R. There is presently no formal written procedure on the sequence of permits. However, one of the major benefits of Act 301 is that it sets up an interagency group that can work out the permit sequence issues.

Q. How many Federal agencies accepted the state's invitation to join the interagency permit group?

R. All of the following Federal agencies were invited to participate in the Interagency Group and with the exception of the Environmental Protection Agency, have attended all of preliminary meetings convened by the Department of Land and Natural Resources: u.s. Army Corp of Engineers, u.s. Coast Guard, u.s. Navy, National Park Service, U.S. Geological Survey, Environmental Protection Agency, National Marine Fisheries Service, and U.S. Fish and Wildlife Service.

The EPA's non-attendance at these meetings should not be construed to mean non-participation by that Federal agency, but rather as indicated by the local EPA administrator, a problem resulting from limited staffing of the Honolulu District Office. Furthermore, they have stated that in the majority of cases, their environmental concerns would be addressed in the permitting process regulated and administered by the Corps of Engineers. The EPA office has requested to be kept on board (in a non-attending capacity) and be kept apprised of any geothermal/cable activity through regular correspondence with the Interagency Group.

Q. Describe the relationship between DBED and DLNR?

R. They are both cabinet level. They go cooperate. DBED is the advocate for the geothermal/cable project. DLNR is responsible for permitting. The Department of Land and Natural Resources manages State-owned land, land regardless of ownership that is in the Conservation District, wildlife, minerals including the geothermal resources, water, flood control, aquatic resources, forestry, aquaculture, natural area reserves, state parks, outdoor recreation and historic sites. As a natural resource manager, some of the DLNR functions are regulatory.

Q. When will the hydrogen sulfide standards be established by the Department of Health?

R. We intend to send these rules to the Governor for approval in September or october 1989.

Q. Is there a Geothermal Resource Subzone established on Maui?

R. Yes, there is a 4,108 acre GRS in the Haleakala Southwest Rift.

Q. Will there be a copy of Act 301 in the documents room?

R. Yes, as well as a copy of the draft Administrative Rules relating to Act 301.

Q. Are different options for the overland portion of the interisland transmission system going to be surveyed in the Master Development Plan.

R. In June 1989 DBED will award a major contract for planning services relating to the geothermal cable project. These services include, somewhat in time sequence; preparation of a Master Development Plan; a public participation program; analysis of a alternative overland transmission corridors; and the preparation of a programmatic Environmental Impact statement. The overland transmission corridor analysis will reach the point of recommending alignments. We will have the planning consultant address the right-of-way acquisition in this analysis. In addition, affected State agencies have initiated a legal and programmatic review to ascertain to what degree the State can directly participate in addressing the corridor issue, including exercising the power of eminent domain.

Q. Is there any value that any islands could assign to the cable, aside from transmitting geothermal energy from the island of Oahu via Maui?

R. We are aware of HECO's plan for Maui Electric Company to link the islands of Maui, Molokai and Lanai with an undersea cable. That effort is somewhat independent of the Hawaii to Oahu via Maui system which is driven by the need to get the Big Island's geothermal energy to the Oahu market. However, in the long-term, there probably will be other benefits to be gained by tying the state together. This question has also been answered by HECO in Attachment 4.

Q. Is there any uncertainty about obtaining $15 million from the federal government for a drilling program, and when will the

- 2 -

drilling start?

R. We have $3 million of state funds available now, the last Legislature appropriated $2.6 million which will be available after July 1, 1989, and we will include another $3 million request in the budget that will be considered by the legislative session that convenes in January 1990 and is scheduled to adjourn in April 1990. In addition, we are working through the U.S. Congress - not the U.S. Department of Energy - for $15 million (probably in increments of $5 million annually for 3 successive years) for our geothermal resource verification and characterization program.

With an initial $3 million in State funds, we expect the University of Hawaii to commence drilling this year up to 6 scientific observation holes with 4 throughout the Geothermal Resource Subzones in the Kilauea East Rift and 1 or 2 on Maui.

We have no specific plans beyond the initial scientific observation holes. We will be asking the private sector and our consultants for recommendations. One option is to use the public funds to share the risks of additional exploration that is primarily financed by the private sector. Like any federal appropriation provided by the u.s. Congress, we will not be certain of the results until after the Appropriations bill is enacted.

Q. Has the state undertaken any studies to estimate the cost of this project insofar as their estimate of what the delivered power would be?

R. Yes, the most comprehensive concerning economics was, "Undersea Cable to Transmit Geothermal-Generated Electrical Energy from the island of Hawaii to Oahu: Economic Feasibility," prepared by Decision Analysts Hawaii, Inc. in February 1988. This is the so called Plasch report since Dr. Bruce Flasch prepared it. This analysis necessarily made a lot of assumptions especially relating to capital costs which were estimated to cost $1.68 billion. "Preliminary Analysis: Legal, Institutional and Financial Aspects of an Inter-Island Electrical Transmission Cable" prepared by Gerald A. Sumida from a local law firm and Alan L. Hills, then of Prudential-Bache Securities, Inc. was published in April 1984. A follow-on report, "Alternative Approaches to the Legal, Institutional and Financial Aspects of Developing an Inter-Island Electrical Transmission Cable System whose principal author was Gerald A. Sumida assisted by others from a local law firm and Alan L. Hills, then with First Interstate Cogeneration Capital Associates, was published in 1986. Mr. Hill, now with Cogeneration Capital Associates of

- 3 -

Larkspur, California, prepared a report for DBED in July 1988, "Hawaii Geothermal Project: Overview of Status, Development Approach and Financial Feasibility Assessment." All of these reports addressed both the geothermal and the cable aspects of Hawaii's project. All are available in the public documents room. Extra copies of the April 1986 and July 1988 documents are available. Call Jerry Lesperance at (808) 548-4020 or Fax him at (808) 531-5243.

A. Has any investigation been carried out regarding reinjection in this fields?

R. HGP-A is 43% steam and 57% brine, by weight. The liquid phase is super-saturated with silica. The brines are disposed in surface ponds. Ormat intends to use the approach successful in Coso, California, to recombine the condensate from the steam phase with the brine, and reinject that along with the noncondensible gases. The Ormat wells show a higher ratio of steam to brine than HGP-A.

- 4 -

89:10938-520

June 21, 1989

MEMORANDUM

TO: Members of the Governor's Advisory Board on the ~~rmal/Cable Project

FROM: ~efkl~esperance

SUBJECT: HECO/State Request for Proposals

Chairman Quinn asked that the Advisory Board members receive the attached HECO letter.

GOL:lta

Attachment

JOHN WAIHEE GOVERNOR

ROGER A. ULVELING .._'· DIREOOP

BARBARA KIM STANTON DEP'v TY DIREOOII

LESLIE S. MATSUBARA OEPJT>' DIREOOR

I~

"'""~"!"'~;;acme .;om par ,c. • f'O Box 2750 • Hooolulu. HI 9684C-0001

R•chard K. McQuaon VtC8 President EnQinoerlng

Mr. William F. Quinn Chairman Governor's Advisory Board 0/0 GOOOSILL, ANDERSON, QUINN P. o. Box 3196 Honolulu, HI 96801

Dear Mr. Quinn:

RECEIVED

JUN 1 · ;?89

WM. f. QUINN June 15, 1989

RECEIVED

& STIFEL WM. f. QUINN

I want to take thia opportunity to thank you and others of your staff and colleagues for participatinq in and contributinq to the successful open proposers conference on the Geothermal/Inter­island Transmission Project held Monday, June 5.

Hawaiian Electric company is very pleased with the breadth of attendance and interest in the request for proposals (RFP). Importantly, I think, the project has now reached the stage where serious proposers are identified, and those entities will beqin defining their proposals. To that end, questions includinq confidential matters will be posed about aspects of intended proposals. Some may be potentially unique, others not. In an effort to ensura that all proposers are treated fairly, I hope you will join with me in coor~inating, to the extent possible, our various and separate co~unications with individual parties interested in submittinq a proposal.

The two vol~mes con$tituting the RFP represent HECO's official documentation f~r the solicitation. We have identified a procedure (see paqe 2-1, section 2.2 of HECO's RFP) by which addenda or clarifications to the RF~ will be issued and made available to all parties intending to submit a proposal. Out of any conversations which HECO or the State may have with prospective proposers, information ma¥ be imparted to one of us that will be helpful to all in preparing a submittal, such information submitted to us by the State which is appropriate for clarification or addition by addenda in accordance with the RFP procedure will be disseminated to proposers by HECO, Admittedly, what information may qualify for broader dissemination is judqmental in nature and a sense of "fair play 11 is likely to be the governing principle.

Mr. William F. Quinn Paqe 2 June 15, 1989

I request at this time that, in an attempt to coordinate our efforts, it would ba helpful to try to advise each other of the overtures being made by various interested parties and the nature ot discussions. Perhaps a loq of such interactions and, if possible, a quick call by your office to John Richardson, HECO's Project Manager of the RFP, or Jackie Erickson, HECO's corporate counsel, in John's absence, would allow us to maintain the inteqrity of the process. Transmittals should be sent to:

John F. Richardson, Jr. Hawaiian Electric Company, Inc. 820 Ward Avenue Honolulu, HI 96814 Telephone Number: 543-4420 Fax: 543-7898

or

Jackie M. Erickson Hawaiian Electric Company, Inc. 220 s. King Street, 13th Floor, Honolulu, HI 96813 Telephone Number: 543-4700 Fax: 543-6857

We, at HECO, will afford the state the same courte&y. Please let me know the contact point in the State administration it you think this an appropriate process.

Again, my personal thanks for your time and continued assistance and interest. I believe we have successfully begun a momentous undertaking for HECO an~ the Sta~e of Hawaii an~ I look forward to continuing our close working relationsnip.

sincerely,

of'~~n.R~~ pv R. K. MeQ~~in

RXM:ajr

~-J/ , Hawaiian Electric Company, Inc.· PO Box 2750 ·Honolulu, HI 96840-0001

~:e . ~ ~ ,.,

\:If ; :~ c~

c.,,. _ ,.'o\ I J ·- '-'

•·' I

,Hichai<JK McrOtliiin' Vice Pres1dent Engineering

Mr. William W. Paty Chairman of the Board Department of Land & Natural

Resources state of Hawaii

r-: f:. C E 1 V E 0

AlQ; 0 0

liiV. Or WATER&. U./iiJ G.:~ ~Ll,PMENT

1151 Punchbowl Street, Room 130 Honolulu, HI 96813

Dear Mr. Paty:

June 15, 1989

I want to take this opportunity to thank you and others of your staff and colleagues for participating in and contributing to the successful open proposers conference on the Geothe~Tialjinter­island Transmission Project held Monday, June 5.

Hawaiian Electric Company is very pleased with the breadth of attendance and interest in the request for proposals (RFP). Importantly, I think, the project has now reached the stage where serious proposers are identified, and those entities will begin defining their proposals. To that end, questions including confidential matters will be posed about aspects of intended proposals. Some may be potentially unique, others not. In an effort to ensure that all proposers are treated fairly, I hope you will join with me in coordinating, to the extent possible, our various and separate communications with individual parties interested in submitting a proposal.

The two volumes constituting the RFP represent HECO's official documentation for the solicitation. We have identified a procedure (see page 2-1, section 2.2 of HECO's RFP) by which addenda or clarifications to the RFP will be issued and made available to all parties intending to submit a proposal. Out of any conversations which HECO or the State may have with prospective proposers, information may be imparted to one of us that will be helpful to all in preparing a submittal. Such information submitted to us by the State which is appropriate for clarification or addition by addenda in accordance with the RFP procedure will be disseminated to proposers by HECO. Admittedly, what information may qualify for broader dissemination is judgmental in nature and a sense of "fair play" is likely to be the governing principle.

An HEI Company

113'/-

Mr. William w. Paty Page 2 June 15, 1989

I request at this time that, in an attempt to coordinate our efforts, it would be helpful to try to advise each other of the overtures being made by various interested parties and the nature of discussions. Perhaps a log of such interactions and, if possible, a quick call by your office to John Richardson, HECO's Project Manager of the RFP, or Jackie Erickson, HECO's Corporate Counsel, in John's absence, would allow us to maintain the integrity of the process. Transmittals should be sent to:

John F. Richardson, Jr. Hawaiian Electric Company, Inc. 820 Ward Avenue Honolulu, HI 96814 Telephone Number: 543-4420 Fax: 543-7898

or

Jackie M. Erickson Hawaiian Electric Company, Inc. 220 s. King Street, 13th Floor, Honolulu, HI 96813 Telephone Number: 543-4700 Fax: 543-6857

We, at HECO, will afford the state the same courtesy. Please let me know the contact point in the state administration if you think this an appropriate process.

Again, my personal thanks for your time and continued assistance and interest. I believe we have successfully begun a momentous undertaking for HECO and the State of Hawaii and I look forward to continuing our close working relationship.

Sincerely,

J ~ »>. f,..t..r-rv R. K. McQual.n

RKM:ajr

FEDERAL GULF GORPORATIO~ 1500 REPUBLICBANK TOWER

DALLAS, TEXAS 75201

214-922-9393

CECIL L. SMITH

PRESIDENT

Mr. William W. Paty Chairperson

June 14, 1989

Board of Land and Natural Resources Post Office Box 621 Honolulu, Hawaii 96809

Dear Mr. Paty:

It was good to there June 5, 1989. March 28, 1989 and Southwest Rift and subzone designation.

meet you during HECO's Conference We also appreciated your letter of enclosures regarding the Kilauea

its potential geothermal resource

Please let us know when the Attorney General's department clears our pending contested case matter so that this designation can be made. As you may recall, our existing landowner's Geothermal Lease on agricultural lands in that area has continued since 1980, and we have been hopeful of a resolution about the contested cases here since 1985.

Clearly, we need to get this de signa ted for geothermal activity current Project discussed during the

Southwest Rift area to fit into HECO's Conference.

We were also very interested in the Conference comments about including this area in the State/Federal funding for the slimhole and related activities later this year or early in 1990. We certainly feel that this Southwest Rift Zone may become a dominant factor in your Master Plan as well as HECO's pending Project.

9--~ I ,_/ .v I IJ

Mr. William W. Paty Chairperson Board of Land and Natural Resources Honolulu, HaWaii 96809 June 1 4, 1 9 8 9

Page 2

Please let me know anyway pursuing these endeavors. cooperation and helpfulness forward.

we can be more helpful in Thanks again for your

in moving this Project

s· erely,

CLS:prh cc: Susumu Ono

Manabu Tagomori Charles W. Smith

~~ Cecil L. Smith

Hawaii Geothermal/Interisland Transmission Project

OrEN PROPQSERS CONFERENCE - June 5. 1989

Hawaiian Electric Company 900 Richards Street

(Enter from King Street) 2nd Floor Auditorium

AGENDA.

7:30 a.m. - Registration of Attendees - Security

8:00 a.m. - Opening Welcome - RKM Remarks by Governor John D. Waihee, III Remarks by H. D. Williamson, President, HECO Introduction of Steering Committee (*) - Purpose Introduction of Working Committee (*) - Purpose Introduction of HECO Resource Persons (*) DBED Support Statement DLNR Support Statement DOH Support Statement County of Hawaii Representative Support Statement

9:00 a.m. - Coffee Break 9:30 a.m. - Reconvene - RKM

Answers to Submitted Questions DBED DLNR DOH

Answers to Floor Questions

11:30 a.m. - Lunch

1:30 p.m. - Reconvene - RKM Answers to Submitted Questions

HECO consultants

Answers to Floor Questions

2:30 p.m. - Coffee Break

3:00 p.m. - Reconvene - RKM

4:00 p.m. - Pau

*Refer to the attached.

FLUOR DANIEL

___..

Fluor Donie! Development Corporation 3333 Micho~on Dri¥e, lrvir,., CA 92730 (71~1 975-6917 foo: (7U) 975-5981

l>outlo• H. Co•••• Pr•sidant

MAY 2 6 1989

May 26, 1989

Mr. John F. Richardson, Jr., PE Executive Staff Engineer Hawaiian Electric Company~ Inc. P.O. Box 2750 Honolulu, HI · 96840

Dear Mr. Richardson:

Subject: Interisland Transmission Project

Enclosed please find a list of questions regarding the Request for Proposal for the subject project.

I estimate that eight per~n~-Fepreeenting consortium will attend the Open Proposers Monday, June S in Honolulu.

members of our Conference on

We look forward to working with HECO on this important project.

Douglas H. 14M~

Cortez President ... Attachment

QUESTIONS for HECO

l. It the Interisland transm1ss1on system 1s constructed, wil! the MECO generating capacity be considered as an integral part of the HE~O system?

2. Will HECO disclose the identity of all Proposers, including those on the short list?

3. Will HECO please rank in order of importance the technical evaluation factors as listed in Section 1.6.3.1 of the RFP?

4. Will HECO please rank in order of importance the commercial eva!uat1on tactors !lstea 1n sect1on l.o.j.2 ot the RFP?

s. ln evaluating the price of capacity and intend to use a leveled cost of service All phe.toea !o.: l.lu• '-"'"""' v! l.)o., !'!'ht Wloal. HECO use to compute leveli:ed cost?

energy, does HECO for each phase or

\ll..,~,.;vu.uL. .&.a.L.• w.l.ll

6. What alternate sources of long term capacity and energy will HECO consider in evaluating the Proposals? What · capital, fuel, and operating and maintenance costs is HECO forecasting for such alternative sources?

7. Will HECO disqualify a Proposal if the proposed cost of power exceeds HECO's projected avoided co~

8. Will HECO please clarify the conflicting statements in Section 7.1.3 regarding the importance of acquiring geothermal mineral rights? Does HECO intend to give no credit to a Proposal that owns or controls a geothe~~al resource? Please clarify the extent to which a Proposer must control the geothermal resource in order to be shortlisted?

P. Will tho Dovol.opor bo <Jr:t.ntc4 ochcdulc relief for force

10.

m~~t'!Urn .nvn1"1i"tl, ;1"11"":1nA;'"'')' r-~:rndt-ot-!n? ftno::\ £.ine-.ne2..n.,- A•~·~··•

beyond the reasonable control of the Developer? -

Is HECO willing to in the event HECO Project?

pay liquidated damages to the Developer is in default or delays or cancels the

ll. !f a Developer is unwilling to grant HECO a first right of 1·efusal to purchase the project, will his Proposal be dioqua.lif:kcd:'

12. Will HECO please rank in order of importance the Evaluation Criteria listed in Section 7.,?

HECO Questions page 2

13, At the time the PPA is executed must the Developer control sufficient geothermal mineral resources for 500 MW or just for the rhaee I eapaeity?

14. Will HECO or the State provide rights of eminent other assistance to the Developer to acquire the rights of ways to construct the Project?

domain or required

15. Will HECO clarify what seismic risk assesarnent. in S~ction 3.1.1 includes other than that the design conform to Zone 3? Also, please clarify what volcanic risk assessment in Ocction J.l.~ io to inclY~a.

16. To what extent and with what legal rights will the State of Hawaii intervene on oehalf of the successful developer in any actions which are likely to occur by environmental and social groups such as the Pale Defense Fund.

17. ThG ~~p~~i~y ~h•r·~~~~~a~i~• nA-~rihQn in ~hP. RFP ArP. nn~

~ypieal of gP.othermAl pnwAr. Can HECO rank in order of importance the characteristics listed in Section 1.6.

lB. What role will the State of Hawaii play in the PPA negotiations?

19. Will HECO please clarify the reference to •relative environmental and social impact" in Section 1.6.3?

20,

21.

22.

Will HECO assume exchange rate risk for foreign suppliers of goods and services?

Will the state mandate the permitting schedules to oe adhered to by the DLNR, DOH, and other State aaencies for .l.ca . .:el.l""L a..wJ J.a:teua.u\.:c: v! }-'tU . .iu.1L AY}J.Z.U"Va.l•'t I! y;D, wlu:::u. l.e this legislative action to be taken? Will the state guarantee this mandate prior to submission of bids?

HECO refers to additional planning required for post 1994 growth. If HECO were to proceed now with the projected 146 MW fluidized bed addition, what would the revised on-line date for geothermal power be and at what MW level?

23. Other than lower load· growth, what factors does HECO envision would cause HECO to delay or defer the pro;ect?

24. Has HECO and/or the State applied for PUC declaration of general guidelines under which the PPA would be negotiated, and if negotiated within those guidelines, will the State guarantee PUC approval of the PPA?

DHC\HECOS.26

PG&E Enttrprlsu

5D Bale Slreot 22nd Flo« Room CflJ Sin f!lnc«XJ, CA 94 105 ~75/168{)4U

Mr. John F'. Richardson, Jr., P.E. Executive Staff Engineer Hawaiian Electric Company, Inc. P. o. Box 2750 Honolulu, HI 96840

Bechtel . F nterprises

Flhy &eale Streel San FranCiaco, Calltornia ,.., _,..c. ... ""'· .... - Co\ .. ,..

HAY 2 6 1989

May 26, 1989

Subject: Hawaiian Geothermal/Interisland Transmission Project

Please find enclosed questions regarding the·subj.;,.:::t·proj-ect.

Sincerely·.

Alastair Campbell Project Manager . PG&E-Bechtel Generating Company

ADC:ml

HAWAII GEOTHERMAL/INTERISLAND TRANSMISSION PROJECT

Regyests for Clarifjcatjon of REP

1. What authority does the State of Hawaii have to resolve impasses in negotiations between developers and the holders of geothermal resource leases? If thh outho.-IL.r \Jirr~::r·~ fur· pr1vaiely held, ~tate-owned,

Hawaiian Crown, and federal propertjes, please describe the St!te's authority in each case.

2. Are records of pending challenges to existing leases available in the document room? If not, please provide such records.

3. Are copies of all geothermal resource leases available in the document room? If not, please provide such copies.

4. Have any cognizant federal permitting agencies refused to participate in the i nt.P.ragF!n~y J"'Prmit t; no oroup? If '0' p, O:&C$ ; dont ify them.

5. Has the State begun its "slim hole" test? When will the next phase of testing begin?

6. Will the State exercise its power of eminent domain on behalf of the developer in the event of impasse in negotiation with land owners?

7. Doe~ HJ:CO hovt: ~:unLr·ul uf t.he S1te 1'0r tile An1an1 :>Ut>station?

8. We assume that in the event of cancellation of the project that HECO will make the developer whole for all out-of-pocket costs incurred. We also assume that in the event of delay at HECO's convenience that HECO will compensate the developer for all additional costs incurred due to the delay.

9. Reference Table 3.7, Physical Conditions • Please specify the site design wet bulb temperature.

10. Please discuss how the unique characteristics of the proposed projec~ will enter into HECO's evaluation of proposed formulas for the cost of power produced by the project.

11. The Governor's letter indicates that the State will assist in both permitting and financing. Please discuss the relationship of DBED and DLNR in the development of the ·proposed project. Specificallv. will uuLI.I p1·oviC1c n~l~l.cut~:~:: In it.rrang1ng f1nanc1ng, ana, H so, in wnat ways?

HAWAII GEOTHERMAL/INTERISLAND TRANSMISSION PROJECT

Reguests for Clarification of RFP (continued)

a. Who:ro "1 11 1.11" tuu~u1 1 u~ I.IIU rermn ~orm oe lSSuea·r

13. What 1s the historical turnaround time for permit appeals submitted to the Hawaii Supreme Court?

14. Please clarify Figures 5.1A and 5.2A. Both appear to show an initial capacity increment in 1995 of about 25 MW, whereas the RFP requests an initial increment of 125 MW. Figure S.ZA uses an hypothetical 50 MW/yr uniform installation rate whereas Figure 5.1A shows nonuniform increments that total 150 MW in 1998 and a jump of about 150 MW in 2001. Does the stepped line in Figure 5.1A represent HECO's projected system peak (or base load) demand growth or HECO's view of how the nrn;Pr.t mipht ann iftrramAnt< of capacity?

Hawaii Geothermal/Inter-island transmission Project Open PROPOSERS Conference

Intended Attendees

LEAD ORGANIZATION

1 ABB Energy Services, Inc. a. Mike Shevade

Assist. V.P. b.

c.

d.

49 American Line Builders, Inc. a. David E. Frame

Chairman

51 Brian Tolley Corp. Ltd. a. Brian Tolley

President

6 Dow Chemical U.S.A. a. None

57 ENCON Ltd., Inc. a. Audre Rezos

President

17 ERC Environmental & Energy Services Co. a. John F. Walter

Vice President

53 Ebasco Services Inc. a. Keith Sipes

Mgr. of Geothermal Proj.

05/30/89 Sheet 1 of 4

SlPPffiT ORGANIZATION

20 None

Sea Energy Corp. a. Correll Gordon

KRTA Limited a.

Destec Energy, Inc. a. Richard H. Davis

V.P. b. William C. Chambers

Director Project Mgt.

c.

None

None

None

194m

Hawaii Geothermal/Inter-island Transmission Project Open PROPOSERS Conference

Intended Attendees

LEAD ORGANIZATION

58 Federal Gulf Corp. a. Cecil L. Smith

President

9 Fluor Daniel a.

b.

d.

e.

f.

g.

h.

56 Fujikura Ltd. a. K. Kashiwase

Gen. Mgr., 1st Export Dept. b. Y. lizuka

Gen. Mgr., Power Cable Dept.

12 Les Cables de Lyon a. Antoine Auquier

V.P. and Gen. Mgr. b. Yves Bonnamour

V.P. U.S. Div.

18 McConnell Dowell Corp. Ltd. a. D. Marshall Hudson

Mgr., Internat. Bus. Div.

16 Marubeni America Corporation a. H. Saito

Mgr., Pwr. Proj. Dept. b. Alex Sugaka

Project Director c. !sao Kikuchi

Asst. Mgr. Power Proj. Sec. VIII

SlJ'PCRT ORGANIZATION

None

None

None

· 13 Alcatel - STK - AIS a. Oswald Gilbertson

Factory Rep.

20 E. E. Black Ltd. a. Ian R. Murray

President

None

05/30/89 Sheet 2 of 4 194m

Hawaii Geothermal/Inter-island Transmission Project Open PROPOSERS Conference

Intended Attendees

LEAD ORGANIZATION

2 Mid-Pacific Geothermal, Inc. a. Rod Moss

Vice President

24 Mission Power Engineering Co. a. J. Jack Adrian

President b. Edan Prabhu

Project Mgr. c. Dan Chase

Financial & Geological Analyst

29 Mitsubishi International Corp. a. Katsuhiko Kobayashi

Mgr. Machinery Div. "B"

30 Mitsui & Co. (U.S.A.), Inc. a. T. Kodama

Deputy Gen. Mgr.

SUPPffiT ORGANIZATION

None

25 California Energy Co. a. Michael H. Heys

President b. Gary Lavering

V .P.

28 Sumitomo Corp. of America a. Takahiro Moriyama

Product Mgr. -Elec. & Mach.

None

31 Sargent & Lundy a. T. J. Murray

Div. Head T&S Div.

b. G. R. Russ Mgr., Northwest Reg.

55 Morrison Knudsen Corp. a. None

05/30/89 Sheet 3 of 4

32 DesignPower New Zealand Ltd. a. Stephen E. Blanch

Chief Exec.

MK-Ferguson Co. a. Roy L. Cline

Exec. V.P. b. Ralph A. Neal

Sr. V.P. c. Jerry L. Naaf

V.P. d. Jack Fabregas

V.P.

194m

Hawaii Geothermal/Inter-island Transmission Project Open PROPOSERS Conference

Intended Attendees

LEAD ORGANIZATION

59 Ormat Energy Systems, Inc. a. Hezy Ram

President b. Maurice Richard

Regional Develop. Mgr. c.

35 PG&EEIBechtell Power Corp. a. Alastair o. Campbell

Project Mgr. b. J. M. Dunstan

34 Parsons Hawaii a. Madison Oliver

General Mgr. b. George Krasnick

Project Mgr.

41 Pirelli Cable Corp. a. Ugo Arnaud

V.P., Submarine Systems b. John T. Barteld

V.P., Corp. Marketing

44 Siemens Energy & Automation, Inc. a. None

3 True Geothermal Energy Co. a. Allan Kawada

b.

8 The Wing Group, Inc. a. None

05/30/89 Sheet 4 of 4

SUPPORT ORGANIZATION

None

39 Mitsubishi Heavy Ind., Ltd. a. M. Kubo

b. J. Kuwada

40 Sumitomo Electric Ind., Ltd. a. T. Usui

b. T. Osada

None

42 GIE a. B. Parziale

Proposal Mgr. b. M. Bianchi

Area Mgr. (Pacific)

Pacific Factors, Inc. a. Howard Wilson

President

None

Enron Power Corp. a. Cheryl Perchal

Oir. Financial Analysis

194m

Hawaii Geothermal/Interisland Transmission Project

~\-:, Hawaiian Electric Company r-

OPEN PROPQSERS CONFERENCE -June 5. 1989

~ 900 Richards Street ftA

1 V ~ / . ) (Enter from King Street) I. 't" \/ !._ v ~ (}-" '{- 2nd_ Floor Auditorium J.l V r \ ]>Q0v?~<~~\J' ~/ AGENDA. ~ ~ ~

7:30 a.m. - ~istration of Attendees - Security

8:00 a.m. -Opening Welcome - RKM

9:00 a.m. 9:30 a.m.

11:30 a.m.

1:00 p.m.

2:30 p.m.

3:00 p.m.

4:00 p.m.

-

Remarks by Governor John D. Waihee, III Remarks by H. D. Williamson, President, HECO Introduction of Steering Committee (*) - Purpose Introduction of Working Committee (*) - Purpose Introduction of HECO Resource Persons (*) DBED Support Statement DLNR Support Statement DOH Support Statement County of Hawaii Representative support Statement

Coffee Break - Reconvene - RKM

Answers to Submitted Questions DBED DLNR DOH

Answers to Floor Questions

- Lunch

- Reconvene - RKM Answers to Submitted Questions

HECO Consultants

Answers to Floor Questions

- Coffee Break

- Reconvene - RKM

- Pau

*Refer to the attached.

Hawaii Geothermal/Inter-island transmission Project Open PROPOSERS Conference

LEAD ORGANIZATION

1 ABB Energy Services, Inc. a. Mike Shevade ·

Assist. V.P. b.

c.

d.

Intended Attendees

SUPPORT ORGANIZATION

49 American Line Builders, Inc. a. David E. Frame

Chairman

20 None

51 Brian Tolley Corp. Ltd. a. Brian Tolley

President

6 Dow Chemical U.S.A. a. None

57 ENCDN Ltd., Inc. a. Audre Rezos

President

17 ERC Environmental & Energy Services Co. a. John F. Walter

Vice President

53 Ebasco Services Inc. a. Keith Sipes

Mgr. of Geothermal Proj.

05/30/89 Sheet 1 of 4

Sea Energy Corp. a. Correll Gordon

· KRTA limited a.

Destec Energy, Inc. a. Richard H. Davis

V.P. b. William C. Chambers

Director Project Mgt.

c.

None

None

None

194m

Hawaii Geothermal/Inter-island Transmission Project Open PROPOSERS Conference

Intended Attendees

LEAD ORGANIZATION

58 Federal Gulf Corp. a. Cecil L. Smith

President

9 Fluor Daniel a.

b.

d.

e.

f.

g.

h.

56 Fujikura Ltd. a. K. Kashiwase

Gen. Mgr., lst Export Dept. b. Y. lizuka

Gen. Mgr., Power Cable Dept.

12 Les Cables de Lyon a. Antoine Auquier

V.P. and Gen. Mgr. b. Yves Bonnamour

V .P. U.S. Div.

18 McConnell Dowell Corp. Ltd. a. D. Marshall Hudson

Mgr., Internat. Bus. Div.

16 Marubeni America Corporation a. H. Saito

Mgr., Pwr. Proj. Dept. b. Alex Sugaka

Project Director c. Isao Kikuchi

Asst. Mgr. Power Proj. Sec. VIII

05/30/89 Sheet 2 of 4

Sl.PPCRT ORGANIZATION

None

None

None

13 Alcatel - STK - AIS a. Oswald Gilbertson

Factory Rep.

20 E. E. Black Ltd. a, Ian R. Murray

President

None

194m

Hawaii Geothermal/Inter-island Transmission Project Open PROPOSERS Conference·

Intended Attendees

LEAD ORGANIZATION

2 Mid-Pacific Geothermal, Inc. a. Rod Moss

Vice President

24 Mission Power Engineering Co. a. J. Jack Adrian

President b. Edan Prabhu

Project Mgr. c. Dan Chase

Financial & Geological Analyst

29 Mitsubishi International Corp. a. Katsuhiko Kobayashi

Mgr. Machinery Di v. "B"

30 Mitsui & Co. (U.S.A.), Inc. a. T. Kodama

Deputy Gen. Mgr.

SUPPORT ORGANIZATION

None

25 California Energy Co. a. Michael H. Heys

President b. Gary Lavering

V.P.

28 Sumitomo Corp. of America a. Takahiro Moriyama

Product Mg r. -Elec. & Mach.

None

31 Sargent & Lundy a. T. J. Murray

Div. Head T&S Div.

b. G. R. Russ Mgr. , Northwest Reg.

55 Morrison Knudsen Corp. a. None

05/30/89 Sheet 3 of 4

32 DesignPower New Zealand Ltd. a. Stephen E. Blanch

Chief Exec.

MK-Ferguson Co. a. Roy L. Cline

Exec. V.P. b. Ralph A. Neal

Sr. V .P. c. Jerry L. Naaf

V.P. d. Jack Fabregas

V.P.

194m

Hawaii Geothermal/Inter-island Transmission Project Open PROPOSERS Conference

Intended Attendees

LEAD ORGANIZATION

59 Ormat Energy Systems, Inc. a. Hezy Ram

President b. Maurice Richard

Regional Develop. Mgr. c.

35 PG&EE/Bechtell Power Corp. a. Alastair o. Campbell

Project Mgr. b. J. M. Dunstan

34 Parsons Hawaii a. Madison Oliver

General Mgr. b. George Krasnick

Project Mgr.

41 Pirelli Cable Corp. a. Ugo Arnaud

V.P., Submarine Systems b. John T. Barteld-

V.P., Corp. Marketing

44 Siemons Energy & Automation, Inc. a. None

3 True Geothermal Energy Co. a. Allan Kawada

b.

8 The Wing Group, Inc. a. None

SUPPORT ORGANIZATION

None

39 Mitsubishi Heavy Ind., Ltd. a. M. Kubo

b. J. Kuwada

40 Sumitomo Electric Ind., Ltd. a. T. Usui

b. T. Osada

None

42 GIE a. B. Parziale

Proposal Mgr. b. M. Bianchi

Area Mgr. (Pacific)

Paci fie Factors, Inc. a. Howard Wilson

President

None

Enron Power Corp. a. Cheryl Perchal

Oir. Financial Analysis

05/30/89 Sheet 4 of 4 194m

-FLUOR DANIEL

,_,

Flucr Oon .. l Development Corporatton 3333 Micholoon Drive, lrv~ ... CA 92730 (714) 975-6917 fo>: (714) 975-5981

Douth" H. Cort•• Pr•sidenl

11AY 2 6 1989 May 26, 1989

Mr. John F. Richardson, Jr., PE Executive Staff Engineer Hawaiian Electric Company~ Inc. P.O. Box 27SO Honolulu, HI ·96840

Dear Mr. Richardson:

Subject: Interisland Transmission Project

Enclosed please find a list of questions regarding the Request for Proposal for the subject project.

I estimate that eight percon~-Fepreeenting consortium will attend the Open Proposers Monday, June 5 in Honolulu.

members of our Conference on

We look ·forward to working with HECO on this important project.

Douglas H. President

Attachment

/" L <-< o ,e D /? ,?-.1/ £ L.

QUESTIONS for HECO

l. It the lnter1slana transm1ss1on system 1s constructed, w1ll the MECO generating capacity be considered as an integral part of the H£~0 system?

2. Will HECO disclose the identity of all Proposers, including those on the short list?

3. Will HECO please rank in order of importance the technical evaluation factors as listed in Section 1.6.3.1 of the RFP?

4. Will HECO please rank in order of importance the commercial evaluat1on tactors l1stea 1n sect1on l.b.J.l ot the RFP?

s. ln evaluating the price of capacity and intend to use a leveled cost of service c.ll f'ha .. ea (.:JJ: l..h .. ~... ....... 0( l..)o .. !'I" I\ f tfloC>I.. HECO use to compute leveli~ed cost?

energy, does HECO for each phase or

\ll•'-'VUIII.. ._al..w wlll

6. What alternate sources of long term capacity and energy will HECO consider in evaluating the Proposals? What ·capital, fuel, and operating and maintenance costs is HECO forecasting for such alternative sources?

7. Will HECO disqualify a Proposal if the proposed cost of power exceeds HECO's projected avoided.co&LAJ

8. Will HECO please clarify the conflic~ing statements in Section 7.1.3 regarding the importance of acquiring geothermal mineral rights? Does HECO intend to give no credit to a Proposal that own~ or controls a geothe~~al

resource? Please clarify the extent to which a Proposer must control the geothermal resource in order to be shortlisted?

1>. Wi.ll tho Dovol.opor l:>c 9'r"'ntcd ochcdulc relief.' for force

10.

m.11Ji :inurn l""'vn.,.,+-•, ; n~1nA.; ...,, Y"'<D~rnd +-<t"i.n? ~n~ £i.n~ftC"i.n-zr A•l.•~ ...

beyond the reasonable control of the Developer? -

Is HECO willing to in the event HECO Project?

pay liquidated 6amages to the Developer is in default or 6elays or cancels the

ll. If a Developer is unwilling to grant HECO a !irst right of 1·efusal to purchase ~he project, 1dll his Proposal be dioqualifi-cd:'

12. Will HECO please rank in order of importance the Evaluation Criteria listed in Section 7.4?

HECO Questions page 2

:?~{/y~ v ~~ r ~(;lo:;(

13.

15.

~6.

17-

18.

At the time the PPA is executed must the Developer sufficient geothermal mineral resources for 500 MW for the rhaee I CApacity?

control or just

Will HECO or the State provide rights of eminent domain or other assistance to the Developer to acquire the required rights of ways to construct the Project? No c 0 ,_ ... _;.,. ... ,.1-

, lVItl R ... ~,,........, .... Will HECO clarify what seismic risk assessment in S~ction 3.1.1 includes other than that the design conform to Zone 3? Also, please clarify what volcanic risk assessment in 3cction J,l.~ ie to includ&,

To what extent and with what legal rights will the State of Hawaii intervene on behalf of the successful developer in any actions which are likely to occur by environmental and social groups such as the Pele Defense Fund. 1-13 f>.d{' J5.,_...., k /'»&.~ ""a6JCJ1H<- ""' cJ .. dr ... ., ~ - t- 1 ~->- Dose '" r.J<>~~ /c.- h-ts

Tho e~~~~i~y ~h•r•~~~~la~l~• noar~lhAn ln ~hA ~FP A~A nn~ ~ypical of geothermAl powP.r. Can HECO rank in order of importance the characteristics listed in Section 1.6.

What role will the State of Hawaii play in th~ ~ negotiations?

19. Will HECO please clarify the reference to "relative environmental and social impact• in Section 1.6.3?

20.

22.

23.

Will HECO assume exchange rate risk for foreign suppliers of goods and services?

Will the state mandate the permitting schedules to be adhered to by the DLNR, DOH, and other State agencies for .LC:t.,.:c:l.pL. cuul .l.t~DUAUio...:~ ur }JC!:.L1u..1L a.yyJ.UYAl•1' X! yee, wlu::.u .l.ts this legislative action to be taken? Will the state guarantee this mandate prior to submission of bids?

HECO refers to additional planning required for post 1994 growth. If HECO were to proceed now with the projected 146 MW fluidized bed addition, what would the revised on-line date for geothermal power be and at what MW level?

Other than lower load· growth, what factors does envision would cause HECO to delay or defer the project?

HECO

24. Has HECO and/or the State applied for PUC declaration of general guidelines under which the PPA would be negotiated, and if negotiated within those guidelines, will the State guarantee PUC approval of the PPA? GCO ,

1 J, .

0 ...);;"

DHC\HECOS. 26 ~ . !'-~ v-:;L ~~( V . 'f"'" .II'

~ • (V" ~ ~ v-: /' / . / ~~t"X;-? ~ ~ ~~· ~/.~. y;· .

1\r-"\ . (Y •

FLUOR DANIEL

C.,o r> s P" t 14 • " s?~~.

Will HECO or the State provide rights of eminent domain or other assistance to the Developer to acquire the required rights of ways to construct the Project? No c 0 ,..,._d"'"'"' i-

~6.

. lvtll R ... v<'UJ ..,

No, Eminent Domain powers cannot be exercised to the benefit of private parties.

To what extent and with what legal rights will the State of Hawaii intervene on behalf of the successful developer in any actions which are likely to occur by environmental and social groups such as the Pe le Defenl'le Fund. /.. 13 1».,7 ~Sa~ -k>

fht;r./:< Q! tY61CJ1~ ....... d r,Jr • ...., ~ - l- t\-1- Dtn;IJ IS iJo~ ~ f., h-.s

ANSWER

Subject to a legal opinion from the State Attorney General's Office, Dewald's position is that it is unlikely that the State would directly intervene on the behalf of a pr·ivate party/developer in any legal action or quasi-judicial proceeding.

To the extent that· it is prudent and legally permissible, the Department may encourage settlement of conflicts between opposing parties by recommending fact finding or mediation proceedings.

Will the state mandate the permitting schedules to be adhered to by the DLNR, DOH, and other State aaencies for Iecelpt an.:~ llH;uarn::e of ~.r:l'lt.l.t appt"ovalfi t if yes., wrren J.~t this legislative action to be taken? Will the state guarantee this mandate prior to submission of bids?

nci: :::~;OJ., !:J~:~!::;!i~.l.ntl Ld~·J!::; cJ·f l··lawai.i J.t?HD, r··f.~qui.t·~r:!:a t:.lli:\.t Bti::ll:e r.~nd

county ag~ncies participate in a consolidated permitting precess i.n which all. state <'•.nd county penn:i.t~inq aqcencit;·~; affecl:<~d by a gectller<nal/r:able system development project must sit down and p,;,.r·ti.ci.patP i.n cr.~cwcJi.n,;d:i.nq a11d c~:~nsnli.rlal:i.nq theit-· prn·mitt.ing efforts. However, tt1e Act also provides that ncthit1g in the 1\ct ~;hall ;;~ffret:l:: cw invalidate I:I1P jw-·i.sdicl:i.on nr· aul:hcwi.ty of any <~<Jnnc:y l.liHlel" En:isl:inq la~J. Thi~; me,;Hls t.h.31: the scllr~dul.e fm-i. SSUi'ltlCQ Of [H?f'!Hi. ts Cdni1Dt IH~ lllallcJ.:d:.led by t:IIP 5l:;:,lte ·- l:IH? flt"CCPS~;

sl1all. l:ak€? pl.01,:c~ ,;iccnnJi.nq to e::i.sU.nq sl:at.ut.es; i·H.ll,H:?vPr·, 14ct ::r.o1 pl·-~nvic:les t:ha.l·: the pE?r-mi. tti1·1q pt-ocp~;s t."t ll be ~-,,ppt-IJacJ-Ied in ,.~,

ccJol···d.irlatr?d t:~.1·1d cun~~!ol.i.dat:t~d n1ann<:?r· 'l'l1c~ adm:ln.is:;1:1,....i':.'.\tive r··ules for- implE·fllE'IIl::i.l·tq ,:;c:t: ~~01 r;l1ould b12 irt plc:~ct~ by r)ugust J.('7·8i7'.

PG&E Enterprises

so BWe s~ .. t. 22nr1 Ftocc Room C60 ~n fnnctSCO. CA 1#705 415/768{1414

Mr; John F'. Richardson, Jr., P.E. Executive Staff Engineer Hawaiian Electric Company, Inc. P. o. Box 2750 Honolulu, HI 96840

Bechtel . F ""'terprises

Flhy Beale StroM

San Francoaco, California

IMII ~M: P.O. &oa. SMS. tan ~ranc.oo, CA. Mnl

HAY 2 6 1989

May 26, 1989

Subject: Hawaiian Geothermal/Interisland Transmission Project

De~r Mr. nichnrdoon;

Please find enclosed questions regarding the·subj~ct· project.

Sincerely·.

Alastair Campbell Project Manager . PG&E-Bechtel Generating company

ADC:ml

HAWAII GEOTHERKAL/IHTERISLAND TRANSMISSION PROJECT

Reauests for Clarification of REP

What authority does the State of Hawaii have to resolve impasses in negotiations between developers and the holders of geothermal resource leues? If thh o.utho.-ll.r l.llrrt:r·~ fur· pr1vaie1y heJo, ~tate-owneo,

Hawaiian Crown, and federal properties, please describe the State's authority in each case.

Are records of pending challenges to existing leases available 1n the document room? If not, please provide such records.

Are copies of all geothermal resource leases available in the document room? If not, please provide such copies.

Have any cognizant federal permitting agencies refused to participate in the intP.ragAnr.y r>~rmittino oroup? lf ~o. p1o~co idontify them.

Has the State begun its "slim hole" test? When will the next phase of testing begin?

~1..1\.l\t. --@ Will the State exercise Its power of eminent domain on behalf of the l L-1--.\. J developer in the event of impasse in negotiation with land owners?

7. Doe~ HECO hdvt: t:unLr·u] uf the S1te fOr the l\nian1 ~UbStation7

e. We assume that in the event of cancellation of the project that HECO will make the developer whole for all out-of-pocket costs incurred. We also assume that in the event of delay at HECO's convenience that HECO will compensate the developer for all additional costs incur~~tJ due to the delay. ~ ~ M o( 1' ~ \\~£0 &¥- ~ ....)- ~{,. ~

9. Reference Table 3.7, Physical Conditions · Please specify the site design wet bulb temperature. ·

10. Please discuss how the unique characteristics of the proposed projec~ will enter into HECO's evaluation of proposed formulas for the cost of power produced by the project.

)) \. ,.J\(.,_-@ The Governor's letter indicates that the State will assist in both (~;>L(;l\) permitting and financing. Please discuss the relationship of DBED and

DLNR in the development of the proposed project. Soecificallv. will. vuLv provicJt: d~~I:>L.dllt:t: In e1rrang1ng f1nanc1ng, ano, 1t so, in wnat ways?

HAWAII GEDTHERHAL/IHTERISLAHO TRAHSHISSIOH PROJECT

Reauests for Clarification of RFP (continued)

\'J \.-~~2 ... " ( DLt.J'). • G Whcu will Llle cur~~ul Hlneu rermlt torm oe 1ssuear

\>ll.Nll::") (i'3;. What Is the historical turnaround time for perm1t appeals submitted to \)~ !'.). ·~ /'0 the Hawaii Supreme Court? l9 ~t~<)

14. Please clarify Figures S.lA and S.lA. Both appear to show an initial capacity increment in 1995 of about 25 MW, whereas the RFP requests an initial increment of 125 MW. Figure 5.2A uses an hypothetical 50 MW/yr uniform installation rate whereas Figure S.lA shows nonuniform increments that total 150 MW in 1998 and a jump of about 150 MW in 2001. Does the stepped line in Figure 5.1A represent HECO's projected system peak (or base load) demand growth or HECO's view of how the nrnjpr,t. might ann \nl"r"m"nto C\f eopoeity?

PG FE -IZ£ct-l TEL

HAWAII GEOTHERKAL/IHTERISLAHD TRAHSHISSION PROJECT

~. What authority does the State of Hawaii have to resolve impasses In 1to l negotiations between developers and the holders of geothermal resource ~·t leases? If thh o.uthor-lt.r \Jirr.,n fur· privately held, ~tate·owneo,

Hawaiian Crown, and federal propert\es, please describe the State's auJ,to[~~ In each case, Mt "'"" '1. ~ ""'- _ av ... ff-, T""' pi '"t r,q~~.l- • wL..J "" , Jvl ~

The State of Hawaii does not have the authority to resolve impasses in negotiation between developers and the holders of geothermal resources leases.

The State can only encourage settlement but not to intervene in all cases.

2. Are records of pending challenges to existing leases available 1n the document room? If not, please provide such records.- t..... •

~.

We are not aware of any pending challenges to existing leases. There are however, two pending suits filed against the State (one in Federal Court; another in Circuit Court) regarding the land exchange between the State and Campbell Estate.

A potential legal question that may arise in the future relates to ownership of mineral rights. The State's position in mineral rights belong to the State.

Are copies of all geothermal resource leases available in the document room? If not, please provide such copies.-.~ w<ilp""''"'u..

A complete set of all leases will be available tomorrow in the documents room and in the Geothermal Permit Center.

Have any cognizant federal permitting agencies refused to participate in the int~r~gRnry ~Prmitttno oroup? If to, p1oACO idGntify thorn.

ANSWER

Fe de ra 1 agencies, by Statute (Chapter 1 96-D, HRS) are not required to participate and as such, sha 11 on 1 y be invited to participate in the consolidated permit app1 ication and review process. To date, no Federal agency has refused to participate in the Interagency Group.

~ S. Has the State begun its "slim hole" test? When will the next phase of testing begin?

ANSWER

To date, DLNR has issued (3) geothermal well drilling permits (SOH 1, 2, and 4) for the University of Hawaii's Scientific Observation Hole Project. The County of Hawaii Planning Commission has completed public hearings on the matter and is currentlv scheduling mediation proce~dings between the applicant and objecting parties.

Will the State exercise its power of eminent domain on behalf of the developer in the event of impasse in negotiation with land owners?

No, Eminent Domain powers cannot be exercised to the benefit of private parties.

lt. When will tne conso11~ateu rerm1t Form be 1ssued?

ANSWER

A preliminary draft of the consolidated permit appl1cation form is being prepared and a final version will be available for distribution when the (Act 301) administrative rules are promulgated. It should be noted, that all application forms currently used by each respective agency will be incorporated in its entirety in order to facilitate the review and processing of such applications by the members of the consolidated permit application and review team.

~ 13. What is the historical turnaround time for permit appeals submitted to the Hawaii Supreme Court?

13. on a very generalized basis, considering only the H-3 and ge6theimai cases the turnaround time for appea~s has been 3 years 9 months and 4 years 5 months, respect1vely.

us S...,f"n.-'i.-... C.'f' d_._.,;., L V~cJ-\.,;.., ~LA.<) t......~=

'

..

v. 1. I)(Jti)A

Would the state be willing to underwrite at least a portion

of the resource risk associated with the first increment of

development?

I do not understand the relationship between the State's

intent to secure permits and the RFP assignment of responsi­

bility for permitting to the developer. Can you clarify this

for ae?

~·~ There is some indication of geothermal potential in the

V~~JI~ southwest rift zone of Kilauea. Does the State intend to

l)o\) designate additional geothermal subzones in that area? If

so, what is the timetable?

~ 4. Air permitting requires that hydrogen sulfide standards be

'DO r( established by the Department of Health. When will these

standards be in place?

~ s. Although this project is endorsed by both.HECO and the State

administration, we see no evidence of strong public support.

Why not?

-i- 3.

J(L \)/_ ~ I .

7 ~~ \r \)/ G~e$1''0/JS rrt(lll\ '-'Ori/J ((,c.t(tltli.))"JII

\· \ ~~J ' ~ ~ I ·f YJr

I do not understand the relationship between the State's

intent to secure permits and the RFP assignment of responsi-

bility for permitting to the developer. can you clarify this

for me?

(41·--.lbhiEn: It i E> Ll·1e c•.pp 1 i c:,::\n 1: • s t--e~;punsi tJ i 1 i t:y tn ~;pcut-e J.li-:~t-mi t:s for- the~ v~:;;.r·:i.nu;; dcl:.i.v:iti<-2Si trJ b~~ undet··t>·:!tkPn ~~.s par-t. of thP 500 t·ll~J qeut.IIPI'"fllo'd /cdblre pl-t:JjPc:t. The l.:~t:tJ~t·s inclt!.de>d in t.l'le r~FP

dt-?lllC)nst.r·i:J.tr:-: l".hi:::~ con}m:i l:mc:~nt of Go-.../E·t··-,·,or- t\la.i. tie·:~-' :?.nd 1·1i s C:\dmln:i.~::;LI···;:·:,t.:i.url l.:n tl"ll.:':l d~:-::·vr.-?lcJpmr:::orJ-L o+ qc:ol.:lli-::::r·,o,::\J pnh1t?r-, ir1cluti:i.nq st.c:ps Lak(:-:~r1 ~:-_,_J ·Fc:\c.i.li 1~_;;-_t:r,..~ t:ipply.inl~l fnr·· pr~r-mi.t.s, m::-:11-::ir·t;_J o-f·F.i.c:r:~s, i. nf Ol''fll::J t: i. ~:,,., ,T•.11d fJF·~r ~:itJnnE-~1 t:l\'t::\i l eJI.:J l i:? t:n i::t~:;si st ft IID!.-·Jr:-~vE-:·t··, the? Stc:\tc' :i.5 ncJl: ti-lE~ applici::t!Jt., 1.:1·1~:! d•:·~\/t-:,•.l.npF:r- i.s Ll1r:-? r.:tpp.lica!Jl~, a1·1d ti-11·.-:.;'I'"F:·+ nl'-f;~ i. L i !::; t.l1c· df-:?Vt?l npt-::·t- t:t-,,:;~,t: i ::; ,.··~-:~£:ij:JOI-1Si.IJ .1. t? -f· Ul'- !::;E-?c:ur· i ni.J

1-: h F' p f:::!l'" fll :i. t !5.,

There is some indication of geothermal potential in the

southwest rift zone of Kilauea. Does the State intend to

designate additional geothermal subzones in that area? If

so, what is the timetable?

There is currently a pending designation of 8,090 acres in the· Kilauea Southwest Rift Zone. Total acreage in goethermal resource subzones will be approximately 26,000 acres.

A procedural question is currently being reviewed by the Attorney General's office. The question is whether a request made by a group opposing geothermal development for a formal contested case hearing before the Board of Land and Natural Resources should be granted since a similar request involving the Southeast Rift was already disposed of by the Board and Courts.

Propootd qutatlona for HECO/Gtothe~mtl Blddtr'• Conftrtnce

'\)'nil) 1!4 To whtt txhnt and with wnat ltgai rights will tilt Shh 1')1/Y Of HIWIIII inttrvtnt 01'1 btlltlf Of the 9UC¢111ful dtVIICplr In tny

·~tton• which •r• llk•ly ~o oceu~ by •nvlronm•ntel ~nd social gfoupa auch aa the P•I• D•t•n•• ~undf

1~6 Tht type ot· firm capacity described In the RFP 11 not t~plc•l of gtothermtl powtr •• conflrmtd In tht document later (by

. H CO), With t~ll In mind, tht RFP eppeare to prQvlde 1 major ~ q alltlcatlon afftctlng HECO'• purch••• of thla type of power,

1,5,1 f:YIIIIIt'I'IOn Crlhrlaa Wllot rolo will till STI'tt Ot Hawaii ~~ P!•Y In the PPA ntgotlttlons. Aasumlng th11t a tUDIIdy mey bt

011~~ r,qulred to make tnla proJtot f•aalble, who will commit tor tht •f•t• during th••• n•;otlttlons?

1\lr6.2 What wtlghtlng avetam 11 btlno applied to the various •yatuatlon factora? ProJtct performance must be wtlghttd v1ry lowi •Inc• by RFP dtflnltlon, gtotnarmal powtr doee not mttt dtllraDle rfqulremonts. WII I HiCO cm~end the RFP to Include the appropriate w l;llttn; foctcra? ·

1~8.3 Will HECO dtttn• the rtferenct to "relative envlronmtnhl and toclal lmpeet 11 T I

·~2· ~.4 Will HECO aaaume txchongo rate rllk fOr foreign 1 ppllera of gooda and aervleta?

!' 1 Ptrmlt11 Will tht ater. mandate tht achedulu to be D~M trtd to by tho CLNR, DOH, and other State egtncloa for rtcelpt

l b~\ •ra luu•nca of permi-t approvola (denlale)? It y ... whu Is thta OL ) ~-~t•lo1'1vo IICT!cn +c be +•kent WI II the •t•+• euartntee thl$

mlndate prior to aubmlaa!on of blda?

1 ,l, OAPACITY1 HECO retor$ to additional pltnnlng required · fp,. po11t 1994 growth. It H!CO were to proeud now with the proJtetad 140MW fluidized btd ad~ltlon, whet wo~ld bo th6 r~vloo~ or Jlno dote for gaothermtl power b• ond It ~het MW Ieveil

7~2.3 Guerentot StrYcturol Whet t•vet of IJqulcated damage• dbea H~CO define 11 uH!CO'• btlt ettlmat?

• 71,2.3.2 Oofer nr C11nn11 Rights: Other then lower load crowth, w~at factor• d~•• HECO •nvl•oge would causa HECO to dtlay or defer tihlt proJtct?

7~2.3.& Lo11 of Reduction of Strvlc•• reftrene• Ia modo tQ on "~gretd u~on tum" ee 1 IQuldeted domag11 per porcont ot loaa of •v•lloblllty, WI I I H!CO dttlno 1n IMect aum It hoa In mind ts an a~dtndum to th• RFP, ·

' I

J, o l, · e s o e 1 15 a ..... :~. ... .J. "· P05

I

~~t'1.;:-~~ Event• of Oefeultr Sin~• the steh 1111 not utel:il.llhtd N~trt:ea tor permit review• end tpprovaf• Cor dliepprovata) and

Q';:".,.o"'\ tllcenalng and permlttlnQ approvels are Included In 1 mlluton• :/"YVT"'"'I 1l,cntdule aubJec:t to (!efeult, It would eppeer that deteultl ~ auooletad with permit receipt end In urvlct dates require

~IQnlflcent chang•• to lnaure protpec~lve developer• thet their · r':nvutment In til• ProJu~t are not fort•rted. Whet e~;tlon do01 HfCO or the State propou to mltlga't• t~l• concern? I

~ E~hlblt 2.!A Certlflcatlona Thl1 I& the only reference to possible "('1:/vr dilupprovel of the PP~ (DI'ld thorefor• the ProJect) by the Hawaii v 0~~ PubliC Utilities Commlaalon, Has HECO end/or the State applied

\ for PUC dtclaratlon of general guideline• under which the PPA wpuld be nagotltted, en~ If negotlattd within thOII ;uldtllne•, willl the St••• gue~an+•• PUC approv•l of ~he PPAf

..!'-''I '-'.1. '-'-' J.'-' -'-'-' L..ll'-1 '~I J....'J. .1.....!.1.'--' 1 '-''-''-' -··-•J,.-_-._._._,

I OS, ql:,..BG OetBOAM ,....J, .... r . CORP.

I

I

t {) !' 1 Ptrmltat Wl II tht ahtt mendah tht achtdutu to be D~M~ a~htrtd t~ by The DLNR. OOM• and other Stbte t;tnclet for rtctlpt ~ a~d latuanct of permit approvals (dtnlalal1 If ytst wh•n Is thll

S•"'~ .,.r;.,-tl•glllatlvo action +o ba t1ko"t Will th• a+•+• ;uarantee thlc ~·~· m~ndot• prior to tubmlulon of blda1

"

r.l~f3t·JEn,

(~ct: ::::;o.l . ., !3c•!:5ti.l.oll L<::\~·JH c1f Hawaii J.9HFJ f"f.:;\q•ti r .. f.~c~ t·l 1 .. ~t· c:··l·· t- -. 1 cnctnl· :- ... , .. -. "JC" -- "'1". -·.-- . .. . ., :·. -·. __ ., .. , - '"-- ,_, .. a .e drH

.--- ·-'( '·_:tqf.:.IILl.L_, IJdl -~Clpdt.E"! In a cc:Jn:so.I.Id.~.tr-?tl PE-?t-nJitt:inq pr-oce·as J.n 1--lltJ.clt ed.l. <,;tat.e 2UtrJ county pet··m:i.l:ti.rliJ aqcenci~;·q ,,ffc?ci:.2d hy a qF!CJI.:t1E:I'"fll,::\.l. /cai.Jl f? syst:em deVE?l Ql'')fllt?.l1t: fJt""[) teet n1uc:l c:i t· IJC1111· · d l' r- - .• -"·--J· ~1ar1 par-":lci.p;"'l:P :i.n J:I:Jot·di.nat:ing •'~lid J:DI~<;nli.Lial:i.tHJ Lheit·· pnr:mitt·.i..ng effcwt.:s.. llm·Jevet-, the ?let also pt·ovidf2S tl1<~t nol:hi.nq i.n the 1\ct shall a.f'fc'1ct.: cw i.nvalidal:e 1:1JP jtwi.sdic1:i. 0 , 1 cw cll.ti:hcwi.tv nf ~iny '~IJ<mcy· lHHlet- n:ds1:ing la~J. Thi~; me,;ins th;;1t thn sclwrJul.~ fot-l.ssuanctol of pr1nni.ts canrlcJt be •nattdcil:r?d bv tiiP <=tot~· --tl ·· -.

1 •. ::) •::\ .-::- 1f? pt OCE?S~:t shal~ take place accordir1g to existir1g statutes; however, Act 301 pr·nvl <;le~; 1:h;; t the pt?nnl. t 1: i. ng pn:Jcps;s will be appn:~ac:hed in ;,1 ·

c:oor .. f:Jl n~:!l.Lt?d ,~:•.ncf cun~1ol.i.dal:Pd nlann<·?r·.. ·r11e Etdmin.i ~:;1:r .... ati ve t"'Ules few llllp.l.t:mm•l::i.nq i~ct :301 BlloLt.lcl h12 in plciCE' by I'H.tgust J.98;i.

I ~.2.e.1 Evtnta of Otft~lt1 Sin~• tht Sttto hat not oatabllahtG •uldtllnta tor ptrmlt rtvltwt and approval• Cor dl1opprovet•> and lllconatng and ptrmlt1'1nQ approvals are Included tn 1 tnlluhn• ~chtdutt tubJtet to default, It would op~eer thot dtfeulta •••c=retad with permit rtctlpt =nd In aarvrce datts rtqulrt ~lanlflcan+ ehang•• to lneure proapactlvt devtlcpera that thalr

· l~vtatmant In tht ProJect ert not fortolted. Whtt ectlon dooa HfCO o'r the Stlh propou to mltlgot• thlt c:onctrnt

I

F'l' .. eoc:t~Ei!O:ie!:~- ·for .. ti-le i r.~;!~:uancr? C•-f IJC~r .. rni t:~:; .:;-._,.··c.::· E·!:::t:.c::lh.l. i !::;t· 11::~cl bv· st..::l.t:u·t~.F~(;., CJJ·-dirtance£...; ancl duly ;.~.ppt·-n·v'ti.l r·uJ.r_-?...:::; ·-- 1-.hr:-:--::;E~ .:Jr .. F.:' pui:J:ti.c

processes whose otJtcomes are deter-IIlir1PcJ ~J~ tt·1e ir-1ter·action of public o·f·f:ic:ial·:-;, concer·nc=:·cl Olf.:-:mber .. s c.'+ tl·1r2 public:, r.Jnrl the e:.;i5t:inq 1-::l.hl!:;:, ·:ri-JF:r·p i!::; no ~~uar-r.:lnt.t-:~f? o+ tJ·If? outcDmP nf e::·t p~::· •. r .. t:iculc:ir- --Pf?f· .. ·m:ttt·.lnq pi·-·octc~!;;;s~ ThE-? outc<:J•HE? Ci.:1.r·1 bE: anyt1-1ir1q +r·nm dr.2nial to arJprf~Val lo aprJroval witJ·1 fnany, few, fJr f10 l:OflditiDflS attac~1ed tc1 l~.hr~. f;'(::-~l''"mi. -1: ~ L\JI1i 1 C--? th<:~ statP c:anncJt i]Uaf·ant.ee tl·1e nt.ttc:onJE-? of i.::t. --

pub.~. 1 c: pr .. oc::ps;•::-;, its pol i r:y mr.:tkE·r·~; ~ n~·:\lnPl '> ... E-!ovr~·l'""nur· ~·JE~i hE'i-? .::\I"Jcl his c:<::\b.~ ,-,t-?1: rnc:~mL1E-1 1'"-~::.;, Cf;in 1 E·nd thf~i ,,- ·fu.t l ~:;upp(:_~r·t <~1-1c1 in+ 1 uo:-:::·nc~~ t{J i-:t

pn!::;1·-~~:ivr0 nu.t.r:nfnc~, r.:;.~; t:hc::.'y J·laVf? d,-:JJJF::· :i.1·1 the• lc·!.:tc:-r-!:; i::~.t.t.-Jc::ht:.~cl t:D. the~· 1\I'F'.

RFP(draft1 )6/1/89

MEMORANDUM

TO: William W. Paty, Chairperson

FROM: Manabu Tagomori, Deputy Director

SUBJECT: Answers to Specific Questions Regarding HECO's Request for Proposal IRFPl as They Relate to Dewald's Area of Concern

Pursuant to Dewald's review of the attached list of questions related to Hawaiian Electric Company's RFP, we have prepared the following responses to those questions that directly relate to our area of concern:

QUESTION (Fluor Daniel, page 2, number 16)

To what extent and with what legal rights will the State of Hawaii intervene on behalf of the successful deve 1 oper in any actions which are likely to occur by environmental and social groups such as the Pele Defense Fund.

ANSWER

Subject to a legal opinion from the State Attorney General's Office, Dewald's position is that it is unlikely that the State would directly intervene on the behalf of a private party/developer in any legal action or quasi-judicial proceeding.

To the extent that it is prudent and legally permissible, the Department may encourage settlement of conflicts between opposing parties by recommending fact finding or mediation proceedings.

QUESTION (Fluor Daniel, page 2, number 21)

Will the State mandate the permitting schedules to be adhered to by the DLNR, DOH, and other State agencies for receipt and issuance of permit approvals? If yes, when is this legislative action to be taken? Will the State guarantee this mandate pr1or to submission of bids?

ANSWER

It is assumed permitting schedules'' HRS) , concerning the process.

that the question of "State mandate of refers to Act 301, SLH 1988 (Chapter 196-D, con so 1 i dated permit app 1 i cation and review

As provided in the draft administrative rules (set for public hearings on 6/21/89), under sections 13-185-12 and 13-185-13, a joint agreement signed by participating State/County agencies will provide a timetable for regulatory review which will consolidate, where practicable, perm1tting requirements, required hearings and

•

Environm6ntal Impact Statements, etc. Each respective agency will contir.ue to operate and review all permit applications within the time limits set forth in that Department's administrative rules.

Pursuant to Dewald's area of concern, maximum review and processing time limits for each permit/approval under the jurisdiction of DLNR are identified in the Department's administrative rules, Chapter 13-183, entitled "'Rules on the Leasing and Drilling of Geotherma 1 Resources".

QUESTION (PG&E-Bechtel, page 1, number 4)

Have any cognizant federal permitting agencies refused to participate in the interagency permitting group? If so, please identify them.

ANSWER

Feder a 1 agencies, by Statute (Chapter 196-D, HRS) are not required to participate and as such, shall only be invited to participate in the conso 1 i dated permit app 1 i cation and review process. To date, no Federal agency has refused to participate in the Interagency Group.

QUESTION (PG&E-Bechtel, page 1, number 5)

Has the State begun its "slim-hole" test? When will the next phase of testing begin?

ANSWER

To date, DLNR has issued (3) geothermal well drilling permits (SOH 1, 2, and 4) for the University of Hawaii's Scientific Observation Hole Project. The County of Hawaii Planning Commission has completed public hearings on the matter and is currently scheduling mediation proceedings between the applicant and objecting parties.

QUESTION (PG&E-Bechtel, page 2, number 12)

When will the Consolidated Permit Form be issued?

ANSWER

A preliminary draft of the consolidated permit appl1cation form is being prepared and a final version will be available for distribution when the (Act 301) administrative rules are promulgated. It should be noted, that all application forms currently used by each respective agency will be incorporated in its entirety in order to facilitate the review and processing of such applications by the members of the consolidated permit application and review team.

,.,. Office of the Mayor

April 28, 1989

a~~NARC K. AKANA Mayor

Kr. Barvood D. William1on, Pre•ident Bawaiian llec~ric company, Inc. · P. o. Bol 27SO Bonol~l~, BI 96840-0001

P.2

I aa w:i~iog in 1upport of c~rrent effort• by B!CO 1nd the State to elicit ind~atry in;e:e1t in the development of geothermal reeo~rcel on the ieland of Bawa!i. Knowing the deva•tating impact• th&t can be wrought ~on our ialand econoxiee •• • reault of foreign energy dependency, I can aea~re you of my intereat in achieving our State'& energy independence, Orderly development of oar ab~dan~ renewable re1o~rce1 might be tbe 1n1wer to our Stitt'• efforta to echieve eoergy aelf-•ufficiency. Importantly alao tor the ial&nd of B&waii and i~1 people, • major energy prolect, like that contemplated, will increaae our ~•• revenue baaa, expand e:ployment opport~nitiel for our people, and perha~ all~ ua to become a major net exporter of an important baaic c~dity--ene:gy.

ru:ther, I as hopef~l ~hat if the geothermal project proceedl forward, there will be other direct and indirect benefit• tor our Big Ialand and other forma o! econOEic development will he •pawned for our citizenry,

Eve:y effort wil be made by ~ a~niatr&tion to eneure that thoee who propoee prcjectl will be treated fairly and ezpaditio~aly. TO that end, I will aeek tc work with the Hawaii Coun~y council, vario~a citizen groupa and the qeotberaal developer• ao that all intereata will be benef1tte4 by tbia iaporta.~t projec~.

We welcoet the opport~nitiea tbat will likely attend the development of B&waii r~wahle energy reao~ree1. We will be attentive to tbe impact upon o~r

coa:~itie1, o~r way of life and o~r environment. By working together, I have DO doubt ~t the COunty and tbe State, a• well •• thole who develop thia vo~e:fu! na:ural relource, will proaper.

I loG« fervard to working witb all of you.

S.r~a:d 1. ~ana Ur:li

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89:327-14

May 23, 1989

Mr. Harwood D. Williamson President and Chief Operating Officer Hawaiian Electric Company, Inc. P. 0. Box 2750 Honolulu, Hawaii 96840-0001

Dear Mr. Williamson:

Thank you for participating in the May 3, 1989, press conference to announce that the Request for Proposals for the geothermal/cable project is available. You, your staff, and your consultants did a fine job in getting the RFP completed on schedule.

I want to take this opportunity to reinforce our earlier agreement (your letter to me dated August 31, 1988, and my response dated September 14, 1988) that the RFP process would be a cooperative HECO and State process. This understanding is based on our firm belief that State leadership and involvement is essential in the RFP process to allow my Administration to provide for the public's interest.

Recently, the Director of the Department of Business and Economic Development (DBED) advised HECO of his concern regarding the State's role and the direction in which the RFP development had turned. I understand some of his specific concerns about the RFP have been resolved.

We proceeded on this joint effort with the understanding that the State would be fully involved during proposal evaluations and in subsequent negotiations with the most qualified proposers. I believe it is essential that the State participate throughout the RFP process so that any decision on the outcome of this project will serve the best interests of the State, and can be fully supported by the State.

Mr. Harwood D. Williamson May 23, 1989 Page Two

DBED has advised me that there is an RFP Steering Committee consisting of HECO and state officials as well as the Chairman of the Governor's Advisory Board on the Geothermal/Cable Project. I believe that this committee is the appropriate organization to establish the specific state role in the evaluation and negotiation processes.

Again, thank you for the outstanding effort that has brought us to this point in furthering our mutual goal to become more energy self-sufficient.

With kindest regards,

ce: Hon. William F. Quinn Mr. Yukio Naito

bee: _...Ron. Roger A. Ulveling Hon. Yukio Kitagawa

Sincerely,