Legal, institutional and financial aspects of an inter-island electrical transmission cable

Abstract

The Hawaii Deep Water Electrical Transmission Cable Demonstration Program (HDWC Program) was initiated in October 1981 by the State and Federal Governments as a research, development and demonstration program. Its purpose is to explore the technical, environmental and financial dimensions of a deep water electric energy transmission cable system which would deliver electric energy from the abundant renewable alternate energy resources (especially the geothermal resources in the Puna area) on Hawaii to Oahu, where the State's largest electric demand exists. If such a cable system is developed, it could result in reducing the amounts of high-cost imported fuel oil presently used to produce electric energy and power. While the HDWC Program has to date focused on the scientific, technological and engineering aspects of a deep water cable, there has been a continuing recognition of the need for a preliminary analysis of the legal, institutional and financing aspects of a cable system. The installation and operation of a cable system would occur within a legal and regulatory framework requiring, among other things, obtaining all required Federal, State and County permits and approvals. Moreover, an appropriate organizational structure must be created to undertake the initial development activities and subsequent installation and operation of a cable system. Finally, the cost of a cable system is currently projected to be some $334-400 million (1982 dollars). This preliminary study reviews and analyzes the international, national, state and local laws, rules and regulations which would apply to a cable system; analyzes the laws, rules and regulations which affect the capital accumulation, ownership and operation of a cable system; and reviews the financial considerations, approaches and specific sources of capital which would affect the financing of a cable system. However, the development of a commercial cable system cannot be examined in isolation, particularly because the costs involved and the possible financing approaches to fund those costs depend upon ensuring that a cable system will be able adequately to assure the generation of sufficient revenues to satisfy the requirements of the financing and provide a reasonably reliable supply of electric energy to Oahu. Since the purpose of a commercial cable system would be to transmit electric energy generated from the renewable alternate energy resources (especially the geothermal resources in Puna) on Hawaii to Oahu, it would not be financially feasible to raise the required financing for a cable system and then actually to install the cable without the coordinated development of the