Danielle Conway: Former PUC chief now acting for wind project (login required)

August 11, 2013
Former PUC chief now acting for wind project (login required)

By Alan Yonan Jr., The Honolulu Star-Advertiser

Aug. 11--The former chairman of the state Public Utilities Commission -- who headed the regulatory agency in 2010 when it voted 2-1 to waive competitive bidding requirements for a proposed wind energy project on Lanai -- is now representing the project's developer before the PUC.

Carlito Caliboso left the PUC in August 2011 to take a job at a local law firm specializing in energy and regulated utilities. Last month his name began appearing on documents filed with the PUC on behalf of Castle & Cooke Properties, the company developing the planned Lanai project.

The state's ethics law restricts "post-employment" interaction between government workers who leave their jobs for the private sector and the agency for which they previously worked. In the case of Caliboso, his representation of Castle & Cooke Properties does not violate the law since a minimum one-year "cooling-off" period elapsed between his departure from the PUC and his representation of Castle & Cooke.

Although Caliboso's move meets the letter of the law, it has drawn criticism from members of a group opposing the Lanai wind project, who say it represents a conflict of interest. Because of his former high-profile position at the PUC, Caliboso may still have influence with agency employees, said Sally Kaye, a member of Friends of Lanai.

"There is some irony, and no small amount of poetic justice, that the guy who gave Castle & Cooke a waiver from competitive bidding ... is now being paid by Castle & Cooke to defend it," Kaye said.

Caliboso, who was first appointed by Gov. Linda Lingle in 2003, said any concerns regarding him or his client receiving preferential treatment are misplaced.

"I'm confident the (current) commissioners have integrity and will be fair, independent and objective. So I don't think there will be a problem," Caliboso said.

The PUC commissioners voted in November 2010 to allow Hawaiian Electric Co. to go outside its normal competitive bidding framework to secure 400 megawatts of wind energy generating capacity on Lanai and Molokai as part of a project dubbed "Big Wind." Under HECO's proposal, Castle & Cooke was to develop the Lanai part of the project while Boston-based First Wind LLC would handle the Molokai portion. HECO's plan called for the electricity to be transmitted to Oahu via an undersea cable.

Caliboso and then-Commissioner John Cole voted in favor of allowing the projects to move forward without requiring HECO to seek competitive bids. But the panel's third commissioner, Les Kondo, issued a 10-page dissenting opinion in which he said the majority's decision was "misguided and emasculates one of the primary purposes of competitive bidding: to provide some assurance that the price of energy is competitive."

Several major developments affecting the Big Wind project have occurred since the waiver was granted, including Castle & Cooke's sale of its majority ownership stake in Lanai to billionaire Oracle CEO Larry Ellison. In addition, First Wind and a subsequent developer have withdrawn plans to pursue the Molokai portion of the project.

These and other changes prompted the PUC last month to open a new docket to review the progress of the proposed Lanai project and address the question of whether it is in the public interest. Castle & Cooke retained the rights to develop the Lanai wind project as part of its sales agreement with Ellison. However, PUC officials have said there is "some uncertainty" regarding that claim.

Hermina Morita, current PUC chairwoman, said she could not comment on Caliboso's representation of Castle & Cooke because his involvement is part of an ongoing case. She said anyone with concerns about Caliboso should express them in writing to the PUC, although none have done so.

Castle & Cooke is waiting for regulatory approval before starting work on the project that involves building 67 wind turbines on the northwest end of Lanai.

Henry Curtis, who heads a local environmental and community action group that opposes the Lanai project, said he did not have a problem with Caliboso representing Castle & Cooke before the PUC.

"I knew Carlito Caliboso during the entire eight years he served as chair of the PUC. I found him to be very, very credible, ethical and responsible," Curtis said. He said he was more concerned with a spate of other PUC staffers leaving for jobs in the private sector, including some who went to HECO.

"Of all the people to go through the revolving door, I'm least concerned about Carlito," Curtis said.

State ethics laws are generally borrowed from federal rules intended to preserve public confidence in government officials, said Danielle Conway, a University of Hawaii law professor who specializes in intellectual property law and government contract law.

"The idea is that a person, particularly an influential person, may have former subordinates or colleagues that he or she can influence or lean on," Conway said. "The ethics laws aren't meant to completely bar a person's (job) mobility. It's meant to reduce the influence that the former employee may have."

A 12-month cooling-off period is usually the minimum amount of time states will impose, Conway said. At the federal level, the restrictions on ex-government employees interacting with their former agencies can be for longer periods of time, all the way up to lifetime bans, Conway said.

Hawaii is somewhat of a special case: Because of its isolation, there's a relatively small circle of government officials and private-sector workers with expertise in a given area, she said.

"Hawaii would be hard pressed to have a complete prohibition on this kind of activity. It's so small, it's probably more reasonable to have a restriction like 12 months, the idea being we don't want to completely discourage people from moving back and forth between the private and public sector," Conway said. "But we do want standards so we don't have a situation where people are cashing in on their government experience."

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