Protect ratepayers as HECO evolves

Everyone can do the math — a simplified form of it, anyway — and see that the numbers don’t add up under the current arrangement. Hawaiian Electric Co. and its subsidiaries are racking up reduced sales as customers with the means to do so have bought photovoltaic solar panels to generate their own electricity.

The utility’s business model offers few counterstrategies for a diminished revenue stream other than to seek an increase in rates paid by the remaining customer base. So the natural question arises: How is this transition to green energy supposed to work, anyway?

That question demands an answer, and the Legislature is reasonably seeking one, through House Bill 1999. The current draft of the measure would establish the Legislative Utility Oversight Task Force, a body to be convened and to focus its attention specifically on investor-owned electric public utilities. The task force would submit a report in a year, and every five years after that.

The measure drew support from Hermina Morita, the former legislator who chairs the Public Utilities Commission. That’s significant, because the PUC is the agency that now regulates HECO and other utilities, and critics might charge that this makes a task force duplicative.

HECO itself said as much in its testimony. One of its attorneys, Kevin Katsura, cited the various reports, rate cases and other filings as indications that HECO is forthcoming with information. "While it is the Legislature’s prerogative to review the utilities’ franchises, utility performance is already extensively reviewed by the Public Utilities Commission," he said.

However, as Morita correctly pointed out in her testimony, there are matters to discuss more basic than what is usually addressed in PUC case dockets and legalese.

That is: The "regulatory compact" under which the utility operates has changed. The deal used to be that in exchange for the exclusive business from electric customers, the utility would meet all service requirements to anyone who wants to purchase electricity.

"Today, customers need not take all of their electric service from the electric utility — they can generate some or most of their needs through the use of such technologies as solar panels," Morita said. "Nevertheless, at present, the electric utility is still required to provide all service needs ‘at the flip of the switch.’"

HECO officials do agree with Morita on one point: This discussion needs to involve experts in this subject area, which will require an appropriation of funds. Currently the bill would convene a panel of lawmakers, and that may not be enough structure to ensure a productive review.

There are many topics suitable for a broad discussion, which also should tap some community input. For example, advocates for green-energy development, such as Blue Planet Foundation, have said that HECO should be exploring alternative sources of income to help it maintain its service rather than rely so heavily on ratepayer revenue.

The preamble to the bill puts the problem succinctly.

"Hawaii’s ratepayers are highly frustrated with sustained high rates of electricity, limited options to manage their utility bills and a perceived lack of urgency by the utilities in addressing their needs," it said.

HECO needs to be more proactive in charting a course to a new era, in which electricity production capacity will be widely shared. At this stage, there still will be the need for a stable, reliable power grid that the utility can manage.

But it needs to be a more enthusiastic partner in adapting to a changed landscape, figuring out how to contain costs borne by the ratepayer. Otherwise, so many frustrated customers may go "off the grid" that it can’t be sustained at all.