Some of the building blocks needed for a 21st-century electric utility may, indeed, be taking shape, as Hawaiian Electric Companies executives contend, and even the Public Utilities Commission isn’t disputing that. The companies — Hawaiian Electric Co. on Oahu, Maui Electric Co. and Hawaii Electric Light — comprise the largest player among the state utilities, and it has made strides toward the state’s renewable energy goals.
The problem, the state authority overseeing HECO said last week, is the lack of a blueprint showing where those building blocks would fit. It’s hard to argue with that logic.
Last week the PUC delivered a sharp rebuke to the company, rejecting its mammoth Integrated Resource Plan (IRP) Action Plan and issuing a white paper titled "Commission’s Inclinations on the Future of Hawaii’s Electric Utilities."
That future, the commission rightly points out in the document, lies in finding a new business model that can sustain reliable delivery of electricity for a lower cost. It’s a tall order — transforming a utility that’s more of a distributor than a power generator demands alternative revenue streams — but HECO should be strategizing about how to get to that point.
"The IRP Action Plan appeared to be, in part, a series of unrelated capital projects without strategic focus on the clear issues facing the utility, and did not indicate further progress towards a sustainable business model," the commission concluded in the document.
It was issued, along with three other PUC directives, during a news conference on Tuesday by Gov. Neil Abercrombie and commission members. The actions included:
» Guidance on maintaining reliability and economy while integrating utility-scale and distributed renewable-energy resources.
» A requirement that the companies develop a "fully integrated demand response portfolio"aimed at bettering operations and lowering customer cost.
» Acceptance of a review of the Maui Electric System Improvement and Curtailment Reduction Plan, directing MECO to file a plan to improve power supply.
These are long, technical documents, but what showed plainly was a welcome emphasis on the ratepayers’ interests; that should be a principal driver of utility plans.
The documents drew a response from Dick Rosenblum, president and CEO of HECO, in which he applauded "the PUC’s clear direction and road map."
"We have many of the building blocks already in place, including our grid modernization work, the initial phase of our smart-grid project and our progress in renewable energy — now at more than 18 percent," Rosenblum added.
He also cited the coming deactivation of older fossil-fuel plants and the import of liquefied natural gas as a "transition fuel."
But this begs the question: To what is the utility transitioning?
A "course correction" is required, according to the commission white paper, and in its absence the PUC intends to "employ arduous regulatory scrutiny and oversight of utility expenditures, operations and investments."
The PUC noted that the state’s other electric company, Kauai Island Utility Cooperative, has a better strategic plan and has made "substantial progress in achieving their goals over the same time period."
For its part, HECO sees this as a chance to move on a "shared vision for the utility of the future."
It’s time that the utility get out its sketch pad and start showing the regulators — and the public — what it has in mind.