Control rising electricity rates

Charting a path to a future in which Hawaii’s electricity sector is teeming with renewable energy options is neither easy nor inexpensive. Along the way, the state Public Utilities Commission’s watchdog role in the state-mandated effort is key to securing steady support from ratepayers.

Last week, Hawaii regulators signed off on Hawaiian Electric Co.’s $205 million Grid Modernization Strategy. Also, the PUC approved revised tariffs for a 2.3 percent increase to HECO’s base rate — the first such bump in six years. It’s slated to generate $36 million in annual revenue for the utility to tap for capital improvements including grid upgrades and resilience efforts.

In both cases, the three-member PUC’s guidance and thorough analysis of HECO proposals led to rulings that rightly push the dominant utility in the islands to fix its focus on cost-efficiency benefiting customers.

Two years ago, regulators rejected HECO’s $340 million grid modernization vision, maintaining that the price tag was too high and it lacked sufficient detail. In response, the utility heeded the PUC’s direction to broaden outreach. It’s encouraging that inclusion of more customers and technical experts in the round-two brainstorming helped produce the successful strategy.

Its “smart grid” concept will take shape over the next six years as HECO and affiliates put in place efficiency-tailored apparatus such as wireless smart devices that can turn off rooftop solar systems, and power outage management and notification technology. The front-end spending aims to create “renewable-ready” island grids and improve flexibility in harnessing future tech breakthroughs.

If implemented successfully, the modernization will help reduce overall electric consumption while moving Hawaii toward losing a ranking as the most fossil-fuel dependent state. Three years ago, Gov. David Ige signed into law a bill that directs utilities in the islands to generate 100 percent of their electricity sales from renewable energy resources by 2045.

The mandate aims to lock in place a new paradigm that delivers much-needed changes for a healthier natural environment, energy security and our economy.

Due to costs tied to importing most of the fuel, ratepayers lamentably shoulder the highest energy prices nationwide — more than twice the U.S. average. Last month, the typical HECO bill for an Oahu household using 500 kilowatt- hours of electricity shot to $144.26, up from $141.82 in December. Monthly upticks and dips are related to fluctuating fuel costs.

On Friday, the PUC-approved higher base rate will take effect for more than 304,000 HECO customers, increasing that typical monthly residential bill by $2.60. Nobody wants to shell out more cash for the same usage, but greenbacks are needed to green-up the sector. And in this case, the hit to the wallet could have been worse. The PUC has set an interim rate that’s two-thirds lower than the company’s original request in 2016 for a 6.9 percent hike in revenue.

Also, the PUC is indeed serving consumer interests with its thumbs-down to a HECO request to tag some revenue as a means to recover pension expenses. Regulators assert because HECO decided to “forgo” a rate increase in its 2014 filing, it gave up opportunity to seek an increase in revenue in that rate case as well as a chance to fully recover pension expenses from 2011 through 2014.

Put simply, PUC Chairman Randy Iwase has said: “Ultimately for the ratepayers, when you say ‘forgo,’ it doesn’t mean ‘defer.’ … They (HECO) were about as clear as mud because they used the word ‘forgo,’ not ‘defer.’ What we’ve done is we want to make sure the ratepayers get the benefits promised in 2014.”

On the long path to clean energy, the utility has been justifiably accused of foot-dragging, with past PUC assertions that its vision was more focused on profits rather than customers. But in the past year or so, HECO seems to have stepped up transparency and collaboration efforts. More of that is needed to ensure effective energy updates on Oahu and elsewhere in the state.