‘Smart grid’ payoff should be lower rates

Smart grid technology is on the way to Hawaii’s electrical grid, which is excellent news.

With the exception of the Kauai Island Utility Cooperative, which started down this path in 2009, Hawaii is a relative latecomer to the smart-metering revolution, which allows for better system control and quicker response to outages and other problems.

This is not entirely a bad thing for Hawaiian Electric Co., which announced its pilot project last week, because HECO at least gets the advantage of buying next-generation systems with fewer problems and for something less than top-dollar.

It’s the latest upheaval in the utility’s standard operating procedure. Reviewing some other recent developments, highlights include proposals for solar-energy installations aimed at advancing HECO’s mandated clean-energy goals. 

And along with its move toward technological solutions, the state’s largest utility is getting in on the ground floor of liquefied natural gas (LNG) imports to Oahu.

Not surprisingly, critics call this a concession to fossil fuels, on which Hawaii has been far too dependent for many years.

The extraction of the fuel from various underground sources across the country through an environmentally disruptive process known as "fracking" certainly needs increased regulatory oversight and refinement to minimize impacts.

However, that extraction will continue independently of any decision Hawaii makes on its energy future. Environmental concerns, while rational, are outweighed by pocketbook realities of isle consumers, who can’t afford for every single change in Hawaii’s energy portfolio to come with a huge pricetag.

The state’s Clean Energy Initiative, which sets benchmarks for the addition of green energy to the grid and for conservation measures to be implemented, has the force of law and will keep Hawaii on the green pathway. As those benchmarks are achieved, policy makers must negotiate with energy producers for further advances toward energy security that also enhance the use of Hawaii-produced renewable sources.

In the meantime, while technology continues to develop, LNG can replace some of the fuel oil used now in power generation for incremental savings to bill-paying electric customers, replacing some of the more polluting fuel oil used now. HECO executives call its use a "bridge" source of energy, and it’s hard to dispute that such a bridge is necessary. Reducing energy costs for businesses and consumers will have a moderating effect on the cost of living here, which otherwise seems to be rising unchecked.

In the short run, the test of the smart grid, rolled out to 5,200 customers on Oahu, is a development that should be applauded. Among other capabilities, smart grids allow the electric company to gauge more accurately how much external power is being generated (through photovoltaic solar panels, for example) and potentially expand how much can be safely accommodated on the grid.

The utility had previously proposed a more full-scale rollout, one that would have been financed through a rate increase, but the plan was rejected by the state Public Utilities Commission.

This smaller pilot, which should yield useful data on Hawaii energy-use patterns that could make full implementation more cost-efficient, is the preferable plan of action, partly because it’s being conducted on the utility’s dime.

Once HECO returns to the PUC with a final plan, officials should have the data to show how much savings could accrue from the ability to automate the currently manual meter-reading process. They also anticipate reduced repair costs because instant system feedback and some remote functions will enable speedier corrections of problems on the grid.

Some of these savings should be passed on to the customers. If HECO wants any rate increase to pay for the smart-grid upgrade, it will have to demonstrate to the commission why that would be necessary.

The consumer will have the means to track energy use in real time and see how changes in their habits could reduce their consumption and the bill they pay at the end of the month. There should be an incentive provided, what in the industry is called "time-of-use" rates, which vary to direct energy use to times of high power generation.

Smart-grid technology has the potential to serve consumers, as well as save the utility money. The goal for Hawaii ratepayers, and the government regulators looking out for their interests, is to make sure the benefits are widely shared.