Hermina Morita

On the wall of Hermina Morita’s office across from the state library, there’s a painting by Kapaa artist Sally French, a somewhat unsettling dreamscape of leaning utility poles, desktop computers, high-heeled shoes and yapping mad dogs. It once hung in the fellow Kauai resident’s legislative office, where she held the House energy chair.

But when she was appointed as commissioner of the Public Utilities Commission — a powerful panel she now chairs — she just had to take it with her.

"I thought, ‘Oh, this is great. It’s got utility poles,’" said Morita, 57. What do the high heels and mad dogs signify in the PUC context? Morita pondered. "It’s always something nipping at your heels," she added.

Morita has been on board only since March, and faced a steep learning curve. The commission oversees petroleum, telecommunications, water and wastewater industries and transportation — the recent clash between Pasha Hawaii Transport Lines and Young Brothers over shipping rights was the most high-profile in the latter category.

But it’s the PUC’s efforts to carry out clean-energy policy that has overwhelmed its workload. Hawaiian Electric Co. now has a "decoupling" scheme in which its revenues no longer have to be tied to the volume of electricity it sells. The review of plans for wind power on Molokai and Lanai, and the Aina Koa Pono proposal for a biofuels agreement were just two of the big issues.

Morita loves her Hanalei home and when she’s there she spends time with her two daughters and three grandchildren and enjoys making a home-cooked meal. When she really has time, she’s taken up skiing at Mammoth, in California.

Truth is, though, time is short and stress is high. The PUC has staffed up a bit to 40 positions from 37, but the state doesn’t have the money yet to put it in quarters large enough to accommodate all the 62 workers the state has authorized. And Morita finds herself suddenly making difficult decisions on consumer and environmental concerns.

"Hey, my job is to be fair to everybody, and sometimes we have to increase rates, and sometimes we ding the utility for bad choices," Morita said. "The simplest way I can describe it is, the job of the commission is to bring forth the utilities’ best performance to serve the public interest.

"The only reason I’m in this position is my reputation as a legislator," she added. "I hope I was viewed as being fair, even though I started my career as being a rabid environmentalist."

QUESTION: What was your transition like, from chairing the House energy panel to the Public Utilities Commission?

ANSWER: I’m really fortunate, because the staff at the PUC is pretty stable. And I’ll tell you, it was a real pleasure to come in and work with (former PUC Chairman) Carlito Caliboso and (Commissioner) John Cole. They helped to make the transition really easy — especially for someone like Carlito stepping down as chair. But working with the both of them, again, was key in making the transition. And being able to just pick up and move forward, given the workload, of the PUC.

I think the hardest part for me is I understand the policy side; now it’s all about execution. And knowing that every single decision we make will impact a business or a resident in some way, usually increased rates, is pretty overwhelming. I think the one thing that people should know is that there’s nothing that prepares you for the position.

Q: Why?

A: It’s not one particular skill set that you’re relying on, it’s all of them. And for me, I’m not a lawyer, I’m not an engineer. I have some accounting background, but not at this kind of magnitude. … I’ve been to a lot of different kinds of courses, training workshops, and continue to go.

Q: What skills did you bring to this job?

A: Again, it’s all focused on my background in policy, energy policy and driving the energy policy at the Legislature. That’s the only credential I have. … Even though we regulate transportation, telcom, the reason I’m here is because of energy as a driving issue in the state right now.

Q: Does legislative policy guide PUC decisions?

A: I think this is what people don’t understand about the PUC. We’re a quasi-judicial agency and so there’s policy involved, there’s statute involved, there’s case law. And our decisions have to be based on the law, and fact-finding. So it’s a very slow, deliberative process, but I think it’s the right process for the type of decisions that we have to make, that have significant impact on people, with the kinds of rates that they’re paying.

Q: What can you say about the Aina Koa Pono biofuels decision, in which the PUC turned down Hawaiian Electric’s application?

A: I’ll have to be sort of limited in that discussion, even though we closed the docket. It’ll probably come up before us again, if they reapply … I think right now they’re re-looking at how they want to renegotiate the contract.

Q: Well, in general terms, then: This case occasions a discussion about how to strike a balance between utility needs and customer interests, doesn’t it?

A: I think the main thing is, just because it’s renewable doesn’t mean we can disregard our concern for cost.

Q: So where do you draw the line?

A: We’re looking specifically at the application before us, so it really is incumbent on the applicant, which was the utility, to make the case for this, in justifying the higher costs, which I don’t believe they did.

Q: Is it too soon to know how well decoupling works, as a policy?

A: It’s still too early to tell. The decision-order on decoupling came out August 2010. The tariff (rules for decoupling) went into place June 1, 2011. We only have HECO decoupled. MECO (Maui Electric Co.) and HELCO (Hawaii Electric Light Co.) are pending the final decision on their last rate case. I’m not sure we’re going to have that done by the end of the year; that’s what we’re shooting for.

Q: So the hope is that decoupling a utility’s rates from how much electricity it sells will push them more toward conservation and inviting small-scale producers to add green energy to the grid?

A: Right. You know, one of the reasons for the movement toward decoupling is because as we move forward in our energy policy, we took away a lot of the revenue-generators for the utilities. We’re moving toward competition in generation. We took away the demand-side management program from the utilities, to an independent third-party administrator. That was huge. Those are, other than their capital investment, their main revenue generators. So given that, we had to look at a different business model for the utility to keep them viable. … Having a viable utility is essential for everybody to benefit, in having the benefits of renewable energy. Otherwise, only those who can afford it can have access to renewables.

Q: What can be done to speed the improvement of the electrical grid, especially on Oahu, so it can handle more renewable energy from small-scale producers?

A: There are two issues. One of the major issues that we’re looking at, at the commission, is what’s the maximum amount of renewable penetration we can have on the grid and still maintain reliability. And this is a critical engineering question. We can solve it through engineering, but how much can we afford? That’s a major issue we’re looking at … With this major docket, the Reliability Standards Working Group, we’re hoping to help resolve this.

Q: What’s the timetable for the working group?

A: Probably not for another year. The process is really slow, deliberative; we’re not using your typical adjudicatory process or adversarial process, where people just take sides and file their briefs back and forth. In this particular docket, because it deals primarily with engineering, the working group is free to discuss among themselves, all the parties, and break down into sub-issues. And a lot of it is a learning process for the renewable advocates to understand the utility system better, in trying to maintain reliability standards. …

So, the second part is the smart grid. All smart grid is, is communications. So having the ability to communicate at critical intersections. … I think part of your question is, what is the PUC’s role in this, and can it be legislated?

I didn’t really put this structure together, but after reading all these books on regulations, the PUC is actually an extension of the Legislature. The Legislature has delegated authority to the PUC, especially in something like smart grid. At the Legislature, you don’t have the resources, nor the time to fully investigate the issue. So in its broad authority, that’s delegated to the PUC.

For the PUC, it’s the right place to do it because you’re dealing with capital investment, seeking to find the right technology at the best cost, and then setting the rates in the integration of smart grid. Whether it’s time-of-use rates, having the capital investments imbedded in the rate structure …

Q: How to recover costs?

A: Right. So all of those are within the purview of the PUC.

Q: What’s your biggest worry?

A: My biggest worry right now is the high cost of energy and the impact of the ratepayer. It is going to cost money to move to a clean energy future. We know that, and we know the long-term benefits are great. Given the high cost of oil for us, it’s really making the transition difficult. We’re getting whacked with the higher cost for renewables, … plus we’re getting hit again with the high cost of oil. So that keeps me up at night.