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State utility grid desirable but help small-scale users, too

LAST UPDATED: 5:09 p.m. HST, Mar 21, 2011

Global news events of recent weeks remind us why wise energy policy at the local level is so crucial. Hawaii, the state that's most dependent on fossil fuels for its electricity and other energy needs, has watched helplessly as unrest in the Middle East increased the volatility of oil markets — and the price of fuel for the consumers.

Among the relatively cheap alternatives, nuclear power is eliminated as an option by the state Constitution. The tragic quake and tsunami in Japan, with the catastrophic damage to nuclear power reactors, should have convinced even the most avowed nuclear power advocate that lifting that constitutional bar is now a political impossibility.

And so the state and its federal government and private partners are working at an intense pace to otherwise expand Hawaii's energy portfolio, an effort prodded by the Hawaii Clean Energy Initiative.

Hawaii's leaders seem to have grasped that this will take big developments and are taking steps in that direction. Unfortunately, the state is not doing enough to empower small-scale users who want to make the leap into renewable energy.

Some late efforts are being made to revive the prospects for an approach called "on-bill financing," an initiative that would allow customers to more easily pay off the large up-front investment required for solar water heating and other energy-saving appliances. The failure of Senate Bill 242, enabling customers to make payments in small increments on their electricity bill, dimmed these prospects, which is a shame.

On-bill financing could allow even renters to benefit from renewable-energy savings because their landlord could install the improvements and let renters pay for it on their bills. The Senate Energy and Environment Committee is giving the idea another look in the form of SB 1520, which will be heard Tuesday; lawmakers should take this second chance to move on what has been a winning strategy in other markets.

Meanwhile, there's more momentum for utility-scale projects, such as the undersea cable proposed to link neighbor island energy producers with the Oahu market. Various drafts of a bill setting up the regulation and financing of this project, which could cost $1 billion, have drawn critics. Many of them use the regulatory bill as a proxy for their opposition to the whole notion of neighbor island plants directing power to Oahu users. They are uneasy in particular about the only two projects now standing in line for the undersea transmission: large wind farms proposed for sites where the wind resource is richest, on Molokai and Lanai.

But the bill in question is about establishing the builder of the cable as a utility that would come under the review of the Public Utilities Commission. If the islands' electrical grids are ever to be connected — and they should be — this kind of regulatory plan makes sense. The version that now seems likely to progress, Senate Bill 367, has made some key improvements over earlier drafts.

Specifically, the financing provisions of the bill seek to lower the risk of the mammoth cable development by allowing the cost to be recouped through a surcharge on the bill of Hawaiian Electric Co. ratepayers. Many opponents rightly took issue with language that appeared to leave those ratepayers picking up the tab even if the wind project is rejected, rendering the cable useless. SB 367 makes it clearer that HECO customers won't pay unless the cable becomes commercially useful. This seems a more reasonable condition under which the cable utility should be able to recoup its up-front costs.

Now lawmakers need to show a little of that same consideration to customers who'd also appreciate help with their up-front costs. It's going to take the participation of many individual consumers, as well as the big commercial players, to push Hawaii over its clean-energy goal line.

CORRECTION: A measure proposing an alternative "on-bill" financing program for solar water heating systems is House Bill 1520; it is similar to Senate Bill 182, legislation that was killed earlier. Incorrect bill numbers appeared in an editorial published in a earlier version of this story.

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