State regulators have rejected a proposal that would have made it more difficult for owners of smaller renewable energy systems to hook into the electrical grids operated by Hawaiian Electric Co. and its subsidiaries.

Environmental groups and alternative energy proponents welcomed Tuesday’s decision by the Public Utilities Commission, saying it was a victory in the campaign to reduce the state’s dependence on oil to generate electricity.

"The PUC’s ruling helps clear the path for households and businesses that want to invest in Hawaii’s clean energy future," said Jeff Mikulina, executive director of the Blue Planet Foundation, a Honolulu-based nonprofit committed to ending the use of fossil fuels. "By rejecting unnecessary new costs and hassles for clean power, this decision moves Hawaii a step closer to energy independence," he said.

One of the more contentious issues argued by HECO and its opponents before the PUC was a proposal by the utility that would have allowed it to require customers installing alternative energy systems with generating capacities of 20 kilowatts to 250 kilowatts to install expensive monitoring equipment. HECO maintained that such monitoring equipment might be necessary in some cases to better manage the variable nature of electricity generated by renewable sources.

But the PUC ruled that HECO did not show that the proposal was "just and reasonable." The monitoring systems, dubbed SCADA for "supervisory control and data acquisition," cost an average of $40,000 per system, according to Blue Planet.

Earthjustice, the nation’s leading nonprofit environmental law firm, represented the Hawaii Solar Energy Association in the case.

"We are pleased that the PUC upheld the existing framework, which supports the deployment of distributed photovoltaic systems and has helped make Hawaii the fastest-growing solar market in the U.S.," said Mark Duda, HSEA president. "We hope such proactive policymaking will continue."

The PUC ruled that SCADA systems "shall be required" for renewable energy projects larger than 250 kilowatts on Hawaii island, Maui, Molokai and Lanai. It also ruled that SCADA systems "may be required" for projects between 250 kilowatts and 1 megawatt on Oahu.

HECO said the ruling will help the utility ensure that larger renewable energy projects can be safely added to the various grids.

"Hawaiian Electric shares the goal of the commission and parties to add as much distributed renewable generation on customers’ homes and businesses as is reasonably possible without compromising the reliable electric service customers have a right to expect and the utility is obligated to provide," said Peter Rosegg, HECO spokesman.