State lawmakers have introduced a host of bills in the new legislative session aimed at keeping pace with Hawaii’s rapidly evolving energy sector, including one proposal that would force Hawaiian Electric Co. out of the power generation business and have it focus strictly on delivering electricity to customers.
The bill restructuring HECO (HB 2400) also calls for the utility to set a single electricity rate across the three counties it serves, and prioritizes geothermal as the state’s preferred alternative energy source to replace fossil fuels.
"The purpose of this act is to facilitate the transition from fossil fuel-based energy to renewable energy for production, distribution and management of electricity to stabilize or reduce electricity costs over time," according to the bill.
Limiting HECO’s business to the transmission and distribution of electricity would open the door for more independent power producers to enter the market for electricity generation and create greater competition, according to state Rep. Denny Coffman (D, North Kona-Keauhou-Kailua-Kona-Honokohau), chairman of the House Energy and Environmental Protection Committee and author of the bill.
Regulators in more than a dozen states have separated the functions of their electrical utilities to reduce electricity costs.
Utilities generally have been allowed to maintain their monopoly control over transmission and distribution networks because it would be wasteful to have duplicate sets of wires delivering electricity to the same areas. On the generation side, however, new technologies have made it possible for different companies to compete to provide electricity to retail customers, proponents of deregulation say.
"HB 2400 makes sense. HECO has a big conflict of interest as both the power generator and distributor," said state Rep. Cynthia Thielen (R, Kailua-Kaneohe).
"Right now any increase in costs get passed right along to the consumer," said Theilen, a member of the Energy and Environmental Protection Committee.
HECO also could achieve greater efficiencies by consolidating its Oahu operations with its subsidiaries in Maui and Hawaii counties, according to the bill. The bill exempts the Kauai Island Utility Cooperative, which operates the electrical utility on Kauai.
"The existing organization of multiple-county-based public utilities that supply electricity does not facilitate a shared or distributed use of renewable energy," according to the bill.
Connecting Oahu, Maui and Hawaii counties with an undersea cable would allow the state to make more effective use of its renewable resources, the bill continues.
Being able to share Hawaii island’s rich geothermal resources with energy-hungry Oahu is a major piece of the statewide "electricity development plan" envisioned in the bill.
The consolidation also would equalize electric rates across the areas served by the restructured HECO.
The bill faces some challenges "but it’s definitely time to move ahead with that discussion," said Jeff Mikulina, executive director of the Blue Planet Foundation, a Honolulu-based nonprofit working to establish Hawaii as a leader in energy independence.
"We’ve had a century of a vertical monopoly in Hawaii. The landscape has definitely changed regarding the generation businesses," which needs to be recognized, Mikulina said. "There will be challenges but it’s not impossible."
Mikulina said the Blue Planet Foundation also will be watching for any moves to revive a bill introduced last session to end the 35 percent tax credit for renewable-energy systems.
"The state’s investment in the tax credit, which yields even more renewable energy today than in previous years due to the decreasing technology costs, should not be viewed as a ‘loss on the state’s books,’" Mikulina wrote in a recent commentary.
The renewable-energy sector "pays dividends" back to the state in the form of income tax, general excise tax and outside investment, he said.
Pending legislation
>> HB 2400: Requires Hawaiian Electric Co. to divest its power generation facilities and focus its business on transmission and distribution of electricity. By putting electricity generation solely in the hands of competing independent power producers, the state would be able to more quickly achieve renewable-energy goals, supporters contend. The measure also would require HECO to purchase the lowest-cost electricity generated from renewable sources before buying fossil fuel-generated electricity. In addition, the bill would establish a statewide electricity rate and prioritize geothermal as the preferred replacement for fossil fuel.
>> HB 1720: Imposes penalties on landowners who allow new growth from their trees or other vegetation to block more than 10 percent of the sunlight on a neighbor’s solar energy device between 10 a.m. and 2 p.m. Any landowner who fails to comply after 30 days of receiving a notice from the state Department of Land and Natural Resources would be subject to a fine of up to $1,000 a day. To be covered by the law, the solar devices would have to be at least 10 feet off the ground and could not be built under the shadow of existing foliage.
>> HB 2164: Requires the Public Utilities Commission to increase the amount of renewable energy that customers can feed into Hawaiian Electric Co.’s grid without objection from the utility. HECO currently requires customers to pay for an interconnection study if the amount of solar or other renewable energy being proposed exceeds 15 percent of the peak load of the affected circuit. Even after paying for the study, there is no guarantee the renewable-energy project will be allowed. The bill would increase the allowable amount of renewable energy to 50 percent of the peak load of a circuit.
>> HB 2733: Requires the Public Utilities Commission to draft rules allowing individuals and businesses installing renewable-energy systems to share the cost of an interconnection study if one is required by Hawaiian Electric Co. The cost of such studies can range from a few thousand dollars for a home PV system to millions of dollars for a large commercial project.
>> SB 2526: Prevents condominium associations from blocking homeowners from installing solar energy devices on their rooftops. A current law applies only to single-family homes and townhouses. The new law would extend to condos not more than three stories high, and require the devices to comply with association design specifications. Solar devices could be mounted on common areas with the consent of the condo association.
