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HECO’s plan needs work

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Hawaii is taking steps toward a future powered increasingly by renewable energy, but it’s still not clear that its primary electric utility has charted a clear course toward that goal.

Criticism from several fronts suggests that reaching that goal without overburdening customers will require that the company shift from its legacy business model — generating and selling power — to become more of an energy distributor.

This is an ongoing debate that resurfaced last week following an independent analysis of the "integrated resource plan." The IRP was issued in June by Hawaiian Electric Companies, the parent company for Hawaiian Electric Co., Maui Electric Co. and Hawaiian Electric Light Co. It’s a blueprint on how the utility companies "will meet energy objectives and customer energy needs consistent with State of Hawaii energy policies and goals," according to the IRP.

Primary among those policies is the Hawaii Clean Energy Initiative, in which HECO is committed to helping reduce the state’s reliance on fossil fuels for energy.

The initiative was launched in 2008, but there have been some key developments in the past five years that should help Hawaii reach its goal: 70 percent "clean energy" by 2030. That comprises a 30 percent reduction in electrical use through efficiency measures and a conversion of 40 percent of the energy portfolio to locally generated renewable sources.

Important advances so far include new laws such as on-bill financing, which should allow more people to install expensive photovoltaic solar panels affordably. Further, HECO has outlined various plans for partnerships developing utility-scale solar power generation plants.

However, in the short to medium term, alternative energy sources are out of reach of many customers, and the power companies have few ways to recover revenue lost to solar panels other than to raise rates for those still dependent on the utility for electricity.

That’s one of the points raised by Carl Freedman, a Maui-based consultant hired by the state Public Utilities Commission to evaluate the IRP. Because of various shortcomings, Freedman told the commission he was unable to certify the utility’s plan.

A few of his points:

» Even customers who switch to PV remain connected to the HECO grid because they need power when panels are inactive at night or during cloudy days. HECO estimates that the cost of maintaining equipment isn’t covered by the $17 monthly service charge customers pay, producing an annual loss estimated last year at $12 million.

Electric bills are projected to increase over the plan’s initial five-year period, but the IRP doesn’t adequately address how HECO will manage this loss other than through rate increases, according to the analysis.

» HECO hasn’t made its case that it won’t need an undersea cable connecting Maui and Oahu counties in order to meet its clean-energy targets. The cable is the essential link in a controversial plan to produce wind energy on the neighbor islands and transmit it to Oahu, where the need is heaviest.

» HECO should have enlisted greater participation of its advisory group in determining methods to measure or present the impact on rates, Freedman wrote.

In response to the critique, HECO spokesman Peter Rosegg said the utility is reviewing the report and underscored the goal as being "to chart a future path to provide our customers with reliable, clean electricity at the lowest possible cost."

Rosegg added that this is a significant challenge for utilities nationally.

"Just raising rates for those who cannot self-generate, while those who can do so leave the grid, is not acceptable to us, as a matter of community well-being and fairness," he said in a written response to the Star-Advertiser.

That is the crux of the problem, one that has been noted by environmental and consumer groups. HECO needs to adopt a new business model less reliant on power generation and make its money more from distribution — perhaps by licensing access to the grid.

Hawaiian Electric Companies executives have promised to work with the PUC to create a clearer plan. The utility also answers to its shareholders, though, so the regulatory function of the PUC is critical here.

With fuel prices continuing to rise without an end in sight, policymakers must work to avoid the worst outcome. That would be putting the cost of maintaining the electric grid on the backs of those who can’t afford to get off it.

They need a roadmap to steer clear of that outcome. HECO still has the task of providing that map, and it’s up to the PUC to keep the utility focused on that task.

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