Hawaii’s two electric companies — Hawaiian Electric Co. and Kauai Island Utility Cooperative — are investing in technology they say will eventually allow them to accommodate greater amounts of rooftop-generated solar power on their power grids.
But for now some homeowners who want to install photovoltaic systems in neighborhoods already saturated with PV panels have to pay out of their own pocket for new transformers and other equipment upgrades the utilities say are necessary to mitigate safety and reliability risks posed by high amounts of intermittent solar energy.
The utilities decide whether upgrades are needed based on the size of a proposed PV system and the level of PV penetration in a certain area. The amount of the charge varies depending on the type of equipment being installed and the number of homeowners seeking to install PV systems who share in the cost.
At the upper end of the spectrum, the upgrades can be pricey. One Hawaii island resident said Hawaii Light and Electric Co. quoted him $7,800 for "relaying equipment" that would be needed to protect the grid from a relatively modest 3-kilowatt PV system he proposed.
Some members of the Kauai Island Utility Cooperative who installed PV systems in saturated areas have paid KIUC nearly $5,000 to have new transformers installed in their neighborhoods.
The charges are fueling a debate over who should have to pay the costs associated with upgrading the grid to keep pace with the rapid growth of distributed solar power generation.
Officials from the local chapter of Earthjustice, a nonprofit public interest law organization, say the decision by Hawaii utilities to charge customers appears to run contrary to language in the state’s "net energy metering" law designed to encourage homeowners to generate their own renewable energy.
Isaac Moriwake, an attorney for Earthjustice’s Mid-Pacific Office, cited a section of the statute he said supports the group’s view that the utilities should be paying for the upgrades: "Any new or additional charge, or other charge that would increase an eligible customer-generator’s costs beyond those of other customers in the rate class to which the eligible customer-generator would otherwise be assigned are contrary to the intent of this section, and shall not form a part of net energy metering contracts or tariffs."
Moriwake said it was the intent of the state Public Utilities Commission to have the state’s electric companies facilitate, not impede, the growth of solar energy and other forms of distributed generation.
"The PUC (Public Utilities Commission) has made clear that the HECO companies should look at the benefits of distributed generation to the grid. If the grid needs upgrading, they shouldn’t be putting it all on the customer," Moriwake said.
"HECO should start taking responsibility for those charges. They are in the best position to see from a big-picture point of view what makes the best sense — whether to do it piecemeal or in a systemic way. It’s not going to be efficient for them to do it one customer at a time."
Any costs incurred by HECO for equipment upgrades could be built into the utility’s rate base, Moriwake said.
A HECO spokesman said the utility’s decision to charge customers for upgrades is based on a "cost causation" principle outlined in a 2006 PUC ruling that addressed the impact of distributed generation on Hawaii’s electric grids.
The PUC’s decision and order states, "To ensure that only economic distributed generation projects are developed and that there is no cost shifting from the customer-generator to other customers or to utility or shareholders, the commission finds that utility-incurred costs must be allocated properly so that those costs that benefit the distributed generation project are borne by the project. This principle is applied to interconnection costs, standby and backup service costs, and unrecovered utility costs."
However, theruling does not reflect current thinking with the PUC in terms of promoting the use of PV, according to Moriwake. The case that resulted in the decision started in 2003 when the PUC was just beginning to grapple with issues related to on-site electricity generation by utility customers, he said. Moriwake said Earthjustice considers the net energy metering law a more appropriate guidepost on which to base decisions regarding the growth of solar energy.
Meanwhile, HECO officials say the utility is pressing ahead with longer-term efforts to modernize its grid. In its third-quarter financial results released last week, HECO’s parent company reported increased spending to replace or upgrade 750 transformers, replace 250 feet of cable and expand the fiber-optic system used to operate its grid and help detect problems.
HECO also announced a $1 million project last month that will help it improve its weather forecasting ability to make better use of solar and wind energy resources. The U.S. Department of Energy and HECO each contributed $500,000 toward the project.
Although HECO is taking steps to accommodate more renewable energy, progress has been slow, said Robert Harris, director of the Sierra Club’s Hawaii chapter.
"Anybody could have seen the circumstances coming five years ago with the rate of PV installations increasingly exponentially. This situation could have been forseen," he said.
Harris cautioned that HECO runs the risk of losing its customer base as electricity storage technology improves. Once utility customers can store solar energy generated during the day for nighttime use in an affordable way, they might decide to go off the grid and cut their ties with the utility, he said.
"The best course for the state is for the Legislature to require that we build a 21st-century, modern smart grid, and to make sure the utility is compensated for its success in delivering such a system," Harris said.
