HEI must act quickly to set future path

This year marks the 125th anniversary of Hawaiian Electric Industries.

Even if there hadn’t been a landmark event in recent weeks — the rejection of a proposed buyout by Next-Era Energy Inc. — this would be an occasion for reflection on the best path forward for the utility to fulfill the state’s clean-energy goals.

But the state Public Utilities Commission did vote down the sale of HEI to the Florida-based company last month. The bid was blocked largely because, according to the PUC, NextEra did too little to assure that costs to the ratepayer would be kept in check.

What was lost in the deal, however, was a sizable amount of capital that could have been invested in the modernization of the aging infrastructure of HEI and its component utilities statewide: Hawaiian Electric Co. (HECO), Maui Electric Co. and Hawaii Electric Light Co.

The challenge now is to find ways to further those goals without imposing too great a burden on consumers, already contending with some of the nation’s highest living expenses.

HEI really can’t waste time searching for a new path, said state Rep. Chris Lee, who chairs the House energy committee and is a renewable-energy advocate.

The cost for customers to become solar-energy producers is reaching parity with the cost of conventional service, he said. It’s urgent for HEI to prove to its investors that it has a sustainable strategy if customers are poised to leave.

That should prompt a serious re-evaluation of the business model for the state’s principal electric company. It’s encouraging to see that the process for doing so has begun.

Lee’s proposal for a financial analysis of alternative business models was passed in the 2016 legislative session, when $1.2 million was appropriated for the study. According to the legislation, the models under review include energy co-ops, municipal ownership of the utility and an “independent distribution system operator,” in which system decisions are made by an independent board to be implemented by the utility operations officials.

The state Energy Office is preparing a request for proposals, due out by early September, to hire a contractor for the study, which then would take 12 to 24 months to complete.

Much must be done in the intervening months as well.

Jeff Mikulina, executive director of the energy advocacy organization Blue Planet Foundation, said with the NextEra debate now over, the focus should return to initiatives sidelined during the protracted PUC hearings.

There are some signs that this is being done. Alan Oshima, president and chief executive officer at HECO, has said the company has plans for achieving its clean energy transition indepen-dent of NextEra.

For example: He said a plan for community solar will pick up steam, one that allows renters and others who lack the option to install solar panels on their own dwelling to reap some of the benefits of a lower energy bill. That is a development that has been long awaited and should be advanced.

HECO also cited a number of projects in the works. These include:

>> A joint plan with the U.S. Department of the Navy to build a 20 megawatt solar facility at the Joint Base Pearl Harbor-Hickam, West Loch Annex.

>> A “self-supply” solar energy plan allowing customers who can buy a self-contained system with storage battery to remain connected to the grid as backup.

>> A reassessment of fuel choices with an emphasis on stabilizing prices, in lieu of its once-anticipated liquefied natural gas (LNG) supply arrangement with NextEra.

HEI should investigate whether an alternative supply partnership, perhaps with Hawaii Gas, would be possible. Although LNG is a fossil fuel, it retains potential as a less costly “bridge fuel” that could ease the move to a more fully renewable-energy portfolio. That would be good for the ratepayer.

However, there are more possibilities. Oshima said the company is open to rethinking its rate-making system, aligning with the performance-based formula the PUC has endorsed. This means the utility’s profit incentive would be based on how well it performs for the customer.

Lee has said he will re-introduce a bill to speed the timeline for such a reform, something lawmakers should explore fully next session.

Further, there are wind-energy options that could push the needle significantly toward energy self-sufficiency, and consideration of these projects must be accelerated.

Other ventures are worth a look. Mikulina pointed to Kansas City Power &Light, which plans to build 1,000 electric vehicle (EV) charging stations. This is something that well could serve Hawaii’s electric companies, providing a use for the state’s excess solar production during daylight hours.

As he correctly observed, this juncture should be seen as an opportune time to reimagine how an electric company can work for what will be, after all, the next era for HEI. The task of defining how it will serve the customers must begin now.