7% surge in Oahu electric bills projected next month

Cutting out coal from Oahu’s power generation mix next month is going to generate somewhat of a jolt to household and business electricity bills.

Hawaiian Electric forecasts that the shutdown of a 30-year-old AES Corp. power plant fueled by coal on Sept. 1 will result in a $15 — or 7% — increase in the monthly cost for a typical residential customer using 500 kilowatt-hours of electricity.

The increase, which amounts to 3 cents per kilowatt-hour, is expected because the utility company will initially rely on more power produced from oil, which costs more than coal.

Per kilowatt-hour, electricity from oil costs about 30 cents, compared with 6 cents for coal.

The AES plant at Campbell Industrial Park produces about 10% of all the electricity consumed on Oahu, representing the biggest and cheapest — yet also dirtiest — power plant on the island. It is also the last power plant in the state fed by coal.

The anticipated higher electricity cost for Oahu ratepayers follows a price spike earlier this year largely tied to global oil prices being driven up after Russia invaded Ukraine in February.

Before oil prices rose to historic high levels, Hawaiian Electric had expected the impact from the coal power plant shutdown to be about $2 a month for a typical residential customer.

“This is a critical turning point in the long-term transition of Hawaii’s energy landscape,” Shelee Kimura, Hawaiian Electric president and CEO, said in a statement. “Unfortunately, the timing has converged with global events that are currently increasing the cost of electricity.”

The extra cost will begin to accrue in September and appear on October bills. This month, the cost for 500 kilowatts of electricity is $228.

Hawaii environmental advocate Jeff Mikulina said the timing from a ratepayer cost standpoint is terrible, but shutting down the coal power plant is long past due considering environmental impacts.

“This is the worst time for bills to go up, but there’s never a good time for climate change,” he said. “(Coal) might be ostensibly cheap, but we pay for it dearly.”

Hawaiian Electric said the 180-megawatt AES facility is one of the biggest greenhouse gas producers in the state, releasing the equivalent of 1.5 million metric tons of carbon dioxide annually.

The utility is under pressure to meet a state goal for producing 100% of power from renewable sources by 2045. As part of the transition planning, Hawaiian Electric decided in 2016 not to extend a 30-year power purchase agreement with the coal plant. The state Legislature fortified the termination into law two years ago by prohibiting the facility from running beyond the end of this year.

Over time, renewable energy from the sun and other sources will reduce the amount of power produced from oil and should have a positive impact on customer bills.

The cost for electricity produced from the newest commercial solar farms ranges from 9 cents to 13 cents, or about a third of the current cost of power from oil.

Seven solar farms in development on Oahu are on pace to begin commercial operations later this year and next year.

Hawaiian Electric also noted that there are some encouraging signs that oil prices are declining, which may help lower rates in the coming months.

The utility company, which does not earn income on oil it buys to produce electricity, also suggested that customers seek savings through conservation.

For instance, installing a solar water heater or heat pump water heater could cut a household bill by up to 40%, with the cost of such water heaters offset by rebates from $500 to $1,000 available from Hawaii Energy, according to Hawaiian Electric.

Other opportunities suggested by the utility company to cut power bills include refraining from air-conditioning use or setting the A/C temperature at 78 degrees, using smart plugs that curtail power from feeding electronics that aren’t in use, and rooftop solar.