The price that most Hawaii electrical utility customers pay for, or in some cases receive payment for, grid stability is being wrestled over at the state Legislature.

A pair of bills sought by the rooftop solar industry seek to increase rates that residential and business rooftop solar system owners receive for helping Hawaiian Electric balance its power needs on Oahu, Maui, Molokai, Lanai and Hawaii island under a program approved by the state Public Utilities Commission in December and scheduled to begin March 1.

But the state’s consumer advocate and the Hawaii State Energy Office have raised concerns that the legislation, if enacted into law, will result in higher bills for customers who don’t have rooftop solar.

One of the two measures, House Bill 1687, advanced after an initial public hearing Jan. 30 amid dominant supportive tes­timony from solar energy companies as well as individual testifiers who include industry workers.

The Hawaii Solar Energy Association contends that compensation levels in the new PUC-approved program, where rooftop solar system owners export electricity to the grid when Hawaiian Electric needs it, doesn’t make financial sense for system owners to participate and therefore will depress industry business and lead to job losses.

The PUC reduced the export compensation rate from prior interim grid support program levels and settled on a new rate that was more than Hawaiian Electric wanted but less than the solar industry group wanted.

Rocky Mould, executive director of the industry group mainly representing rooftop solar companies, told the House Committee on Energy and Environmental Protection that the new program rate for exported power will depress industry sales, perhaps by around 60%.

“What this bill is about is harnessing rooftop solar and energy storage systems from customers and helping the rest of the grid to get to our renewable energy goals,” he said. “And what we need to do is we need to incentivize, properly, customers to make those investments so that they can (export energy).”

Erin Weber Kiel, senior manager of government affairs for Texas-based Sunnova, said the recent PUC decision was flawed.

“It will drive customers away from enrolling in these programs, which we all know are critically important to keep the lights on when Oahu’s coal plant shut down,” she told the committee, referring to the September 2022 closure of an AES Corp. plant in Kalaeloa. “We urgently need this bill to correct this error at the PUC.”

The committee received 86 pages of written testimony on HB 1687, with about 60 testifiers in support. Hawaiian Electric and the Kauai Island Utility Cooperative oppose the bill, and three state officials offered comments with concerns.

Hawaiian Electric and two state agency officials familiar with the PUC decision, which was made after four years of work and rooftop solar industry engagement, told the committee that they have concerns that paying rooftop solar system owners more for exporting energy under the program will come at the expense of other utility customers.

Under the program, dubbed Bring Your Own Device, participating customers receive a fixed fee plus bill credits for exported energy, which on Oahu is 32.9 cents per kilowatt-hour.

The two bills would mandate that program participants receive the “retail” rate credit for exported electricity, meaning the rate Hawaiian Electric customers pay for electricity, which is about 40 cents per kilowatt-­hour on Oahu.

Michael Angelo, executive director of the Division of Consumer Advocacy at the state Department of Commerce and Consumer Affairs, said in written testimony that Hawaiian Electric customers not participating in the program will shoulder the extra burden if program participants get retail rate credits.

“Electricity rates have embedded costs for things that all customers rely on, such as grid infrastructure,” Angelo said. “Allowing retail rate crediting for exports would allow customers with solar and battery storage to avoid paying their fair share of those costs.”

Mark Glick, chief energy officer at the State Energy Office, told the committee that the agency has cost equity concerns with the bill, and noted in written testimony that a couple of relatively new utility-scale solar farms on Oahu are paid about 8 cents per kilowatt-­hour for electricity sent to the grid.

“We do have deep concerns about legislating tariffs, and particularly things that are typically the purview of the Public Utilities Commission,” Glick said during the public hearing.

Kaiulani Shinsato, director of customer energy resource programs at Hawaiian Electric, told the committee that the PUC’s decision was a careful balancing of multiple stakeholder interests and that providing retail rate credits would upset that balance.

“Retail crediting for our new programs would increase the cost for these programs, and that cost gets paid by all ratepayers, including our low- to moderate-­income customers and customers on fixed incomes,” Shinsato said. “And that’s an outcome that we’re trying to avoid.”

In written testimony, Shinsato noted that one incentive offered from 2001 to 2015 to encourage rooftop solar system use by giving system owners a retail rate credit for any power sent to the grid has sapped about $103 million in utility company revenue going to grid investments through the end of 2023, and that all customers have had to absorb this expense.

KIUC, a customer-owned utility cooperative on Kauai that isn’t subject to the recent PUC decision, noted in written testimony that its customers with rooftop solar systems designed to generate extra power for export receive either a credit or payment that is more than 50% lower than the retail rate but 50% higher than rates paid to the two largest utility-scale solar and energy storage facilities on Kauai.

If rooftop solar customers received Kauai’s retail rate for exports, 36 cents per kilowatt-hour in January, it would be more than double what they get paid now and more than triple what is paid to the biggest commercial solar energy providers.

“Such a rate is inequitable to our member/customers, and is not based on economic justification since the benefits to the grid do not justify the payment amount,” KIUC said in written testimony. “KIUC’s current tariff provides more than adequate payment and incentive for distributed solar.”

Leo Asuncion Jr., chair of the PUC, said in written testimony that the commission aims to provide fair incentives and compensation for utility customers in grid-­service programs while trying to avoid harmful bill impacts on nonparticipating ratepayers.

“Establishing the compensation rate for distributed energy exports through statute may limit the Commission’s ability to investigate the role of distributed energy in the State and design programs to meet the above objectives,” Asuncion said in written testimony. “Additionally, the Commission emphasizes that it is important to understand the impact of this measure on non-participating ratepayers. Increasing export credits may cause non-participating ratepayers to bear a larger energy burden, which is an important focus for the Commission.”

State Rep. Nicole Lowen, chair of the House Committee on Energy and Environmental Protection and lead introducer of HB 1687, said during the hearing that there appears to be a problem that needs addressing.

“I’m concerned with the PUC’s decision,” said Lowen (D, Kailua-Kona-Honokohau-­Puuanahulu).

The bill might next be considered by the House Committee on Consumer Protection and Commerce.

A companion measure, Senate Bill 2986, was considered by the Senate Energy, Economic Development and Tourism Committee at a hearing Thursday. But after similar testimony, the committee chaired by Sen. Lynn DeCoite (D, East and Upcountry Maui-Molokai-­Lanai) deferred the measure.

Meanwhile, the Hawaii Solar Energy Association and the Hawaii PV Coalition have petitioned the PUC to reconsider its December decision. The PUC on Monday declined to raise the rate for energy exports under the grid balancing program.