Middle class, poor increasingly footing cost of island’s electrical grid
The middle class and poor are increasingly footing the bill for Hawaii Island’s electric grid when wealthier homeowners, businesses and government agencies opt out by installing photovoltaic systems, the county energy coordinator said Tuesday.
Will Rolston, addressing the county Energy Advisory Commission, said Hawaii County intervened in a state Public Utilities Commission case (Docket 2013-0141) trying to determine the best model for encouraging alternative energy sources while helping utilities such as Hawaiian Electric Co. protect their substantial investments in electricity infrastructure.
“The low-income population is really taking the hardest hit on this,” Rolston said. “It affects rates because the fixed costs have to be recouped.”
At issue is a process known as “decoupling,” which the PUC defined as a regulatory tool that separates a utility’s revenue from changes in energy sales. This encourages energy efficiency and renewable energy. The decoupling mechanism, instituted by the PUC in 2008, in theory, adjusts rates up or down to meet the utility’s revenue targets.
But with rates set at specific amounts, and fewer ratepayers to share the burden, the cost ultimately falls on those who can’t afford the upfront costs of solar or are renters or live in high rises where they have no place to put the panels.
“All the people who are going off the grid because they have the opportunity to do that affects the rates of everyone else,” noted Energy Advisory Commissioner Steve Burns. “The lower-income person has a disproportionate rate increase. … This sounds like a fairness issue.”
Peter Rosegg, a HECO spokesman, agreed cost burdens are being shifted because of the increased popularity of solar panels. He said it’s a nationwide phenomenon, but it’s seen most in Hawaii, which has the highest percentage of solar on its grid. The Hawaii Island grid is about 9 percent solar, compared with the national average of about 1 percent, he said.
Rosegg said the country is just starting to deal with the equity issue, although he thinks it’s a societal one, not one the utility has any control over.
“This is an issue more about social equity than it is about the utility’s bottom line,” he said.
That’s especially true because of decoupling, which changes how utilities gain revenue, he said.
Rolston said the county recently won a first-step victory. The remainder of the decoupling issue has yet to be resolved, however.
The PUC on Feb. 7 reduced the interest rate of a key account from 6 percent to the short-term interest rate of the companies’ last rate cases, a move that lowers the amount ratepayers would pay to HECO companies by about $2 million to $3 million. The account, known as the revenue balancing account, is the difference between the utility’s target revenue and recorded adjusted revenue, plus interest applied monthly.
HECO’s Big Island subsidiary, Hawaii Electric Light Co., is governed by that order.
In the PUC filing, HECO argued using the interest rate for short-term debt interest rates would add “another layer of complexity to the process.”
Rolston is no fan of decoupling. When asked about alternatives, he discussed a smart grid system, where automating the collection of electricity customers’ usage habits allows for much greater efficiency which can reduce costs. That’s the path the Kauai Island Utility Cooperative took, a lengthy process that included almost 3,000 of the roughly 25,000 electricity customers refusing to use the wireless smart meters out of health and privacy concerns.
Rolston and Burns agreed electric utilities need some form of revenue assurances, as the energy business undoubtedly has the highest upfront and infrastructure costs of any other commodity.
Still, Rolston said, “We don’t favor decoupling as the proper model.”
Email Nancy Cook Lauer at email@example.com.
Rules for posting comments
Comments posted below are from readers. In no way do they represent the view of Oahu Publishing Inc. or this newspaper. This is a public forum.
Comments may be monitored for inappropriate content but the newspaper is under no obligation to do so. Comment posters are solely responsible under the Communications Decency Act for comments posted on this Web site. Oahu Publishing Inc. is not liable for messages from third parties.
IP and email addresses of persons who post are not treated as confidential records and will be disclosed in response to valid legal process.
Do not post:
- Potentially libelous statements or damaging innuendo.
- Obscene, explicit, or racist language.
- Copyrighted materials of any sort without the express permission of the copyright holder.
- Personal attacks, insults or threats.
- The use of another person's real name to disguise your identity.
- Comments unrelated to the story.
If you believe that a commenter has not followed these guidelines, please click the FLAG icon below the comment.