The relatively high price Hawaiian Electric Co. and its subsidiaries pay customers for surplus solar energy produced by their rooftop photovoltaic systems is proving costly for the utility, according to a report prepared for the state Public Utilities Commission.
Under its net energy metering program, HECO and its subsidiaries credit residential customers for their excess solar energy at the full retail rate, which in January ranged from 33.7 cents a kilowatt-hour on Oahu to 39.5 cents a kilowatt-hour on Hawaii island.
By contrast, HECO is currently negotiating contracts to buy utility-scale solar and wind energy from independent power producers at around 16 cents a kilowatt-hour. The cost of generating electricity from burning oil, HECO’s most common source of power, is about 23 cents a kilowatt-hour at current oil prices.
The report was prepared for the PUC by Energy and Environmental Economics Inc., an energy consulting firm. The PUC commissioned the report in January 2013 to evaluate the different renewable-energy procurement methods employed by electric utilities in Hawaii.
The three main ways the HECO companies obtain renewable energy are through the net energy metering program, utility-scale power purchase agreements and the feed-in tariff program.
The feed-in tariff program launched by HECO in 2010 provides standardized pricing, terms and conditions for developers that want to sell renewable energy to the utility.
The study said net energy metering is the most expensive of the three.
The study echoed the findings of a report HECO filed last week with the Public Utilities Commission that quantified the amount of revenue HECO lost last year due to the net energy metering program.
"The NEM program may ultimately shift costs to other non-participating customers to the extent that NEM program costs exceed the value provided to the system," according to the report.
HECO estimated that lost electricity sales due to the net energy metering program on Oahu, Hawaii Island and in Maui County totaled 381 million kilowatt-hours last year, about 4 percent of the total 10 billion kilowatt-hours sold.
The lost kilowatt-hour sales meant that the HECO companies were not able to collect an estimated $38.5 million that would have gone to pay for fixed costs, such as power plant maintenance and new utility poles. HECO ultimately recovers that amount from ratepayers.
The scope of the Energy and Environmental Economics study was limited to evaluating the costs of different renewable-energy procurement methods and did not take into account other considerations, such as the stable prices of renewable energy, environmental benefits and "freedom of customer choice," according to the report.
"There are still reasons to promote customer-sited behind-the-meter systems and some of these qualitative policy elements may partially provide a counterweight to the higher costs of the policy," according to the report.
HECO spokesman Peter Rosegg said the report "provides an important big-picture look at the issues we all need to consider in our quest for a clean-energy future."
"The report basically says that as we keep pressing forward with clean energy, we must be aware of what that means for all of our customers’ electric bills, to keep things fair and equitable," Rosegg said.
