Pressure’s on for ‘clean’ energy

Recently, our regulators — the Hawaii Public Utilities Commission — highlighted concerns about high electricity costs, clean energy progress and customer service. At the Hawaiian Electric Companies, these priorities, along with safe and reliable service, remain at the top of our list, too.

Our roots in this community run deep. This is our home, and we take our responsibilities to our customers very seriously.

Part of that responsibility means acknowledging we haven’t done everything right and working to fix that. We’re doing just that with added resources and new procedures to improve customer service. Technology upgrades that are in the works will make things even better.

We’re also making significant progress on other fronts.

Case in point: laying the clean energy foundation for lower electricity costs. Consider that more than 50 percent of a typical electric bill goes to pay for fuel-related costs. In addition, more than 80 percent of the increase in that bill on Oahu over the last several years has been due to higher oil costs. So cutting Hawaii’s dependency on imported oil is clearly key to lowering our customers’ electric bills.

This year, we expect to get more than 18 percent of our electricity from renewable sources, eclipsing our state’s next milestone goal of 15 percent renewable energy by 2015. Wind, solar, waste-to-energy, geothermal, biomass, biofuels and hydro — Hawaii’s full portfolio at work.

Our utilities are No. 1 in the nation in the percentage of customers who have solar photovoltaic systems and in solar watts per customer.

The challenge of this success is that the road ahead is much tougher.

Take the small Maui island grid. With more than 20 percent renewable energy — mainly from more than 30 megawatts of PV and 72 megawatts of wind energy from three wind farms — Maui Electric faces a complex balancing act. To keep electricity safe and reliable, we must keep some conventional power generation running to compensate for the variability of wind and PV.

On top of that, we need to balance the amount of electricity generated with the amount being used by our customers. The demand for electricity is dropping partly due to the economy, but also thanks to efforts to use energy more efficiently and the proliferation of PV. That means we need to reduce the amount of electricity we generate, as well as the amount that we integrate from the wind farms.

To integrate more wind energy, Maui Electric has reduced the run times of several of its own units and will be working on plans to deactivate its Kahului power plant.

Of course, getting our customers’ input on plans like these is important. We’re currently asking for feedback on a long list of actions as part of draft five-year energy action plans that we’ll soon be submitting to the PUC. As further examples, these plans include:

» Geothermal on Hawaii island at a significant scale, working in concert with the Native Hawaiian community.

» More wind farms, solar farms, and rooftop PV — with smart meters and a smarter grid to help integrate them.

» More biomass and biofuels.

» Waste-to-fuel on Maui and waste-to-energy on Hawaii island.

» Deactivating more utility generation.

» Repowering hydro units on Hawaii island.

» More “demand response” programs that pay incentives to customers for the option to turn off some customer equipment when the system needs it.

» Pursuing natural gas imports so long as they lower prices for our customers, can be done in an environmentally responsible way and do not take away from achieving our goal of self-reliance as islands (it’s not in our interests to simply trade one dependency for another).

None of this will be easy. Every one of these efforts will be debated, with likely opposition by one group or another in the hope of stopping this project or that project.

Hawaiian Electric stands at the center of that debate. It is our duty to always remember Hawaii’s vulnerability to oil and the harm it has done to our customers and our communities. We must remember and we must act. It is also our responsibility to take a long view, to understand the passions of all parts of our community, to learn from our mistakes and, ultimately, to achieve a truly sustainable Hawaii.

We are not without our flaws. We can and will do much better. We have come a long way already, and we have a long way still to go.

— By Robbie Alm

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Fast-moving changes mean HECO must evolve quickly, likely from power generator to clean energy distributor

Maui ratepayers overpaid for electricity last year because the utility dumped renewable wind energy in favor of running an outdated fossil fuel generator — at two-and-a-half times the cost per kilowatt-hour.

This was one standout failing that compelled the Public Utilities Commission (PUC) to order the electric utility to refund $8.1 million to customers. Although the utility has filed for reconsideration of that decision, the PUC’s directive was clear: The utility’s responsibility is to serve the customers’ best interests. This will mean redefining its role to match our changing energy landscape.

For the past century, Hawaii’s utilities have steadily expanded their capacity to meet growing demand. On Oahu, the original Honolulu power plant was joined by Waiau in 1938, then Kahe in 1964. Oil was relatively cheap, and the utility’s progress was charted by healthy financial returns.

In the past decade, the ground has radically shifted. The steady upward climb of energy demand has reversed, partly driven by the skyrocketing growth of clean energy from solar rooftops. The utility has been selling less electricity each year for the past seven years. Meanwhile, the cost of oil has been dangerously volatile.

As technology enables more clean energy at more affordable costs, the utility faces new challenges, not only in grid management and reliability, but also in neutralizing the fundamental threat of losing customers who choose to generate — and someday store — their own energy. The utility has been examining ways to cope, but legacy systems aren’t equipped to deal with disruptive change. A new model must emerge.

The commission understands this burden from its vantage as referee between the utility and the public. Consequently, alongside the Maui decision they simultaneously targeted the heart of the problem by opening an investigation of what’s known as “decoupling”: By detaching revenue from the amount of power sold, decoupling is designed to correct a disincentive for the utility to sell less electricity. But the current regulatory framework provides “no adverse economic consequences [for Maui Electric] if they withhold cheaper renewable energy from customers … ” That’s a huge gap.

The utility has taken some positive steps, promising to take a proactive approach to allowing more solar on the grid, adding utility-scale wind projects, and installing load control technology on some electric water heaters. The challenge now is scaling up such efforts as part of a larger sustainable business model, while maximizing customer service and helping Hawaii achieve its clean energy goals. What does an electric utility look like in a world where customers can produce their own energy, where businesses want energy that doesn’t change the climate, and where electric cars can store enough energy to power a home for days?

Just as the telecommunications industry shifted from rotary phones to smart phones and terrestrial lines to wireless networks, energy utilities must quickly evolve to provide new services and value based on modern technology. This evolution will likely push our utility further (or completely) out of the generation business into the business of distributing and managing local clean energy. They would do well to acknowledge that even though they are in the business of moving electrons, their customers simply want the services that energy provides: hot water, lighting, communications, mobility, etc. Are there ways the utility can deliver these services better and more affordably? And can the savings from operating efficiencies be shared with both shareholders and customers?

Change rarely comes easy for large institutions with deep roots. But history shows that disruptive new technologies and social change can uproot even the most respected companies, unless they evolve.

The stern nature of the PUC’s recent decisions demonstrates that its gavel can be a powerful lever for meeting this challenge. As the institution celebrates its 100th anniversary on July 1, 2013, it reminds the utility that evolution favors those that are most adaptable to their immediate environment, and it extends a weighted invitation: Seize this opportunity to make the operational changes and clean energy investments that will benefit both shareholders and customers, or shareholders will suffer alongside customers.

As the commission concluded in its order, “The public interest demands no less.”

— By Jeff Mikulina