KAHULUI >> A former top federal energy regulator said Wednesday that Hawaii can reach its 100 percent renewable energy goal more quickly and cheaply by revoking Hawaiian Electric Co.’s control over the electric grid.
Jon Wellinghoff, former chairman of the Federal Energy Regulatory Commission, said an independent third party not obligated to shareholders could move the state toward the goal of generating all electric power from renewable sources by 2045 at a lower cost to ratepayers. Wellinghoff spoke at the two-day Maui Energy Conference, which concludes today at the Maui Arts &Cultural Center. An independent system operator, or ISO, would be a private not-for-profit entity that would be regulated by the state Public Utilities Commission.
“The main benefit here is it effectuates the policy the state has in place for 100 percent renewable and gets that done quickly and efficiently without having conflicts from the utility,” Wellinghoff said. “(The utility) really is trying to continue to make money under their business model by just investing more money in their infrastructure. … It may be cheaper and easier to actually have customers investing in infrastructure on their side of the meter instead of having the utility do it.”
Wellinghoff’s message was similar to the conclusion of a study by Oklahoma-based energy consultant C.H. Guernsey &Co. of the Maui electric grid. The role of the ISO, in part, would be to promote competition by making sure all parties that can generate power have equal access to the grid, according to Guernsey.
The establishment of the independent system operator would reduce generation and transmission costs, according to Guernsey. Generation and transmission costs amount to roughly 60 percent of customers’ bills, according to the firm.
Wellinghoff said the third party would operate and control the system but the underlying assets, the substations and the wires, would still be owned and maintained by HECO.
Colton Ching, vice president of energy delivery at HECO, said the model is not applicable in Hawaii, and that if it were pursued it would likely face a long process. Ching said that it doesn’t make sense because creating an independent system operator would create additional expenses for a service the utility already provides.
“To essentially replicate what already exists for each island, I have a hard time understanding how much value is created from this tremendous expense that we we would need to incur to create (an ISO) that is essentially responsible for the same area the utility is,” Ching said.
Ching said it it would be better for there to be more transparency of the operations of the grid. The “opportunity for value is in transparency of information,” Ching said.
Guernsey released a report in December recommending that Maui look into an independent third party to oversee the electric grid and energy market.
“It would make sense to have an independent system operator because it would be low cost,” said Jared Stigge, vice president of Guernsey. “The concept … has a lot of merit to it but it is a sea change from how business is conducted on the islands.”
He added that it would take years to make the change. “It should be measured in years, not months. Safe to say years and more than a couple,” Stigge said.
Wellinghoff said he talked to Gov. David Ige and senior legislators about the concept of an independent system operator. “I think they are open to looking into alternatives,” he said.
When asked, Ige said he is reviewing the information Wellinghoff gave him when they met.
Wellinghoff said the model could be established by having the state Legislature set up the structure and the PUC mandating there be a third-party operator.
“In my mind there is no question that the state has the authority to require that it be done,” Wellinghoff said.
The Maui energy conference comes as Hawaiian Electric Industries and Florida-based NextEra Energy Inc. await a decision from the PUC on whether they can go forward with a planned $4.3 billion sale of HEI to NextEra. The PUC concluded hearings on the proposed sale this month and will announce a decision later this year.
Maui Mayor Alan Arakawa, who has voiced his opposition to the sale of HEI, kicked off the conference Wednesday morning.
“The future of our communities are dependent on what we do today,” Arakawa said. “We need to be able to analyze what the animal is we are working with and where we need to go.”
Shelee Kimura, vice president of corporate planning and business development at HECO; Alicia Moy, CEO of Hawaii Gas; David Bissel, CEO of Kauai Island Energy Cooperative; and Greg Callman, business development and market entry at Tesla Energy Inc.; also spoke at the conference.
