On April 26, state Sen. Jarrett Keohokalole made news by killing legislation (Senate Bill 2922) that would have authorized Hawaiian Electric (HECO) to directly compel its captive customers to help pay for HECO’s Lahaina fire repair costs, while indirectly putting state taxpayers on the hook as well. Gov. Josh Green immediately began efforts to change the senator’s mind before the Legislature adjourned on May 3, without success.

What follows is a possible “win-win” alternative to SB 2922.

I’ve been thinking, and writing, about converting HECO from a mostly absentee-owned for-profit monopoly, to some form of locally-owned nonprofit ever since the electric utility on Kauai became a customer-owned nonprofit in 2002. Local interest in this peaked again about nine years ago, when Florida-based for-profit utility Next Era tried to buy HECO.

Instead of forcing local customers and/or taxpayers to bail out HECO indefinitely, we could use the “ownership transfer corporation” concept — long proposed by Australian scholar Shann Turnbull — to create tax incentives for HECO to transfer ownership to local customers and/or taxpayers over 20 years, at 5% annually.

This would convert absentee-owned, for-profit monopoly HECO to a nonprofit local customer-owned cooperative — like Kauai and about 2,000 customer-owned electric cooperatives nationwide; and/or a nonprofit local taxpayer- owned electric utility — like Sacramento, San Antonio, Austin, the Los Angeles Department of Water and Power, and the entire state of Nebraska, among others.

Due to its depressed stock price, “junk bond” credit rating, huge fire-related financial and legal liabilities, and indefinitely paused dividend payments, the institutional owners of HECO’s parent company on Wall Street may now, more than ever, be “motivated sellers” — similar to the former for- profit utility on Kauai after two hurricanes 10 years apart left it unable to make a profit due to overwhelming hurricane repair costs.

Similar to Kauai, for more rural HECO customers, we could also consider accessing loan financing from the federal Rural Utility Service, as Hawaii’s late U.S. Sen. Dan Inouye facilitated in 2002 when the previous for-profit owner of Kauai Electric — Connecticut-based Citizens Utility Co. — wanted to sell.

Converting HECO to local customer and/or taxpayer ownership might also require additional more-creative forms of debt and/or equity financing.

If so, there are existing examples of large absentee-owned, for-profit utilities that have been converted to some form of local nonprofit ownership, e.g., Boulder, Colo.

Alternatively, we could use such incentives for HECO to literally plan for its inevitable obsolescence, due to the long-anticipated “utility death spiral,” which is making anachronistic 19th/20th- century centralized top-down “command and control” electric utilities increasingly nonviable without ever more subsidization by their captive customers and/or host taxpayers.

This could allow us to replace the archaic HECO business model with a much-more bottom-up decentralized model — with a goal of eventually making electricity not only 100% local and renewable, but also completely “free” after upfront transition costs and periodic maintenance and replacement costs — based on a distributed network of small-scale electricity generation, storage and — if and when necessary and/or desirable — sharing with other nearby customers via microgrids, nanogrids and/or picogrids.

One way to begin this decentralization process could be to make every HECO electrical substation the heart of a new microgrid.

A decentralized system could also be much more resilient, sustainable and adaptable to unpredictable changing conditions, in addition to lowering future electricity costs to the lowest possible nonprofit level.

If such incentives are insufficient, could we also legally invoke the Public Trust Doctrine and/or eminent domain to compel such an ownership transfer?

I think this would be completely reasonable, considering HECO’s predecessor was simply granted — free of charge — the privilege to be Honolulu’s exclusive electricity provider shortly before the illegal overthrow of Queen Liliuokalani in 1893, and there is reason to believe coercion was involved as well.

Thomas Brand, a public policy analyst since 1986, has also worked for the state Department of Business, Economic Development and Tourism; his doctoral dissertation research focused on ways to “relocalize” and better “democratize” local ownership of Hawaii’s major economic assets.