Hawaiian Electric’s recent decision to kill off solar projects that would deliver over 100 megawatts of clean and cheap power shows a startling indifference to Hawaii’s clean energy goals, and a major problem with the existing electric monopoly model.
Hawaiian Electric’s excuse for killing these solar projects lacks credibility. Its fear that the primary developer, SunEdison, might go through bankruptcy would likely add only a few months delay in the project development.
A core principle of bankruptcy is the need to avoid “waste,” which means any rational bankruptcy trustee would insist on this revenue-producing solar project moving forward. Contrast this with the years of delay that it has taken to get these solar projects to this point. Or the time that it will take to initiate new solar projects, and something smells fishy with HECO’s decision.
HECO’s actions speak louder than its words. At the same time it actively lobbied against rooftop solar power and killed big-scale utility projects, it proposed to expand the amount of coal burned on Oahu and to build a power plant that burns hundreds of megawatts of liquid natural gas. Killing clean energy projects? Promoting fossil fuels? Is that where we want Hawaii to go?
So what is the rationale behind Hawaiian Electric’s actions? HECO currently gets paid for each project it builds. Or “build more to profit more.” Spend a billion dollars on a new power plant? Great. Our electric monopoly is guaranteed to get that billion dollars back from ratepayers, plus a tidy profit.
This business model doesn’t serve the public
interest. For example, it aligns the electric monopoly against rooftop solar, because customer-generated power prevents the utility from building more expensive power plants and related infrastructure. Instead, the utility uses its monopoly to prevent competition from third-party providers.
For example, the state Public Utilities Commission expressly found that Next-
Era’s proposed solar project was the most expensive project proposed and the one that would cause the highest cost to ratepayers. Admittedly, NextEra isn’t an existing monopoly in Hawaii, but it demonstrates why competition may be the preferred approach rather than allowing one company to dictate what is built in Hawaii.
The model of “build more, profit more” needs to change. It’s increasingly plain that a competitive market — where the needs of the electrical grid are provided by the most competitive provider — will produce innovations and ultimately result in better service and cheaper power to customers.
Hawaiian Electric’s days of getting a guaranteed profit from ratepayers can and should end. We should, instead, compensate Hawaiian Electric based on its success in achieving our goals of cheaper, cleaner, and more reliable power while encouraging customers and technology to solve our electrical grid problems.
This transformation should lower costs for
everyone. An inefficient compensation model causes inefficient expenditures, which raises costs for everyone. HECO’s decision to kill a project that should deliver cleaner and cheaper power only underscores this point.
Over the past few years, Hawaiian Electric has made record profits to the tune of hundreds of millions of dollars. It’s understandable HECO doesn’t want this to change. But change will happen regardless. Leaders, like state House Rep. Chris Lee, who are pushing for an examination of the public ownership model and promoted bills that seek to change HECO’s compensation model, eventually will prevail. The voice of reason usually does.
Hopefully, HECO will start to recognize the inevitable and become a willing partner in laying out this future before it significantly damages Hawaii’s clean-energy future.
