Dive Brief:
- A bill that would tie Hawaiian Electric Co. revenues to performance metrics and would focus on renewable targets, rates and reliability, has passed the Hawaii House of Representatives.
- The proposal, HB 1283, would set both performance incentive and penalty mechanisms that link utility revenues to a set of goals established by the Public Utilities Commission.
- The bill notes that the current regulatory structure rewards utilities for "increasing capital expenditures, irrespective of utility performance," and concludes that after more than a century a new business model may be warranted.
Dive Insight:
Hawaii continues to look for ways to modernize its power system as it forges ahead with its goal to power the state with 100% renewable energy by 2045, and lawmakers are now considering linking utility performance to rates and revenues—a shift some say is necessary to reflect modern ways of producing and delivering electricity.
Utilities have proposed plans that will slash fossil fuel use, but HB 1283 warns that "this shift would be accompanied by an equally dramatic shift in how utility revenues are expended."
With fewer funds spent on fuel, the bill explains utilities will need to focus on capital projects—a benefit to consumers, "insofar as fixed-cost renewable energy projects can reduce the risk of consumers facing volatile fossil fuel costs." But that model has been around longer than 100 years, and lawmakers are concerned that the new shift will "result in a bias toward expending utility capital on utility-owned or funded project."
If passed, the bill would direct the Public Utilities Commission of Hawaii to set up performance incentives and penalty mechanisms that directly tie electric utility revenues. Those would include areas such as Hawaii's renewable goals, rates, reliability, customer satisfaction, integration of renewables and "access to utility system information."
That information access might include public access to electric system planning data and aggregated customer energy usage data, as well as individual access to "granular information about one's own energy usage data."
The bill, sponsored by Rep. Chris Lee (D), passed on first reading. Lee chairs the House Committee on Energy and Environmental Protection.
