Dive Brief:

• Hawaiian Electric (HECO) proposed to reward or penalize utilities based on how quickly they could grant conditional approval of interconnection applications for small distributed energy resource (DER) systems, according to a regulatory filing on Aug. 14.
• In May, the PUC adopted a portfolio of PBR tools and said updated revenue adjustment mechanisms would establish targets for HECO utilities, which will be applied over a five-year multi-year rate plan (MRP). HECO's proposal includes multiple Performance Incentive Mechanisms (PIMs), such as the incentive to more quickly connect DER systems less than 100 kW.
• Parties to the Hawaii Public Utilities Commission's (PUC) effort to develop Performance Based Rates (PBR) on Aug. 14 filed their initial proposals and will launch informal working group meetings on Wednesday, though the process will take a year or more to complete.

Dive Insight:

The proposals sketched out by the parties are starting points in the effort to develop performance based mechanisms and make other changes to how rates are set. Proposal updates will be filed in January and final versions in May, at which point the proceeding will shift to a more formal process that will ultimately shape the rates of HECO's three utilities.

HECO's proposed performance incentive measures target three areas: interconnections, customer engagement, and distributed resources.

The utility also put forth a shared savings mechanism to encourage non-wires alternatives. HECO's proposal includes a Grid Investment Efficiency mechanism that would "mitigate [capital expense] bias, and reward the pursuit of cost effective solutions to meet customer needs."

"The companies designed their proposals to be consistent with the guiding principles identified by the Commission of utilizing a customer-centric approach, promoting administrative efficiency, and preserving utility financial integrity," HECO wrote.

The utility highlighted the extent of the changes being undertaken and that PIMs, along with new metrics and scorecards, would need to be developed with caution.

"Jurisdictions across the country are working to develop the type of mechanisms that are being evaluated in this proceeding and there is not yet a great deal of established precedent and experience to look to for guidance," HECO wrote.

Regulators will how the new mechanisms will be rolled into the rates of HECO's three utilities, Hawaiian Electric, Maui Electric and Hawaii Electric Light, next year. The commission has said that existing or pending rate cases would be used as a starting point for the revenue requirement before factoring in PIMs; implementation details are expected to be included in final proposals.