PUBLIC UTILITIES COMMISSION ISSUES LANDMARK DECISION ON UTILITY BUSINESS MODEL REFORM

News Release from Earthjustice (With corrective accuracies introduced in parenthesis.)

HONOLULU (Dec. 23, 2020)—Today, the Hawai‘i Public Utilities Commission issued a historic decision adopting broad reforms for how the Hawaiian Electric Company (HECO) makes money and runs its business.  The Commission explained that it made the changes to “sustain the momentum towards transforming [HECO] into a utility of the future” and give HECO better incentives to reduce customer bills by advancing Hawai‘i’s clean energy goals. 

(Translation: Your electric rates will go up, and they hope to force you to use less electricity.)

The Commission decision breaks from the century-old system where utility profits were based on how much capital the utility spends.  Instead, the Commission has established a new system of “Performance-Based Regulation” that “continues the transition away from traditional . . . regulation and will better align [HECO]’s financial incentives with customer needs and the State’s policy goals.”  As a result, “customers will benefit from lower utility costs and see greater integration of renewable energy resources, while [HECO] will have the opportunity to improve their financial position through improved efficiencies and by earning rewards for exemplary and high-quality service.”

(Translation: This is a continuation of ‘decoupling’.  2014: Decoupling: How HECO's "Money Printing Machine" Causes High Electric Rates)

The Commission’s 264-page decision is a landmark ruling for the entire nation, putting Hawai‘i at the leading edge for realigning the electric utility business with a 100% clean energy future.

(Translation: Ratepayer money will be shoveled to Elon Musk to buy batteries.)

“It’s been a long road, but the Commission’s bold decision today puts ‘cost-plus’ regulation in the rearview mirror,” said Ron Binz, former Chair of the Colorado Public Utilities Commission, and an expert for Blue Planet Foundation (representing money hungry Silicon Valley billionaires).  Binz and Blue Planet filed the first proposal to move utility regulation in Hawai’i in a new direction in October 2014.  “This decision puts Hawai‘i in the lead nationally by reforming regulation to achieve a ‘win-win-win’ for customers, the utility, and the environment and climate.”

(Translation: Customers pay the utility to send money to wind and solar schemers—plus batteries.  Lots and lots of batteries.)

“This order comes at a crucial time,” said Melissa Miyashiro, Blue Planet’s managing director of strategy and policy.  “As we work collectively to rebuild from the COVID-19 pandemic while also urgently rising to meet the challenge of climate change, the Commission today is signaling that the time to reimagine the future is now. It provides assurance that we won’t be going back to business as usual and we can further accelerate Hawai’i’s march toward a carbon-free future.”

(Clue: This has nothing to do with COVID.  Moving the smokestack does not equal ‘carbon-free.’  Watch: Planet of the Humans.) 

Today’s decision concludes a two-and-a-half-year process involving multiple parties—including Blue Planet, who partnered with Mr. Binz and Isaac Moriwake, a clean energy attorney with Earthjustice.  The Commission opened the case in April 2018, around the same time that the Hawai‘i state legislature enacted the Ratepayer Protection Act.  That pathbreaking law, the first in the nation, mandates the use of performance-based regulation to “break the direct link” between utility revenues and investments and instead link utility revenues to performance.  

(HFP April, 2018: ‘Rate Hikes Coming: Bill to change Hawaiian Electric's business model lands on Ige's desk’)

In today’s decision, the Commission reiterated that “it is evident that further action is required to achieve the goals of a financially healthy utility supporting the State’s clean energy future.”  (Translation: Its gonna cost more.)  HECO’s traditional business model posed a roadblock to progress, where HECO made money by building and maintaining its own centralized infrastructure. This created an inherent bias toward postponing the retirement of fossil-fuel plants, expending capital on utility-owned projects, and deterring customers from installing rooftop solar.  (Translation: We are going to force HECO to shut down existing plants and replace them with Elon Musk’s batteries.)  In contrast, performance-based regulation seeks to unlock new opportunities for the utility to make money by supporting customer choice and the state's clean energy goals.  (Translation: Its gonna cost more.)

The main features of the new performance-based system include:

•  A revenue index tying utility revenue increases to general inflation, which will control utility cost escalations and give the utility the incentive to maximize its profits by capturing savings and efficiencies.  (Translation: Automatic rate hikes based on CPI regardless of dropping oil prices.)

•  A “consumer dividend” that will give ratepayers tens of millions of dollars of additional savings.  (IQ Test: Do you believe this?)

•  A longer period between utility rate cases, extended from three to five years, giving the utility more time to realize longer-term savings opportunities.  (Translation: We green energy schemers got what we want so we don’t want to reopen this can of worms for 5 years.)

•  A mechanism for reviewing and approving major infrastructure investments and ensuring that the expenditures promote performance goals.  (Translation: If it doesn’t send money to green energy schemes, it will be rejected.)

•  A performance incentive mechanism to reward the utility with additional revenues for accelerating its adoption of renewable energy ahead of the legally mandated targets.  (Translation: We green energy schemers, having captured the PUC, will reward HECO with even more rate hikes for their compliance.)

•  Additional performance incentive mechanisms to encourage the utility to reduce delays in interconnecting rooftop solar, move forward on establishing rooftop solar programs to support the grid, and encourage energy efficiency for low-income customers.  (Translation: We green energy schemers, having captured the PUC, will reward HECO with even more rate hikes for their compliance.  And we will make the little people consume less.)

“In a year that has been so challenging for all, the Commission has given the people of Hawai‘i a year-end present and more hope for the future.” said Isaac Moriwake, Earthjustice attorney for Blue Planet.  “This decision not only gives ratepayers much needed bill relief, but also sets a bold direction for Hawai‘i and the nation so that everyone—the utility, its customers, and our planet—can win by moving to a 100% clean energy future without delay.”

(Translation: Your rate hikes are my clients’ money shower.)

Read the order online

Read this press release online

IM: HECO, MECO & HELCO will be Rewarded for Exceeding the Corrected RPS  

IM: HECO, MECO & HELCO -- Implementing Performance-Based Regulation

SA: Hawaiian Electric bills to drop under new PUC rules 

SA Editorial: New power policy equals lower rates

PBN: Hawaiian Electric Co. responds to directive from Public Utilities Commission