From Blue Planet Press Release
STATE COMMISSION REDUCES UTILITY PROFIT FOR WASTING CLEAN ENERGY
Public Utilities Commission sends strong signal to Hawaiian Electric: More renewables, less waste, lower rates
HONOLULU—In a stern decision on May 31, the Public Utilities Commission (PUC) sent a clear message to Maui Electric Company (MECO) to change their operations to accept more renewable energy, reduce costs, and retire fossil fuel generating units. Concluding a nearly two-year rate-setting process, the PUC’s decision revised downward a prior agreed-upon allowable profit from 10% to 9%. As a result, Maui ratepayers will be refunded $8.1 million. Among the reasons for the reduction, the order cited wasted renewable energy, operating inefficiencies, and delays in shutting down fossil fuel power plants.
“The Commission’s decision sends a strong signal that business-as-usual is not good enough,” said Blue Planet Foundation CEO Jeffrey Mikulina. “By placing shareholder profits at stake, the order makes clear that using less fossil fuels, and more clean energy, is in the interest of both the public and shareholders.”
Highlighted in the Commission’s 156-page ruling was the amount of clean wind energy that MECO curtails, or dumps. In 2012, that amounted to no less than 15,625 megawatt hours (MWh) of energy, which MECO estimates will increase to 54,429 MWh annually in the near future. The average cost of the wasted wind energy is 11.953 cents per kilowatt hour (kWh). The average cost for MECO’s fossil fuel generation is 20.843 cents per kilowatt hour. The order incentivizes MECO to use more of the inexpensive wind energy, and use less of the expensive fossil fuel energy.
The ruling requires a detailed action plan from the utility within three months that prescribes how the company will operate more efficiently, reduce dumping of clean energy, and lower operations costs. In a nod toward transparency, the Commission is requiring that MECO post on its website the amount of wind energy both used and wasted each month, as well as the cost of the wasted wind energy to ratepayers.
Despite signing the Hawaii Clean Energy Initiative in 2008 calling for 70% clean energy, Hawaiian Electric has yet to reduce the number of fossil fuel generating units that it operates. The Commission’s order noted that multiple studies have offered specific remedial strategies and scenarios involving the retirement of portions and/or all of MECO’s fossil generating units in order to reduce the level of wind energy curtailment. The PUC requires MECO to address the elimination of these inefficient units in the action plan.
Blue Planet has engaged in numerous dockets before the Public Utilities Commission to help drive the adoption of renewable energy in Hawaii and reduce fossil fuel use.
Separately, the PUC also launched a new investigatory docket to explore whether decoupling, a mechanism that separates utility revenues from the amount of power sold, should be amended to ensure it is effectively encouraging greater integration of renewables.
Expressing concern that the utility is growing capital investments that increase profits but “provide little or limited long-term customer value,” the PUC warned that the utility will face increased (“arduous”) regulatory oversight and involvement if it fails to identify and execute a “strategic and sustainable business model” that provides high performance, affordable rates, and embraces Hawaii’s clean energy future.
“The public interest demands no less,” the Commission articulated.
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ABOUT BLUE PLANET FOUNDATION
The Blue Planet Foundation is a nonprofit organization committed to ending the use of fossil fuels, starting by making Hawai‘i a global model for energy independence. By advocating for innovative policy solutions, raising awareness about the benefits of clean energy, and facilitating actions that increase the adoption of renewables and energy efficiency, Blue Planet is moving Hawai‘i beyond oil.