SUBMITTED BY REPRESENTATIVE HERMINA M. MORITA, DISTRICT 12
CHAIR OF THE HOUSE ENERGY & ENVIRONMENTAL PROTECTION COMMITTEE

Was Thomas Edison a man one hundred years ahead of his time? In 1882, his first heat and electricity plant near Wall Street was what he thought would best meet his customer's needs -- networks of nimble, decentralized power plants in or near homes and offices. Edison's concept lost out to George Westinghouse and the Westinghouse Electric Company's model of large centralized generating and miles of transmission systems. But, now, over one hundred years later, was Edison really on the right path after all?

The way electricity is generated and transmitted is now changing reflecting Edison's original concept. Traditional arguments for economy of scale that support large centralized electrical generation plants are giving way to decentralized distributed power facilities that boost fuel efficiency and are environmentally clean and quiet while capable of providing premium power necessary for sensitive computer equipment essential in many businesses today. To further complicate matters, the ultimate electrical transmission grid no longer move electrons in one direction, from a centralized generating facility to the electricity consumer. But, rather, omnidirectional transmission systems utilizing concepts like net energy metering and distributed power have the potential of creating vast webs of energy suppliers and consumers moving the electrons in multiple directions.

Unfortunately, if Hawaii Electric Light Company and its parent company, Hawaii Electric Company, have it their way this type of emerging technology, which can offer substantial cost savings to many businesses, will be smothered to squelch competition.

What is being proposed by HELCO continues to exasperate any effort to lower costs for all ratepayers. Such a proposal rewards large electricity users for saying no to the incumbent utility competitors. Conversely, it penalizes the customer accepting a competitor's bid by denying that customer interconnection to the grid system or charging standby fees which negate any cost savings to the customer while holding all other ratepayers hostage for its inability to deal with emerging technology or competition.

Faced with the highest electricity rates in the country, many neighbor island businesses are investigating ways to increase efficiencies and cut costs. All customers, especially residential and small business, could benefit from thoughtful and coordinated electrical restructuring which encourages large customers to generate most or all of their power. If most or all of an island's new growth demand were offset by private generation systems then the existing ratepayers would not need to bear the cost of building a new power plant, transmission and distribution systems and other related support systems. For example, if the Big Island's annual growth demand is four megawatts two large hotels installing one megawatt of distributed power could offset this growth at no cost to the ratepayer. These kinds of highly efficient systems, also referred to as combined heat and power or cogeneration, can reduce the load on the transmission grid by about twice the amount of power being generated onsite. Onsite power generation allows the use of waste heat that supplants the need for electricity to heat water or cool a facility thereby resulting in cost savings for that customer. For example the fuel efficiency for many of HECO's centralized power plants is at best 40%. Combined heat and power systems have fuel efficiencies as high as 90% with the utilization of waste heat. Distributed onsite generation also reinforces our island's power systems against damage resulting from natural disasters.

Time of day rates, power interruption contracts and net metering are just some of the tools to keep large customer on the grid while promoting the attractive traits of fuel efficiency, cost savings, clean and premium power associated with distributed power. The challenge is how to integrate these kinds of innovations and advances to benefit all ratepayers rather than to deny market entry of these technologies. This lack of ability to adjust to a changing marketplace and failure to meet customer needs is costing all of us money. It is a scenario that does not secure a bright energy future for Hawaii.

HECO has an important role to play in Hawaii's energy future. However, HECO is a textbook case of an institutional remnant of the industrial age, hierarchical, rule-following, control everything – a company too rigid to respond to new challenges and opportunities. HECO's subsidiary, HELCO, attempt to have residential and small business customers bear the cost of their anti-competitive practices is very wrong and unconscionable to say the least. Unfortunately, while government bears the responsibility in regulating public utilities, these protectionistic and political barriers are difficult to penetrate against such a formidable Hawaii institution. Difficult, but not impossible if HECO understood its evolving role in Hawaii's energy future.

Just as Hawaii residents desire progressive leadership in government, stockholders should demand the same of corporate leadership for a service so critical to our economy and quality of life. It is the stockholder that should bear the responsibility of these protectionists and anti-competitive practices not the ratepayer.

District 14, East & North Kauai

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