WORLD-GENERATION NOV/DEC 2015
25
PERSPECTIVE
If we send the right price signals the
customer will have the incentives to
respond when prices are low but there is
a cultural component, Starrs said. Utility
reliability has not been understood by
customers.
Litzinger said, however, fixed and
demand charges and variable charges are
volumetric and that’s not the way to go.
In other words customers pay the same
rate for 10 amps and 10,000 amps. A
higher rate for 10,000 amps would send
the signal to the customer to be more
efficient with their electricity use.
Litzinger sees the following trends:
demand is becoming flat and customer
preference is for low carbon and more
choice.
Jim Spiers, the vice president for
technology, engineering and economic
analysis at the National Rural Electric
Cooperative Association, seems to agree
with Litzinger. He said basic rate-based
cost service is a blunt instrument. We
need to move to market-based, price-
based rates to provide the right signals
for efficient energy use.
Spiers said there are 930 cooperatives
across the country but some have only five
to ten staff members. They don’t have the
budgets or man power to think about or
make strategic changes to their grid sys-
tems.
Lorraine Akiba is a commissioner on
the Hawaii Public Utilities Commission.
She spearheaded the writing of a white
paper laying out a strategic road map for
Hawaii’s utilities. The commission is fac-
ing the challenge of a small island grid
where one-third of residences have solar
systems on roofs.
Akiba said in the SPI session the
issue is how utilities are to embrace tech-
nologies and create public benefits. “We
need to properly value the grid services
that allow you to turn on your new dryer.”
She predicted that utilities will become
energy business services acting as con-
sultants to customers.
HAWAII PUC LOOKS AHEAD
In the White Paper Akiba referred to,
the Hawaii Public Utilities Commission has
charged the utilities it regulates, the
Hawaiian Electric Co., Maui Electric
Company, Hawaii Electric Light Company,
Kauai Island Utility Cooperative and Hawaii
Gas, with failing to articulate a sustainable
business model in light of the evolving elec-
tric utility business and the adoption of dis-
tributed energy resources by its customers.
“The HECO companies appear to lack
movement to a sustainable business model
to address technological advancements and
increasing customer expectations,” the
White Paper charges.
The White Paper observed that some
mainland electric utilities have begun to
define, articulate and implement the vision
for the “electric utility of the future.” It
points out that “it is difficult to ascertain
whether the HECO companies’ increasing
capital investments are strategic invest-
ments or simply a series of unrelated capi-
tal projects to expand utility rates and
increase profits, appearing to provide little
or limited long-term customer value.”
These are harsh words and reflect the
PUC’s concerns. It is concerned about net-
work congestion when roof-top solar gener-
ation is exporting “uncontrollable” amounts
of energy. It says this raises the cost of
energy for the two-thirds of the customers
who do not have roof-top solar systems.
Furthermore says the White Paper, the
PUC is concerned that current electric utili-
ty rate structures in Hawaii are not well
suited for a future where there are signifi-
cant quantities of variable renewable ener-
gy customer-sited distributed energy
resources and increasingly smart grid tech-
nologies.” They do not send the correct
market signals to customers and markets
when large electricity supplies hit the grid,
the White Paper said.
Unbundled rates and supplemental
power supply pricing are two alternatives
the White Paper discusses and would pre-
vent shifting utility fixed costs from DER
customers to customers without distributed
generation.
The White Paper argues that it is now
incumbent on the utilities under its regula-
tory jurisdiction to utilize the guidance out-
lined in the White Paper to develop a sus-
tainable business model “that explicitly gov-
erns the companies’ capital expenditure
plans, major programs and projects submit-
ted for regulatory review and approval.”
THE PUC ACTS
Apparently the PUC took the White
Paper seriously, because on October 12 it
took action to control utility costs and to
offer customers more options under its Net
Energy Metering program. First, it reduced
credits for new rooftop solar owners on
Oahu that sell excess power back to the
utility from 26.8 cents/kWh to 15.07 cents/
kWh. Customers on neighboring islands
will see similar reductions.
Customers with new rooftop solar sys-
tems will also see their minimum monthly
bill increase from $17.00 for a net energy
metering contract to $25.00.
Customers who have already installed
rooftop solar systems or who have submit-
ted applications by October 12 will be
grandfathered in at the current rates.
The PUC ordered the Hawaiian Electric
Co. to develop a time-of-use rate for all cus-
tomers so a customer can choose to pay
less for electricity during the middle of the
day when solar power is at its peak, and
more in the evening.
The PUC also created a self-supply pro-
gram for solar customers who intend to con-
sume all the electricity produced by their
solar system onsite and will not export ener-
gy to the grid. They will receive expedited
interconnection review. These customers
will be expected to use energy management
and energy storage systems to balance
onsite generation with demand. They will
therefore have reduced technical impact on
the grid, according to the PUC’s order.
The PUC will continue its work in
Phase 2 to further develop competitive mar-
kets for distributed energy resources,
including storage.
Energy storage is already a focus for
Hawaiian Electric. In August, a $2.1 million
pilot program to install energy storage sys-
tems saw its first award go to Milbrae,
California company, Stem, Inc.
EXPLORINGTHE UTILITY OFTHE FUTURE
CONTINUED FROM PAGE 8
