Energy Office Presents Utility Model Study

Posted on Jun 4, 2019 in News

Hawaii State Energy Office
For Immediate Release: June 4, 2019

HONOLULU—The Hawaii State Energy Office (HSEO) has completed a study analyzing alternative models for utility ownership and regulation in Hawaii.

The study was produced in response to Act 124, Session Laws of Hawaii 2016, which provided funding to HSEO “for a study evaluate alternative utility and regulatory models including, but not limited to, cooperative, municipal and independent distribution system operators; and evaluate the ability of each model to:

  • Achieve state energy goals;
  • Maximize consumer cost savings;
  • Enable a competitive distribution system in which independent agents can trade and combine evolving services to meet customer needs; and
  • Eliminate or reduce conflicts of interest in energy resource planning, delivery and regulation; and to include a long-term cost-benefit analysis of each model and the steps required to carry out each scenario for each county.”

The study examined the costs and benefits, as well as the viability of, various electric utility ownership and regulatory models to help Hawaii in achieving its energy goals. The full report can be viewed here.

Through a competitive procurement process a contract to undertake the study was awarded to Boston-based London Economics International LLC (LEI), a global economic, financial and strategic advisory professional services firm specializing in energy, water and infrastructure. The study was informed by a robust outreach effort that included three rounds of stakeholder meetings and workshops on all islands as well as numerous one-on-one meetings over the past 18 months. A public briefing on the final report is scheduled for 10:30 a.m. June 5, at the Hawaii Convention Center, Emalani Theater.

The study, the most extensive analysis of its kind ever conducted in Hawaii, examined existing ownership and regulatory models in each county and evaluated them in comparison to alternative models. Ownership models evaluated included: investor owned utility (IOU), IOU with a new parent company, cooperative utility, municipal utility, single buyer, hybrid ownership with majority government owned, integrated distribution energy resources systems operator, and grid defection. Regulatory models reviewed included: status quo, status quo with Hawaii Electricity Reliability Administrator, independent grid operator, distribution system platform provider, performance-based regulation (PBR), lighter PUC regulation and combinations thereof.

Each model was assessed for its ability to achieve state energy goals, maximize customer cost savings, enable a competitive distribution system, eliminate or reduce conflict of interest and align stakeholder interests. As part of that assessment the report took into consideration costs required to change from the existing model to a new model, legal and regulatory approvals needed for the change, impact on revenue requirements and rates, and effects on distributed energy resources, such as rooftop solar, batteries and smart appliances.

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About the Hawaii State Energy Office
The Hawaii State Energy Office (HSEO) is a division of the state’s Department of Business, Economic Development and Tourism. HSEO is committed to developing and deploying high impact solutions that will maximize Hawaii’s renewable energy resources and improve efficiency and transportation standards. Through effective policies and innovative programs, HSEO has positioned Hawaii as a leader in clean energy innovation, which will generate quality jobs, attract investment opportunities and accelerate economic growth. For more information, visit energy.hawaii.gov

MEDIA CONTACT:

Alan Yonan Jr.
Communications Officer
DBEDT State Energy Office
(808) 587-3860