Measure aims to restructure HECO in effort to lower energy bills

HONOLULU (HawaiiNewsNow) - Recent weather-related power outages is fueling momentum for a measure to break up Hawaiian Electric Company, in an effort to lower energy bills and bring in outside investment.

For decades, HECO has controlled and generated power, mainly through fossil fuels, and managed electric grids across the islands.

Critics want to change that, saying HECO’s dual role poses a conflict that delays the benefits of renewable energy. Recent financial troubles tied to the Lahaina wildfires are also prompting lawmakers to look at other ways to upgrade the islands’ aging power system.

Senate Bill 3326 tasks the Public Utilities Commission with creating a framework for restructuring HECO, separating its power generation business from its transmission and distribution services by 2050.

“The generation part, we’re gonna have the private sector come in and play in that arena and you may know that we already have 30+ private sector players, right, AES, Ameresco, they’re all inputting solar, wind, or whatever onto the generation side,” said state Sen. Glenn Wakai, who introduced the bill and chairs the Senate Committee on Energy and Intergovernmental Affairs.

Supporters believe opening generation to the private sector will promote competition and investment, and drive lower rates and more reliable service.

“Both the PUC as well as HECO have this kind of public conveyance of everything’s OK, we’re working on solutions, be patient. And I think at this point, the public is losing patience,” Wakai said.

But critics of the bill want more information about the impact of a restructuring and worry it would cause disruptions with no guarantee of lowering costs for consumers.

“Each island is separated and has its own process of the utility that needs to be provided for that particular island and it’s very concerning,” state Senator Lorraine Inouye of Hawaii Island said during Thursday’s hearing of the Senate Ways and Means Committee.

During a joint meeting of the Senate Energy and Commerce and Consumer Protection committees last week, utility officials said HECO’s existing competitive bidding framework already secures lower rates, but it will take time to be reflected in utility bills.

“Unfortunately, a lot of the delay has been with evolution of technology, changing technology, you know, changing circumstances,” said PUC chair Jon Itomura.

“Even if it’s sort of incremental progress, as more of these products slowly get online, they slowly whittle down our reliance on fossil fuel generation, oil generation, then the fuel component of our bills, which represents Maybe about half of your bill is just going to pay for fuel. That’s going to slowly come down,” said PUC utility analyst Daniel Park.

Wakai questioned HECO about its ability to lower rates, in the wake of the Lahaina wildfires.

“Considering you’re in junk bond status, you have no idea how you’re going to pay your $2 billion liability. Where are you gonna get the resources to help create the generation capacity that the state needs?” he said.

In a statement to HNN, HECO VP Jim Kelly said:

“You don’t have to be a utility expert to see the bill doesn’t make sense. How does disassembling the utility operation, potentially displacing hundreds of workers and setting up two separate companies lead to lower rates? It’s been looked at before and rejected by the legislature, the PUC and the Consumer Advocate.

It’s illogical to say rates are too high and then complain that the company didn’t spend billions of dollars in infrastructure investments. Customers pay for those investments. We’ve worked hard to make the grid safe and reliable while holding the line on rates and over the past 15 years, even as inflation has surged, the base rates that pay for our operations have barely moved.”

The Senate WAM committee passed the measure with amendments, requiring the PUC to do an impact study and provide a report before the 2027 legislative session.