Grid Defection in Hawaii:
Crisis or Opportunity?
EUCI 4th Hawaii Energy Summit
Honolulu, Hawaii
December 4, 2014
Jim Lazar, Senior Advisor
The Regulatory Assistance Project
50 State Street, Suite 3
Montpelier, VT 05602
Phone: 802-223-8199
www.raponline.org
The Regulatory Assistance Project
(RAP)
RAP is a global, non-profit team of experts.
We focus on the long-term economic and
environmental sustainability of the power
sector.
We provide assistance to government
officials on a broad range of energy and
environmental issues.
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Here Comes the Sun!
3
Grid Parity in Hawaii:
We’re A Little Past That Point!
4
For Commercial Consumers:
Here Yesterday!
5
For Residential Consumers:
Here Soon!
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Issues With Home-Grown Electricity
Source: Crossborder Energy / VoteSolar
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Utility Solution:
High Fixed Charges
HECO Proposal:
$55/month
+ $16 for PV Customers
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ILEC Access Lines (FCC Form 477)
How Did High Fixed Charges Work
Out for the Phone Companies?
9
SolarCity Response:
Battery Leasing
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Many People
Cannot Own Rooftop Solar
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Genesis of Utility Regulation
“The controlling fact is
the power to regulate at
all. If that exists, the
right to establish the
maximum of charge, as
one of the means of
regulation, is implied.”
Munn v Illinois, 1877
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Purposes of Utility Regulation
• Assure reliable, adequate service at
reasonable prices.
• Provide a reasonable opportunity for a fair
return on investment.
• Regulation should support
competitive forces that help to hold
energy costs down, and replace
competition where monopoly power
is present.
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How Does the Tomato Industry
Handle This?
14
A Home-Grown Tomato
is a “Better” Tomato
15
Lots of People
Grow Their Own Tomatoes
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What if you don’t have enough?
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What If You Have Too Many?
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What About Other Industries?
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Principle #1
A Customer
should be
allowed to
connect to the
grid for no more
than the cost of
connecting to
the grid.
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Principle #2
Customers
should pay for
the grid in
proportion to
how much they
use the grid.
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Principle #3
Customers
should pay
based on when
they use grid
services, and for
how long.
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Principle #4
Customers
delivering power
to the grid should
receive full and
fair value – no
more and no less.
23
Applying Principles
to Tariff Design
Current HECO Residential Rate
Principles-based Residential Rate
Customer Charge
Customer Charge
$9.00/month
$9.00/month
First 350 kWh
$0.34
Off-Peak
On-Peak
Next 850 kWh
$0.35
Power
$0.10
$0.30
Over 1,200 kWh
$0.37
Delivery
$0.05
$0.15
ONLY the “Power” rate credited
for power fed to the grid.
Ride The Wave?
Or Wipe-Out?
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About RAP
The Regulatory Assistance Project (RAP) is a global, non-profit team of experts that
focuses on the long-term economic and environmental sustainability of the power
and natural gas sectors. RAP has deep expertise in regulatory and market policies
that:
 Promote economic efficiency
 Protect the environment
 Ensure system reliability
 Allocate system benefits fairly among all consumers
Learn more about RAP at www.raponline.org
Jim Lazar, [email protected]