HELCO President Finds Himself on Hot Seat

Hawaii Electric Light Co. President Jay Ignacio visited the Hawaii County Council room today to explain recent media coverage of HELCO and its parent company, Hawaiian Electric Co.

But before he was done, several members of a council committee took on the media’s role, presenting him with some questions of their own.

Ignacio began by describing the various ways that the public can contribute to HELCO’s electrical grid such as through the net metering program, which allows customers to install photovoltaic systems that offset power they use at night.

Ignacio said with the rising cost of electricity and the decreasing cost of solar panels, the program has become “very popular,” with the number of such systems increasing over the past decade from two to more than 1,600 in 2011.

He noted that HELCO is the fourth-ranked utility in the country when it comes to the ratio of solar watts per customer.

Ignacio noted that newspaper articles in February incorrectly stated that HECO would be seeking a rate increase to cover costs not borne by net metering customers.

Although he noted that the misinformation — which according to a Big Island Now review was the result of comments from a HECO spokesman — was later corrected, Ignacio said many readers likely were not aware of that.

Ignacio told committee members that because of net metering’s popularity, HECO and its subsidiaries now require, with the approval of the state’s Public Utilities Commission, that any new applicants on circuits consisting of 15% or more net metering systems must first pay for a study on its impacts.

He said the studies are necessary for a variety of reasons, including ensuring that equipment and the electrical grid are protected from power fluctuations caused when the net metering systems create a “micro-grid.”

Ka‘u Councilwoman Brenda Ford later questioned Ignacio about the costs of the studies, which she had heard could cost $500. Ignacio said the studies actually could cost up to $15,000, depending on their complexity.

Asked by Ford why the studies couldn’t be used for more than one new applicant, Ignacio said the utility sometimes tries to assemble several applicants to share the cost.

Ford said she was concerned about HELCO requiring such costly studies when the company is financially well-off, noting that at one point HECO was paying dividends to its shareholders equal to more than its net profits. She also questioned how HECO arrived at the 15% level, to which Ignacio responded that was the “industry standard.”

Ignacio insisted HELCO wasn’t trying to slow down or stop net-metering installations, and the studies are a necessary step to ensure the integrity of the utility’s grid.

Hilo Councilman Donald Ikeda asked Ignacio whether HELCO’s efforts to obtain geothermal- and biomass-generated power at levels below the avoided cost – what it would cost to make it with fossil fuels – would result in lower electrical rates.

“If we get it at the right price it will go down,” Ignacio said.

HELCO recently executed a contract with Puna Geothermal Venture for 13 of the plant’s 38 megawatts at below avoided cost. It is also looking to purchase 22 megawatts from Hu Honua, a company which by 2014 plans to generate electricity by burning plant materials at a former sugar cane processing plant in Pepeekeo.

Asked by Big Island Now how the addition of those 35 megawatts decoupled from avoided cost would affect electricity rates, Ignacio said it would have only a negligible impact.

Ignacio said HELCO currently pays about 21 cents per kilowatt hour – a unit equivalent to burning 10 100-watt light bulbs for one hour – for avoided-cost power and anticipates paying about 12 cents under the new contracts.

HELCO customers last month paid about 41 cents per kilowatt hour, the highest rate in the nation. Ignacio said the difference is used to pay for transmission, maintenance, administration and other costs.