Client Alert: Changes to Utility Pricing in Hawaii

In a landmark order, Hawaii’s Public Utilities Commission has ordered Hawaiian Electric to transform its existing power rate structure into one that better acknowledges the growing use of renewable energy.

Specifically, the order that was issued Oct. 31 will lead to a new rateChanges to Utility Pricing in Hawaii structure designed to encourage customers to reduce electricity during peak times when energy costs are high and shift load to the time of day when cheaper renewable resources are plentiful.

The time-of-use rate scheme — planned to be fully implemented in a couple of years — will give customers the opportunity to explore rate options and save money, according to the PUC. The newly approved rate structure will help do that cost-effectively by encouraging people to shift consumption away from the most expensive and dirty hours and into the cheaper, cleaner hours for the grid. ensure there’s enough electricity to keep the lights on after the sun sets on an increasingly solar-dominated grid.

Hawaiian Electric customers will soon see their bills made up of three components. A small fixed charge covers utility billing and payment-collection expenses, which everyone incurs. In addition, there’s a ​“grid-access charge” that’s proportional to the capacity a customer pulls from the grid in a given month But the bulk of the monthly payment will be determined by a time-of-use rate that splits the day into three sections: electricity in the evening peak hours costs three times more than it does in the sunny hours of booming solar production. The middle of the night is cheaper than the peak but more expensive than the sunny hours.

This will have large implications for commercial real estate and hotels across the Hawaiian islands.