Lawmakers in Hawaiʻi have passed a groundbreaking bill aimed at reshaping the state’s electricity market and potentially lowering electricity costs for consumers.
Governor Josh Green signed the bill, which is expected to provide additional options for ratepayers starting in 2027.
This legislation mandates that Hawaiian Electric Company (HECO) allow independent electricity producers access to its grid, enabling them to deliver electricity directly to customers for a fee.
As a result, HECO’s century-long monopoly on the electricity supply in Hawaiʻi will be challenged, potentially giving rise to a more competitive environment in the state’s energy sector.
Under the existing system, independent producers are required to sell their energy to HECO at wholesale prices.
HECO then resells this electricity to end-users at significantly higher rates, a practice that has drawn criticism due to the high costs associated with electricity in Hawaiʻi — currently among the highest in the nation, with residential rates surpassing three times the national average.
State Senator Glenn Wakai, the bill’s sponsor, expressed that this legislation will provide much-needed competition in the energy market, allowing consumers to choose alternatives to HECO, especially given the utility’s recent history of unreliable and costly service.
“For more than 100 years, we have been at the mercy of HECO for our electricity needs,” Wakai stated.
He emphasized that beginning in 2027, every HECO customer will be able to purchase electricity from independent sources.
Governor Green’s office added its support for the bill, stating that the new provisions will lead to greater energy choice and hopefully a reduction in costs for consumers.
The most significant aspect of the new law is the introduction of a practice known as wheeling, which was previously banned in Hawaiʻi.
With wheeling, independent electricity producers will be able to pay a set fee to use HECO’s infrastructure to distribute their electricity directly to customers.
This move is intended to bring rates closer to the cost of electricity that HECO pays to independent producers, which can be as low as 8 cents per kilowatt-hour.
In comparison, residential customers on Oʻahu currently pay about 43 cents per kilowatt-hour, with Big Island residents facing charges as high as 48 cents.
The hope is that this legislation will lower costs for consumers by increasing competition and allowing emerging players in the energy market to thrive.
As noted by renewable energy consultant Jeff Mikulina, who played a pivotal role in earlier legislation mandating a 2045 renewable energy goal, the regulatory changes could spur innovative energy solutions and increase access to renewable power.
However, the historical context surrounding wheeling in Hawaiʻi is indicative of the difficulties that independent developers face.
For instance, R.J. Martin, a developer in West Oʻahu, sought to form a microgrid for a development that used solar power and battery storage.
Despite his attempts to create a shared energy network for the homes, he found it illegal under existing regulations, which require homeowners to be classified as regulated utilities to share power.
Wakai described this obstacle as an example of the unnecessary barriers that have been prohibitive in Hawaiʻi’s energy sector.
He expressed optimism that the new law would dismantle these barriers and facilitate more innovative approaches to energy production and distribution.
The implementation of the law will be crucial, as further decisions from the Hawaiʻi Public Utilities Commission (PUC) will dictate how the changes are rolled out.
Mikulina asserted that if managed effectively by the PUC, this new law could lead to significant advancements in renewable energy growth in the state.
Despite these positive aspects, some critics have raised concerns about potential consequences stemming from the new energy framework.
One major issue is equity, as there is apprehension that wealthier HECO customers might seek partnerships with independent power producers, thereby leaving low-income customers with higher electricity rates.
The International Brotherhood of Electrical Workers Local 1260 articulated its concerns, stating that the technical long-term effects of wheeling on HECO’s grid are uncertain, and that fixed system costs would likely still be shared among remaining customers in the system.
This scenario could ultimately lead to higher charges for vulnerable populations.
To address such risks, the law has imposed limits on the size of wind or solar farms utilizing the wheeling provision, capping them at two megawatts — enough to power approximately 3,000 homes.
Wakai clarified that the intention is not to allow the establishment of large-scale plants aimed at supplying major commercial entities, but rather to enable smaller projects that empower local communities.
For those looking forward to participating in the new energy market, the implications of the legislation are promising.
Steve Mazur, a director at RevoluSun, highlighted the potential for businesses with energy-intensive operations to partner with solar installations located nearby, fostering a collaborative energy ecosystem.
This opportunity encourages efficiency and helps utilize underused rooftop space by linking surplus solar generation to adjacent electricity needs.
In conclusion, while challenges remain with the new energy legislation in Hawaiʻi, the framework for a more competitive electricity market is now in place.
With the promise of innovative solutions and competitive rates on the horizon, residents and businesses alike may soon benefit from a reformed energy landscape that has long been dominated by HECO.
image source from：civilbeat
