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Hawaii’s highest-in-the-nation energy costs stay intact by politics, monopoly

By   /   July 21, 2014  /   No Comments

POWERFUL: Much of Oahu’s tropical beauty is marred by a crisscross of aging power polls and powerlines, critics say.

By Malia Zimmerman | Watchdog.org

HONOLULU — If residents of Hawaii are going to have affordable electricity, the state needs to break up Hawaiian Electric Industries Inc., the parent of the Hawaiian Electric Co., a former lawmaker contends.

A study of electric rates produced by WalletHub, Most & Least Energy Expensive States, puts the unit price of electricity in Hawaii at  38.5 cents per kilowatt-hour, or 4.5 times more than the cheapest state. Natural gas in Hawaii is six times more expensive than other places in the country.

POWER PLAY: Former Hawaii state Sen. Fred Hemmings says politicians allowing monopoly control of Hawaii’s energy market are largely responsible for high costs.

Former state Sen. Fred Hemmings puts the blame squarely on politics.

“Hawaii’s most egregious for-profit monopoly is Hawaiian Electric Industries Inc. Even during the last fuel crisis, Hawaiian Electric posted robust profits,” Hemmings said.

“Hawaiian Electric has been able to get away with these prices for most of the 20th century and into the 21st century because of politics. One of their biggest expenditures is their government relations division. They have friends in the Legislature.

“There are solutions to Hawaii’s energy problems. Allowing Hawaiian Electric to continue with business as usual is not one of them.”

Hemmings said he wants Hawaii lawmakers to break up the monopoly and create nonprofit consumer-owned electric utilities.

One cost driver is executive pay, Hemmings said.  Hawaiian Electric Industries Inc. CEO Constance Lau is paid $5.8 million annually, which earned the company an “F” grade rating  from Glass, Lewis & Co.

Panos Prevedouros, a professor of engineering at the University of Hawaii, is critical of HECO’s priorities and use of technology.

“One of the most ridiculous things, instead of implementing smart grid for efficient and reliability, the company is spending billions of dollars on an undersea cable to connect power grids on each of the Hawaiian Islands. That is going to cause costs to skyrocket,” Prevedouros said.

GET SMART: Panos Prevedouros, a professor of engineering at the University of Hawaii, says HECO should invest in smart grid technology not costly “pie in the sky” ideas.

For a number of reasons, the plan isn’t a good one, Prevedouros said, including the expense, estimated at as much as $2 billion, and the base load it will put on the state’s oil resources on islands other than Oahu, where the state’s population is largely based.

“The grid is in bad shape. We don’t have winter storms here, yet we have one of the highest power interruptions. That’s in part because of the low-hanging wooden power polls that are overrun with vines, or easily blown over by wind, leaving the entire neighborhood dark,” Prevedouros said.

Hawaii residents should be able to rely on the elements to generate electricity like the abundant amount of sun, Prevedouros said. But HECO controls the energy market so completely that the company even decides who in the state can get a working solar panel system.

Ironically, those with solar panels ultimately take away from the company’s profits. That doesn’t give the company incentive to approve solar hook-ups for residents. In fact, residents have waited months to get approval for the solar system they purchased and hooked up to the grid.

“They can control permits, refuse permits, delay indefinitely and restrict capacity,” Prevedouros said of HECO. “No other body can override them.”

In April, a new opinion poll by the Honolulu-based polling firm SMS and commissioned by The Alliance for Solar Choice, an organization representing most rooftop solar installations in the United States, documented Hawaiian Electric’s “significant public image problem.”

The poll showed an overwhelming number of Hawaii residents, or 94 percent of those surveyed, support more rooftop solar, and 90 percent said HECO is slowing rooftop solar to protect its profits.

The telephone poll of 405 randomly selected residents from three Hawaii counties was released in April with a 5 percent margin of error.

“The people of Hawaii clearly want and expect more rooftop solar, and are looking to both HECO and to policymakers to advance policies that help increase access for homes and businesses,” said Jon Yoshimura, a Hawaii spokesperson for TASC.

Reach Malia Zimmerman at Malia@hawaiireporter.com

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Malia Zimmerman co-founded the investigative news organization, Hawaii Reporter, in February 2002. Malia reports daily for KHVH News Radio 830 AM, a local Clear Channel station, and hosts a monthly inspirational television show on the local CBS affiliate called You've Got the Power. Malia has freelanced for ABC 20/20, People magazine, Inside Edition, Fox News and publications such as the Washington Times, Bangkok Post and the Wall Street Journal. Malia and the reporters who worked under her have won numerous awards for their investigative reporting.

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