Energy is one of the sectors regulated by the Hawaii Public Utilities Commission (PUC). Established in 1913, the Hawaii PUC’s primary duty is to protect consumers by overseeing and regulating public utilities. That means, ensuring safe, reliable service is provided at just and reasonable rates. The PUC’s role has expanded from traditional utility regulation involving rate cases, major project approvals (e.g. capital projects, fuel supply agreements, power purchase agreements), and review of long-term plans to oversight over major energy policy directives and program implementation. Below is a summary of the major ongoing energy policy docket proceedings.* For more information, docket filings can be accessed by inputting the docket number or searching by keyword.
*By law, the Division of Consumer Advocacy, is party to all proceedings before the Public Utilities Commission, while other interested entities may apply for full intervention as a party to a docket or for limited participation to assist the Commission with certain issues. Generally, applications for intervention or limited participation, among other things, must demonstrate how the applicant’s unique interest in the matter will not be represented by existing parties.
The PUC initiated this docket in April 2018 to explore new opportunities for evaluating and updating the State’s utility regulatory framework in light of a transforming electric power system—from one that relies on mainly centralized fossil-fuel generation to more distributed renewable energy sources such as rooftop solar photovoltaic systems. A week later, the Governor signed into law SB2939 SD2, which requires the PUC to establish performance incentive and penalty mechanisms that directly link electric utility revenues to the utility’s achievement on performance metrics by 2020. This docket will shift the regulatory framework from what is referred to as cost-of service regulation in which utility’s ability to earn money is closely tied to its capital investment to performance based regulation (PBR) which follows an incentive structure that rewards the utility for specific outcomes and objectives. While both models are intended to allow the utility to earn fair compensation for providing quality service, the latter allows for aligning financial incentives with the public interest.
The docket proceeding is divided into two phases. Phase 1 covers evaluation and assessment, focusing on building a foundational goals-outcomes hierarchy, current regulatory assessment, and performance metrics. Phase 2 addresses design and implementation, focusing on refining and/or modifying the current regulatory framework through performance incentive mechanisms, revenue adjustment mechanisms, and other regulatory reforms.
PBR Goals and Outcomes Matrix
In the first phase of the PBR docket, the 12 intervenors developed a goals and outcome brief to guide the PBR framework and inform the type of evaluation approach that will be used for assessment. HEPF developed a matrix highlighting where there is common ground and where there are differences in terms of goals, outcomes, and metrics, making note of concerns and changes relative to those presented in the PUC Staff Report #1.
The PUC initiated this docket to re-examine the existing decoupling mechanism (established in Docket 2008-0274), to determine whether it is serving its intended purpose, is fair to Hawaiian Electric Companies and its ratepayers, and is in the public interest . Decoupling is a regulatory tool that modifies the traditional rate-making model where utility revenues is tied to electricity consumption (i.e. increased electricity sales translates to higher revenue; under decoupling, Hawaiian Electric Companies is guaranteed a PUC-approved revenue regardless of the quantity of electricity sold. This is intended to align the financial interests of Hawaiian Electric Companies’ with that of Hawaii’s clean energy goals (e.g. renewable energy and energy efficiency). The decoupling mechanism is comprised of two components: the Revenue Balancing Account (RBA) and the Revenue Adjust Mechanism (RAM). The RBA serves to “de-link” or decouple revenues from the amount of electricity sold and adjusts monthly on one’s utility bill. The RAM serves to compensate Hawaiian Electric Companies for changes in utility costs and infrastructure investment between rate cases, which the utilities must file every three years. This docket resulted in a cap on the RAM and revisions to the RBA tariffs (Decision and Order No. 31908 and Order No. 32735), reporting of performance metrics on Hawaiian Electric Companies’ website, and the establishment of performance incentive mechanisms related to reliability and customer service.
Related Docket No. 2008-0274.
The PUC initiated this docket in July 2018 to investigate Hawaiian Electric Companies’ proposed integrated grid planning (IGP) process, which through stakeholder engagement, a technical advisory panel, and working groups, intends to merge three separate planning processes: generation, transmission, and distribution while addressing procurement. The goal is to identify gross system needs, coordinate solutions, and develop an optimized, cost effective portfolio of assets. As IGP integrates all levels of the system, it differs from the traditional resource planning framework known as Integrated Resource Planning (IRP) (between 1990-2014) and subsequent Power Supply Improvement Plan (between 2014-2017). The IGP process was originally raised as part of Hawaiian Electric Companies’ Grid Modernization Strategy.
According to Hawaiian Electric Companies’ IGP report: Planning Hawaii’s Grid for Future Generations, Integrated Planning Report, the process will be conducted in four steps:
Hawaiian Electric Companies propose to complete the bulk of the planning process in 18 months and conduct an IGP cycle every two years, with the first cycle beginning in 2019, resulting in the first plan by the end of 2020.
This docket was opened in June 2018 following Hawaiian Electric Companies’ application for approval to commit funds in excess of $2.5 million for Phase 1 of its Grid Modernization Project. Their Grid Modernization Strategy aims to empower customer’s choice; provide safe, reliable, and affordable services; enable distributed resources to become a vital part of Hawaii’s renewable portfolio; and leverage the electric grid to spur economic growth in Hawaii’s communities. First, Hawaiian Electric Companies propose to focus work on “foundational core investments and those investments necessary to resolve the service quality issues” associated with distributed energy resources (DER) growth. Next, Hawaiian Electric Companies will “identify and assess” grid modernization investments based on the benefits they provide in relation to the Companies’ distributed resources forecast and the State’s 100% renewable energy goal.
Related Docket No: 2017-0226, 2016-0087.
The PUC initiated this docket in August 2014 to investigate the technical, economic, and policy issues associated with distributed energy resources (DER). Distributed energy resources include distributed generation, energy efficiency, demand response, electric vehicles, and distributed energy storage. This docket has resulted in the approval of revisions to interconnection standards for inclusion in Hawaiian Electric Companies’ Tariff Rule 14H as well as new program offerings (customer self-supply, customer grid-supply, customer grid-supply plus, smart export, net energy metering plus) following the closure of net energy metering (NEM) to new participants in 2015. These interconnection standards and programs aim to expand customer options and ensure that customers can efficiently interconnect new DER systems that are configured to provide grid-supportive benefits. This docket also established a residential time-of-use pilot to incent customers to shift their electricity consumption from the evening hours to the mid-day when the sun is shining. This evolution in DER policies is essential given the State’s commitment to meet a 100% renewable portfolio standard by 2045.
Phase 1 of this docket focused on establishing a transitional market structure for DERs. Phase 2 of this proceeding builds upon the transitional market structure established to develop a set of longer-term policies to enable continued beneficial deployment of DER across the State. This will include an evaluation of opportunities to integrate and aggregate various forms of DER (e.g., solar PV, energy storage, demand response, etc.) to enhance their value, adoption of new technical requirements for safely and reliably interconnecting DER, as well as detailed consideration of regulatory policies (including rate design) appropriate for cost-effectively acquiring these resources.
Related Docket Nos: 2011-0206 (Reliability Standards); 2014-0130 (Tariff Rule 14H); 2015-0410 (Department of Education Time-Of-Use Rates)
This docket was opened in December 2015 following Hawaiian Electric Companies’ application for approval of a demand response program portfolio tariff, reporting schedule, and cost recovery of program costs through the demand-side management surcharge. Demand response (DR) programs focus on peak reduction and are designed to modify customer use of electricity so as to permit the most efficient and cost-effective operation of the electrical system. DR programs use two basic mechanisms: time-based pricing (e.g. on-peak/off-peak pricing, real time pricing) or an automated or manual control program).
This is a continuation of Docket No. 2007-0341 to develop a framework for a demand response (DR) portfolio that can assist in the integration of additional renewable resources onto the grid, contribute to system reliability, and offer customers greater control over their energy usage while offering the possibility of lower customer bills. Ultimately, the vision is for DR to mature to become a fundamental component of a virtual power plant of renewable distributed energy resources (DER).
In January 2018, the PUC approved Hawaiian Electric Companies’ revised DR portfolio tariff, resulting in four grid service rules (capacity grid service, fast frequency response grid service, regulating reserve grid service, and replacement reserve grid service) and rate schedules and riders upon which the DR programs are to be deployed in support of the grid service rules. Customers will receive compensation by allowing third-party providers, also known as “aggregators”, to control their equipment to help manage the grid.
Related Docket Nos: 2007-0341, 2005-0069
The PUC initiated Docket No. 2007-0323 to examine the issues and requirements raised by and contained in Part VII of Chapter 269, Sections 269-121, et seq., Hawaii Revised Statutes (HRS) pertaining to Hawaii’s Public Benefits Fund. HRS §§ 269-121 and 269-122 authorize the commission to contract with a third party administrator to operate and manage energy efficiency and demand-side management (DSM) programs in the State and to assess a Public Benefits Fund (PBF) surcharge to support those programs. By statute, the PUC may also redirect all or a portion of the funds collected by Hawaiian Electric Companies through the current DSM surcharge to the third party administrator. This docket continues to set the PBF surcharge for each year. It also is where the PBF Administrator, Hawaii Energy, files its Annual Plan. These energy efficiency programs are intended to help Hawaii meet its Energy Efficiency Portfolio Standards (EEPS), which require a 30% reduction, or 4,300 GWh in electricity demand relative to a 2008 baseline by 2030; Docket No. 2010-0037 lays out a framework for meeting the standard.
Related Dockets Nos: 2010-0037, 2005-0069
The PUC opened Docket No. 2018-0135 as a repository for Hawaiian Electric Companies’ Electrification of Transportation (EoT) Strategic Roadmap. This came out of a related docket (Docket No. 2016-0168) which required Hawaiian Electric Companies to submit a plan detailing their participation in fostering EV adoption and charging opportunities, following the extension of the fast-charger pilot (Schedules EV-F and EV-U). The EoT Roadmap describes near- and long-term strategies for creating a clean energy future in Hawaii through reducing the State’s dependence on fossil fuels, in-line with Hawaii’s goal for utilities to produce 100% of their electricity from renewable resources by 2045. In the Roadmap, the Companies analyze the benefits of increased electrification of transportation for Oahu and outline ten utility-driven initiatives aimed at accelerating the adoption of EVs in Hawaii, ranging from education and outreach, lowering EV purchase costs, opportunities for public, workplace and residential smart charging, and engaging the tourism industry, to the electrification of buses and other medium and heavy-duty vehicles. An addendum to the EoT Roadmap was filed in November 2018, in which the projections for EV adoption and potential benefits were expanded to Maui and Hawaii Islands.
Related Docket: 2016-0168, Transmittal 12-05.
This docket was opened in October 2015 to review an application for approval to establish a rule to implement a community-based renewable energy (CBRE) program. Community-Based Renewable Energy (“CBRE”), also known as shared renewables, allows customers who cannot site solar, small wind, or other renewable distributed generation on their own property to participate directly in off-site projects through a bill credit arrangement. Act 100, 2015 Session Laws of Hawaii, required each electric utility file, a proposed community-based renewable energy tariff or tariffs for the commission’s review and “establish[ment,]” provided that said tariff or tariffs “are found to be in the public interest.”
The CBRE program framework was adopted in December 2017. The program consists of two phases, each of which includes a capacity limit, as well as a time limit, to help ensure technical integration with minimal impact to grid stability, and successful implementation from a customer experience standpoint regarding bill crediting and customer service. Phase 1 aims to establish foundational capabilities and gain experiential learning. Towards this end, eight megawatts (MW) of solar photovoltaic (PV) program capacity was made available across Hawaiian Electric Companies’ service territories, with capacity amounts and credit rates varying by island. Phase 2 is intended to be the long-term continuation of the CBRE Program with allocated capacity to be released in increments, based on the utilities’ periodically updated resource plans and market demand. It will also encompass periodic program updates based upon customer needs and lessons learned. Phase 2 is more sophisticated in design as it incorporates time-varying credit rates and extends the program to peaker facilities that produce at least 85% of their average monthly output during on-peak hours and utility-owned facilities that serve at least 50% of low-to-moderate income customers.
Related Docket No: 2015-0382
The PUC initiated this docket in July 2018 to investigate the establishment of a microgrid services tariff as directed under Act 200, 2018 Session Laws of Hawaii to encourage and facilitate the development and use of microgrids. A microgrid is a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as single controllable entity with respect to the utility’s electrical grid and can connect to public utility’s electrical grid to operate in grid-connected mode and can disconnect from the grid to operate in island mode. Some of the preliminary questions that this docket will address is the coordination of existing tariffs and programs, modification of interconnection standards and procedures, and consideration of services and functions in the microgrid services tariff.