Virtually everyone in Hawaii is familiar with HECO’s efforts to stop the installation of rooftop solar systems. For example, HECO proposed a complete moratorium in 2010, prevented thousands of customers from connecting their solar system in 2013 and 2014, and finally forced the PUC to step in just a few months ago and order HECO to start serving its customers.

HECO’s latest effort is to place a tax on new solar customers. This is serious. The “sun tax” impacts of HECO’s recent PUC filings would make solar investments less attractive than continuing to buy power from the utility. Specifically, new solar customers would be subject to new federal and state income taxes, and possibly Hawaii general excise tax obligations.

HECO’s proposal also jeopardizes Hawaii families’ ability to claim the 30 percent federal investment tax credit for solar. The credit that has helped so many Hawaii homeowners purchase PV systems is expiring in less than 18 months. At a time when states are looking to maximize solar deployment before the federal credit goes away, HECO is seeking to undermine its customers’ access to the credit just before it disappears completely.

solar panels/ home rooftop

HECO is proposing a new tax on rooftop solar customers.

Jon Callas/Flickr.com

 But don’t just take my word for it. The former director of Hawaii’s Department of Taxation and two leading national tax law firms reached these conclusions.

Rather than level with the public about the consequences of its proposals, HECO’s spokespeople shrug off these serious tax issues. HECO has yet to produce an analysis or opinion from qualified experts on these topics. And probably more pragmatically for the families impacted, HECO hasn’t offered to protect or compensate its customers if they’re taxed because of HECO’s proposal.

The sheer uncertainty created by HECO’s tax proposal compromises future solar investments by customers, which poses a serious problem for Hawaii. These private investments represent a significant share of Hawaii’s renewable energy investments and generation to date. Last year, approximately 27 percent of Hawaii’s renewable energy was generated by rooftop solar systems.   

HECO’s efforts also fly in the face of landmark legislation signed into law by Gov. David Ige last month. Hawaii is the first state in the country to commit to 100 percent renewable energy. This measure attracted worldwide admiration for Hawaii’s energy leadership and was even tweeted by President Obama.

HECO’s efforts to stop rooftop solar are also directly contrary to the will of Hawaii’s people. At least three polls have been conducted that show 94 percent of Hawaii residents want to see more, not less, rooftop solar on our islands. A regulated monopoly is required to serve the people of Hawaii, and not try to tax them for seeking cleaner and less expensive options to generate their own power. 

When customers put their own money forward to achieve Hawaii’s clean energy future, the last thing we should do is to punish them for their efforts. We can and should reject HECO’s idea. No other state has exposed its citizens to gratuitous taxation.

There are better ways to encourage the behavior changes and investments needed to solve the technical challenges of Hawaii’s grid. Various stakeholders have proposed innovative approaches like time-of-use rates, which can better align the production and consumption of electricity to when power is actually needed. These are the types of solutions that will move Hawaii forward. Not punitive taxes.

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