Politics Are Why Our Electricity Bills Will Remain High
Unless we make bringing down electricity costs the top priority in energy policy, most of us will continue to pay far too much.
Public schools have been so hot recently that educators proposed that they be closed for “heat days.”
“Heat days” would be like schools in Maine shutting down for “cold days” because their schools aren’t heated.
Call me an optimist but I believe only a tiny minority wants to lock kids in hot boxes in order to train them to hate learning.
This perverse outcome is the result of our obscenely high electric rates, which are more than three times the national average.
PF Bentley/Civil Beat
You might think these outrageous rates would be a central issue of the proposed merger between Hawaiian Electric and NextEra Energy.
Not.
Instead Gov. David Ige wants them to pledge allegiance to “100 percent renewable” electricity production.
All but one of the more than two-dozen “intervenors” in the Public Utilities Commission’s merger process, the governor, and the PUC’s consumer advocate say it is all about these companies not providing enough detailed information.
What exactly were those missing “details”?
Who knows. Maybe it’s a detailed plan to get to 100 percent renewables, since no one here has developed one.
Electricity rates here are set by the PUC.
In the end, we ratepayers, who cannot have solar, purchase electricity at a higher price than oil from homeowners whose solar arrays were subsidized by us.
The commission’s web site states that the “PUC prescribes rates, tariffs, charges and fees” and “determines the allowable rate of earnings in establishing rates” for electric utilities, including Kauai’s.
Yet they have defined the main issue of the merger as “being in the best interests of the people of Hawaii.”
Why not make it “the lowest rates for the people of Hawaii?”
The PUC then anointed all who volunteered to intervene on the merger with the title of “intervener.” These are people who provide formal testimony aiming to answer the question above.
(Full disclosure: I became an intervener in the NextEra-Hawaiian Electric merger at the request of the International Brotherhood of Electrical Workers 1260, although my opinions do not necessarily reflect those of the union or of my employer, the University of Hawaii.)
Thus the same interest groups and special interests that lobbied for “100 percent renewable electricity” became “interveners.”
Other special interests, like the gas company, were added, too.
Predictably the result has been that their prior positions have been restated as official testimony.
The gas company has used its position as an intervenor to ask for the confidential business plan of its competitor for bringing natural gas to the islands.
To understand what’s going on we need to look no further than our electric bill, and follow the money.
Seventy percent of my condo association’s bill goes to an “energy charge.” That is the cost of oil used by HECO and electricity purchased from power providers. During 2014, 20 cents of the 33 cents per kilowatt-hour sold fell into this category. So without these expenses, our retail price of electricity would have been 13 cents, rather than 33 cents, per kWh.
Nationally, as early as the 1980s, utilities were encouraged by oversight bodies to invest in technology that allowed them to switch easily between fuels to use whichever fuel was least expensive.
As a result oil was eliminated, and this “energy charge” doesn’t exist on mainland bills.
The merger proposal has revealed a wide political coalition that benefits from high rates. It is so broad that environmental groups are implicitly allied with oil companies.
“Purchased power agreements” between outside companies and HECO are the result of federal deregulation. The theory involved busting up the electric utility’s monopoly on production and having companies compete to provide power.
Instead monopolistic utilities in one area set up plants to sell power to monopolistic utilities in a different area.
This meant the PUC no longer set rates based on costs, but instead on approved contracts.
So this electricity is sold at unregulated rates. This means, among other things, that they aren’t really monopolies but monopolistic competitors.
An example of this is American Electric Power’s local coal-fired plant. Power is “purchased” from this plant at twice the average national cost of production.
Another item on my bill is the “RBA Rate Adjustment, which is 9 percent of my condo association’s bill of $2,241.01. Think about that, the charge for the current level of electricity entering the grid from rooftop solar is nearly 10 percent.
If you add that in, we actually pay more for rooftop solar per kWh than for oil or purchased power.
And our taxes have paid for 70 percent of the cost of those solar arrays.
In the end, we ratepayers, who cannot have solar, purchase electricity at a higher price than oil from homeowners whose solar arrays were subsidized by us.
Follow the money.
HECO’s profit on sales was 4 percent during 2014 — up from 3 percent in 2009 thanks to rooftop solar.
HECO is merely a rest stop for our money as it flows on to Chevron, American Electric Power, the rooftop solar industry and relatively well-off homeowners.
The merger proposal has revealed a wide political coalition that benefits from high rates. It is so broad that environmental groups are implicitly allied with oil companies.
The merger merely opens up the possibility of lowering rates. For instance, NextEra already sells renewable energy to HECO under purchase power agreements. And it has big plans, so big that about 30 percent of our power could come from NextEra renewable energy purchase power agreements.
Yet this same electricity production, could be re-regulated based on costs of production. And our bills reduced, by a lot.
What is going on now is not a debate, but a negotiation, in which the merger will go through and the current system remains in place. Or the merger won’t go through and the system remains in place.
And this will go on, forever, until we demand real change and lower rates.
