When it comes to Hawaii’s highest-in-the-nation electricity prices, could crafting a low-priced plan for select customers result in savings for everybody?

That is driving a Kauai Island Utility Cooperative pilot project slated to begin in February. The co-op that has powered Kauai since 2002 is launching a one-year pricing plan that will offer 300 select households a 25 percent discount on electricity between 9 a.m. and 3 p.m. each day.

The immediate goal of the project is to convince customers to use a larger share of electricity when the sun is out. Solar produces most of its energy over a six-hour period each day, and none at all after sunset.

The likely reward for customers who take part: lower electric bills. And, if things go well, some version of the time-of-use rates could be instituted island-wide.

The Garden Island, like the rest of the state, is trying to get to the point where it is efficiently using the growing amount of cheap solar power it produces during the day so that it can consume less electricity generated from burning expensive fuel oil in the evening and at night.

“When we don’t burn oil, that saves everybody money,” said Jim Kelly, the KIUC’s member services and communications manager.

Kauai has ramped up its solar capacity — most recently with the $54 million Anahola solar array, which was completed this summer, and the $40 million Koloa solar field in 2014. That’s on top of about 10 percent of residential customers who have rooftop residential solar systems.

“From a grid standpoint, we really do have this tremendous, clean, cheap resource and we don’t want to waste one electron, if we can avoid it,” Kelly said.

Kauai is also making the leap to utility-scale battery storage, but that isn’t expected to resolve some of the complications that come with so much solar.

While batteries may prove to be very useful for storing energy until the time when it is needed each day, simply getting people to change the hours when they use their appliances could prove to be the simplest and most cost-effective response to the current solar quandary.

Another solar array on Kauai, where 17 percent of electricity this year has been produced by solar.
A REC Solar array on Kauai is part of the reason why about 17 percent of electricity on the island this year has been produced thanks to the sun. REC Solar/ Drew Bradley

A Garden Island Role Model?

Kauai, like the rest of the state, is facing the challenge of syncing a large amount of renewable energy and customers’ needs.

About 17 percent of electricity used on Kauai this year has come from solar energy, according to Kelly, with hydropower generating another 9 percent.

That’s overall. At peak production moments, solar produces far more energy. On many sunny days, 60 percent of the island’s daytime energy needs are satisfied by solar, according to the co-op’s website. And, on a sunny recent weekend day, there was a moment when a record 72 percent of electricity demand among the island’s 22,300 households was satisfied by solar energy, according to Kelly.

The co-op is committed to producing 50 percent of electricity from renewable sources by 2023.

The rest of the islands, where the Hawaiian Electric Co. serves the other 95 percent of the state’s population, enjoys similar opportunities and faces  similar challenges.

“When we don’t burn oil, that saves everybody money.” — Jim Kelly of the Kauai Island Utility Cooperative

After prodding from the Public Utilities Commission, HECO recently proposed its own voluntary time-of-use pilot project with sharply differentiated rates that stand in contrast to those that will soon be offered on Kauai.

HECO’s proposal includes offering low prices, at least by Hawaii standards, for 16 hours of the day, but an evening rate that is nearly three times higher than during the day. The rates would be the same on weekends as weekdays.

The primary difference between the proposals by Hawaii’s two electricity providers is that Hawaiian Electric, encouraged by the PUC, is putting forward a carrot-and-stick approach, while the co-op is starting out with just a carrot — although Kelly acknowledged that a stick could be added later, if necessary.

But for now, the KIUC will simply offer ratepayers a discounted rate that would, if applied to the September residential rate of 32 cents per kilowatt-hour, trim it down to about 24 cents. The overall cost of the project is expected to be about $125,000.

The Payoff

There are many variations on time-of-use systems around the country, and varying motives drive them. In parts of Texas, to avoid curtailment and to ease pressure on the grid during peak usage hours, some retail electric providers have begun to offer time windows of free electricity overnight or in the morning. These companies compensate with higher-than-normal rates at other times.

Nothing so radical is on the books in Hawaii. But representatives of both the Kauai co-op and HECO suggested that these forays into highly differentiated time-of-use rates will be an educational experience for them, as well as for customers. The main reason: They aren’t entirely sure they will work, or which version will prove to be most effective at getting people to shift when they plug in.

Reduced prices have a natural appeal for customers who struggle to pay their electric bills. But Shalanda Baker, director of the Energy Justice program at the University of Hawaii’s William S. Richardson School of Law, noted that, “Those who are hurting would not be the ones who could participate.”

That seems likely to be true, at least initially, according to spokesmen for both of Hawaii’s electricity providers.

On Kauai, the co-op will place a premium on multi-family or large-family homes where people take a lot of showers, cook at home, run plenty of appliances and air conditioning.

“If the family works together and really thinks about how and when they use electricity, there is potential to make a pretty good dent in the utility bill,” said Kelly.

There is little incentive for the co-op to include people who live alone, use few appliances and pay a very low electric bill.

Customers who are most likely to benefit from time-of-use rates generally have the money to purchase newer appliances with built-in timers or even pricey home batteries that facilitate electricity load-shifting.

Various analysts and electricity providers pointed out that other programs are likely better suited in the short term to respond to making electricity prices more affordable to lower-income customers.

Customers who are most likely to benefit from time-of-use rates are people who have the money to purchase newer appliances with built-in timers or even pricey home batteries that facilitate electricity load-shifting.

But, if a time-of-use plan is eventually offered islandwide — or statewide, in the case of Hawaiian Electric — it could potentially offer everyone access to the benefits, assuming that electricity providers succeed in shifting demand.

That said, Susan Mazur-Stommen, a Washington, D.C.-based anthropologist and expert in electricity consumption, warned that time-of-use plans often only incrementally alter people’s behavior, sometimes by as little as 1 percent or 2 percent of their usage — and not always in a sustained way.

She also said that when such plans are set up as part of a carrot-and-stick approach for all customers, they can weigh disproportionately on poor people because electric bills consume a larger percentage of their income.

For now, though, there is no stick in the Kauai proposal, which the Public Utilities Commission approved in September.

So people participating in the Kauai pilot could see cheaper daytime rates, but evening rates would stay the same.

Each household that takes part will also receive a digital display that shows electricity use in real time. The co-op will also give them $200 to install a water-heater timer or another device that makes load-shifting easier.

KIUC wants people to see that the benefits of time-of-use rates are worth their time. Otherwise they won’t change their consumption habits.

That’s important for the utility as it seeks to develop a pathway to lower rates overall.

“Part of why we’re doing it as a pilot, we really don’t know what the outcome will be,” said Kelly, who noted that the hours and rates could all fluctuate.

“The whole point of getting people engaged in how and when they use electricity is really a key to what we’re trying to do — and what a lot of utilities are trying to do — so that it is no longer a thing you don’t think about very much,” said Kelly.

Read our ongoing report on Hawaii’s high cost of living and the search for what can be done about it.

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