Electricity customers on Lanai could see their already super-high power bills skyrocket even further if a proposal by ultra-billionaire and island owner Larry Ellison moves forward.

Ellison’s sustainability-focused company Pulama Lanai intends to design a microgrid and remove two resorts that consume about 40% of the island’s power off the existing grid owned by Hawaiian Electric. The exclusive resorts — the Four Season Lanai and Sensei Lanai — are both owned by Ellison, co-founder of Oracle. Ellison bought nearly all of Lanai in 2012 for a reported $300 million.

“We have begun the process to design and construct a microgrid to serve Four Seasons Lāna’i and Sensei Lānaʻi with a targeted completion in 2027,” Lyssa Fujie, an account director for IQ 360, a Honolulu-based public relations firm working for Pulama Lanai, said in an email. “The microgrid will be 100% powered by photovoltaic and battery energy storage systems, positively contributing to Lānaʻi’s renewable energy future.”

A spokesperson for Pulama Lanai was unavailable, Fujie said.

Hawaiian Electric expressed its concern about the microgrid in a letter to the Hawaii Public Utilities Commission earlier this week. It informed the commission that given Pulama Lanai’s intentions, it will pause moving forward with a 17.5 megawatt solar project on Lanai.

The solar project, led by DG Development & Acquisition, was aimed at helping residents lower their electric bills.

If 40% of the electrical load on Lanai goes off-grid, it would have major ramifications for all of the remaining island residents who remain as customers with Hawaiian Electric as well as for the utility itself, said Marco Mangelsdorf, an energy expert who lives in the Big Island.

“Loads dropping off the grid because ratepayers find it more economic to generate part or all of their electricity needs on their own can lead to a utility ‘death spiral,’ said Mangelsdorf by email.

This happens when higher rates lead customers to partially or completely defect from the grid, decreasing revenue to the utility, leading to even higher electric rates and prompting even more to go off grid, he said.

“And what kind of precedent might this microgrid on Lanai set for other large utility customers across the islands? If it pencils out for Ellison, it may do the same for others,” said Mangelsdorf.

Lanai resident Robin Kaye said he only knows what Hawaiian Electric put in its filing with the commission.

Pulama Lanai has not said anything yet to the community, as far as he knows, Kaye added.

The retired consultant who has lived on Lanai since the 1970s said he has the same questions as everyone else: what will this do to electric bills and what will be the source of power for Pulama Lanai’s microgrid?

Kaye said he hopes Pulama Lanai will reach out to Lanai residents and let them know what’s happening. The company holds a monthly informational call by Zoom for the community. Kaye said he imagines Pulama Lanai representatives will make themselves available to answer islanders’ questions during that forum.

Lanai residents already pay some of the highest electricity bills in the state if not the nation. The typical September bill for a customer using 400 kilowatt hours is $225.27, according to Hawaiian Electric. The kilowatt rate per hour is 56 cents.

“If rates do go up, that would be a tragedy since Lanai residential rates are the highest in Hawaii,” said Henry Curtis, executive director of Life of the Land, a nonprofit in Honolulu that closely watches utility issues.

Curtis wrote about the Pulama Lanai plan on his blog on Friday.

In its letter to the PUC, Hawaiian Electric said the company is disappointed in Pulama Lanai’s decision and “the delay this causes in bringing renewable energy to customers on Lanai.”

The company has 1,700 customers on the island, according to Hawaiian Electric, many of them of Filipino or Japanese descent whose family members came to Lanai to work in pineapple plantations.

“We are currently having ongoing discussions with Pulama Lanai. We will continue to work on the best path forward to bring the most affordable renewable energy to all of our customers on Lanai,” Hawaiian Electric spokesman Jim Kelly said in an email.

In its letter to the public utilities commission, the electric company noted it’s not the first time Pulama Lanai has proposed building a microgrid. In early 2020, Hawaiian Electric suspended and then revised its request for proposals for a new, renewable energy plant due to Pulama Lanai’s announcement that it was going to remove the two resorts from the grid.

Pulama Lanai later abandoned its plan, according to Hawaiian Electric.

Based on that history, the company wants to “be prepared to move forward expeditiously should Pulama Lanai again change its plans,” Hawaiian Electric told the commission.

Civil Beat’s coverage of Maui County is supported in part by grants from the Nuestro Futuro Foundation and the Fred Baldwin Memorial Foundation.