Honolulu’s municipal electricity bills have skyrocketed in the past year, placing more pressure on an already tight operating budget.

Electricity prices for city buildings have risen more than 28% over the past year, forcing many agencies to look for ways to make unexpected cuts in their budgets.

From March 2022 to February 2023, the city spent $87.19 million on electricity, up from $67.78 million for the same months one year earlier – a $19.4 million increase according to city data.

Global oil prices and the shutdown of the island’s last coal-fired plant have been identified as major drivers.

“I’m just shocked,” said Honolulu City Council member Calvin Say, who formerly chaired the city’s budget committee. “We have to try to control the increase in the cost of utilities.”

“That’s huge, that’s almost 30%,” said Natalie Iwasa, an accountant and community advocate who follows the city budget process.

In an interview, Honolulu Mayor Rick Blangiardi said that “variable expenses” like electricity always pose a “management challenge,” but that the increases in costs only underscore to him the need to do a better job conserving energy because of other essential community objectives.

“We need to balance the budget,” he said. “That’s how it works.”

Island households have been affected by the same price trends. According to the U.S. Bureau of Labor Statistics, residential utility prices in Honolulu rose 15.7% from March 2022 to March 2023.

The city has a big footprint, occupying more than 90 buildings and almost 50 park facilities. Its properties include such marquee facilities as Honolulu Hale, the Frank Fasi Municipal Building and Blaisdell Center, as well as satellite city halls, police and fire departments and myriad small work sites for government operations.

The expense increase occurred even though the city has taken a number of steps to cut its utility usage, according to interviews with city officials. Usage overall has fallen 7% in the past two years, dropping from 231.1 million kilowatts to 214.70, even as city activity ramped up when pandemic restrictions eased.

Lighting systems are being retrofitted for lower energy use, automated controls are set to prevent energy waste, air conditioning systems are being reengineered, film is being placed on windows to reduce the heat of the sun, surfaces are being painted to reflect heat and solar power is being deployed in as many places as possible, city officials said.

They are seeing progress, they added. Since 2018, energy usage has substantially fallen in five of the city’s largest departments including the Bureau of Water Supply, Environmental Services, Facilities Management, Transportation Services and Parks and Recreation.

Looking To Transfer Funds

The city’s electricity cost challenges are the same as those faced by residential users, said Matt Gonser, chief resilience officer and executive director of the city’s Office of Climate Change, Sustainability and Resiliency.

“Our community is suffering with all these high costs as well and that is why the city is laser-focused on cutting costs, cutting waste and driving efficiency, and it’s even more important in this heightened electricity rate moment,” Gonser said.

Darren Pai, a spokesman for the Hawaiian Electric Co., blamed the high prices on larger forces outside Hawaii. He said that the state Public Utilities Commission regulates the formula for rates, and that HECO makes no profit on the fuels used to generate electricity.

“The Russian invasion (of Ukraine) caused a historic global spike in oil prices,” Pai said in a statement.

He said that the coal plant, which was shut down in September 2022, produced energy more cheaply than oil, and that there was a brief increase after it closed but that has now leveled off. He said that HECO is turning to renewable energy instead. By the end of the decade, renewable energy sources will insulate customers from these kinds of price hikes, Pai said.

This is all happening in the context of a state mandate to replace fossil fuels with 100% renewable energy sources by 2045 to combat climate change and reduce pollution.

The upward cost spiral has affected a number of city agencies.

At a council meeting on May 2, several department heads explained what they were doing to try to cover the unexpected cost and asked council members to allow them to reallocate funds outside of normal budget channels.

The Department of Budget and Fiscal Services asked for a transfer of $2.9 million in funds to cover fuel and electricity shortages for the Department of Facility Maintenance, the Honolulu Fire Department and the Department of Emergency Services.

“The costs are a matter of volume and rate,” Carrie Castle, deputy director of the department of budget and fiscal services, told the council.

Council member Augie Tulba asked whether the city was doing everything it could to reduce costs, and Castle said the city was “always looking for opportunities to save money and look at ways of doing things differently so that we can utilize less energy, less fuel, less electricity, more natural resources.”

Tulba responded, “It’s kind of mind-boggling that we have already been talking about this for years and in the meantime, until we put solar and do all the other things and modifications, we are going to eat the cost.”

Impact On Parks

Kehaulani Puu, deputy director of the parks department, reported that the department’s electricity bills had shot up 24%.

She asked for the transfer of up to $1.3 million to cover the utility shortfall, though she said that up to $900,000 of it would be covered by savings on water costs. She said the department needed to make up the difference by making cuts in the grounds maintenance budget.

Council member Esther Kiaaina questioned how the department would decide what services to cut.

Parks maintenance, Kiaaina said, “is a bread and butter issue for our community.”

Puu said the cuts would likely affect clay court resurfacing and purchases of playground equipment, adding that department officials hope the impact will be minimal.

In an interview after the meeting, Puu said that the parks department was being hit by higher power prices during the high-use hours of 5 p.m. to 9 p.m., a time window when people are home from work or school and like to be using park facilities.

“Electricity rates have increased quite significantly and we are running at peak times at our fields and gyms,” she said.

Council member Say also expressed concern about cutting grounds maintenance, saying that parks promote social well-being. He asked that money be restored to the parks department during the fiscal year 2024 budget process.

“Personally I think the parks play a major role in trying to address major, major medical issues that we have in the state of Hawaii and the county of Oahu,” he said.

All the fund reallocation requests were approved.