Lights Flickering on Energy Reform
THE 2006 legislative session began as an enlightened one in terms of potential energy reform, but the lights dimmed as the session progressed. Measures were introduced with the goal of reducing our dependence on imported oil while strengthening our local economy and protecting our environment. A majority of the bills dealt with the development and use of renewable sources of energy. Unfortunately, these attempts to enact reform were diverted.
For decades Hawaii has endured an energy system that burdens residents with escalating energy costs and a self-destructive dependency on fossil fuels. No other state relies so heavily on oil; we stand alone in our staggering 77 percent usage of fossil fuel for energy production. For an isolated land mass, this is an extremely dangerous practice that leaves us vulnerable to international politics, fluctuating supply and escalating prices. Yet with our current policy supporting the fuel adjustment clause -- or energy costs adjustment clause (ECAC) -- we can hardly be surprised at our continued dependence on fossil fuels.
The ECAC permits energy utilities, such as Hawaiian Electric Co., to avoid any financial risk resulting from fluctuating oil prices by passing on all the risk and costs to the consumer. Because the utility and its shareholders assume none of the risk, HECO has no motivation to change its inordinate dependency on oil. Therefore, it is critical that the Public Utilities Commission significantly adjust the ECAC to force HECO to move toward a greater reliance on sustainable, local, renewable energy sources.
In recent Senate testimony, Ted Liu, director of the state Department of Business, Economic Development and Tourism, illustrated the ECAC's harsh impact on consumers, stating that it accounted for 33 percent of Oahu's and 50 percent of Maui's residential electricity costs in February 2006. Liu noted that in 2005, HECO's ECAC charge to the consumer increased by 81 percent (from 3.578 cents per kWh to 6.483 cents per kWh). If oil wasn't the main source of our energy, and if HECO assumed any of the risk and cost, this frightening increase wouldn't have such a severe effect on the consumer who pays the bill -- that's you and me. The 32 other states that have an ECAC are much less dependent on oil. In fact, according to Liu, the next highest oil dependency is Florida at 17 percent, with the majority of ECAC states using less than 1 percent of oil to meet their energy demands. When prices rise and the ECAC increases, the consumers in these states don't get hit as hard on their monthly bill as we do with our 77 percent oil usage.
I also co-introduced legislation that would have held HECO more accountable to its consumers by allowing for better business practices in the form of healthy competition. HB 2619 guaranteed that electric utility companies have the opportunity to make a profit, rather than being guaranteed a profit (as they were given under past law).
Hawaii must rid itself of its self-destructive dependence on oil. Many hearts and heads were in the right place to achieve this goal in the 2006 session, but old habits and staunch partnerships got in the way of significant change. While we have been able to achieve some small improvements in energy reform, we missed a bright opportunity to shepherd Hawaii into a state of energy enlightenment.