Frequently Asked Questions
I heard your plan will result in a tax on new solar customers for the solar they generate. Is that true?
No, it is not true. We're proposing to credit new customers for energy produced by their rooftop PV systems, just as current customers are credited under the existing Net Energy Metering program. The difference under the new program would be the rate at which customers get credit for the energy their rooftop solar sends back into the electric grid.
We support the continued growth of rooftop PV, while ensuring safe, reliable service and fair treatment for all customers. The state Consumer Advocate submitted a filing with the Hawaii Public Utilities Commission recommending the same bill credit we've proposed for new solar customers.
What changes did the Hawaiian Electric Companies recommend to the PUC?
Our recommendations include:
- A new pricing structure for new rooftop PV systems that more fairly shares costs for operating and maintaining the electric grid. Currently, customers with rooftop PV are annually shifting about $53 million in grid operations and maintenance costs to customers who do not have rooftop PV.
- Nation-leading technical standards for advanced inverters, which will improve integration of high levels of rooftop PV.
- New options for customers, including battery-equipped rooftop photovoltaic systems.
- A pilot time-of-use rate to offer customers the opportunity to save money by shifting their energy use to different times of day, particularly when PV panels are most productive.
- An improved method of calculating the amount of rooftop PV that can be safely installed without impacting service reliability for other customers.
- Streamlined and standardized PV application processes to improve efficiency and provide further transparency of the status of applications.
How will the rates and pricing work under your proposal?
First, to be clear, under our proposal, customers with a net energy metering agreement today and those with valid pending applications will continue under the present program.
For new solar customers, we need to transition to a more sustainable system and ensure the costs of operating and maintaining the electric grid are more fairly shared among all customers who rely on it.
Under the current net energy metering program, customers receive credit on their electric bills at the full retail rate for electricity they produce. The retail rate includes the cost of producing electricity plus operation and maintenance of the electric grid and all other costs to provide electric service.
Instead of the retail rate, we propose to credit new O'ahu solar customers at 18 cents per kilowatt-hour for all solar energy sent to the grid from their rooftop solar systems. This still represents a premium over the utility cost of producing energy, which, based on June 2015 fuel costs, is roughly 12 cents per kilowatt-hour. However, the revised rate helps remove some of the existing cost shift from customers with solar to those without it.
In addition, we're proposing to increase the minimum monthly bill for new PV customers to $25.
Combined, these changes will reduce the shifting of costs for grid operations and maintenance to non-solar customers while still offering new PV system customers a significant benefit from their investment in rooftop solar. The "payback" for financing of a new rooftop solar system would increase only about one year over today.
How much is the minimum bill now?
Currently, residential customers have a minimum bill of $17 on O'ahu, $18 on Maui, and $20.50 on Hawaii Island.
How would a $25 minimum bill for distributed generation customers such as those with solar address the "fairness" issue?
The PUC has made it clear that it expects all of the parties in its distributed generation docket to develop options that treat all customers fairly. The PUC said:
Currently, the costs of operating and maintaining the electric system are increasingly being shifted from customers who have rooftop PV to those that don't. A minimum bill is one way to help ensure customers with rooftop PV are helping to cover the costs of operating and maintain the grid that they are connected to and benefitting from.
What will happen to the current net energy metering (NEM) program?
Under our proposal, customers with a NEM agreement today and those with valid pending applications will continue under the present program. For new PV customers, we're recommending a new program that will still allow customers to save money on their electric bills and get a good return on their investment. It's important to note that these are PROPOSALS. The PUC will consider our recommendations, along with those from others, and decide on any changes it deems appropriate. There is no firm timeframe on when the PUC will make a decision.
Why are you proposing these changes?
Our community needs to take an important step to transition to a system where all customers are fairly sharing in the cost of the grid we all rely on. Currently, the cost of grid operations and maintenance is increasingly being shifted from those who have rooftop solar to those who don't.
As of the end of 2013, there was an annual cost shift of approximately $38 million. Just one year later, at the end of 2014, that annual cost shift had grown to an estimated $53 million -- an increase of about $15 million.
In addition, the current NEM program did not anticipate the technical solutions that will be needed to integrate higher amounts of PV into the grid. So we need to replace that program with one that allows for new technical solutions to ensure safe, reliable interconnection.
How will the pilot "Time-of-Use" rate work?
Time-of-Use rates offer customers the opportunity to save money by shifting their use of energy to different times of day, particularly when solar panels are most productive. Customers would pay more for electricity during on-peak hours, and less during off-peak hours.
We are proposing this as a voluntary pilot rate for residential customers who install new rooftop PV systems. It would only be offered on O'ahu in areas where we have started the initial development of our smart grid program. The maximum participation would be 500 customers.
Because we need to accurately measure the time that customers use electricity, this program would require participating customers to have smart meters. Smart meters can measure the exact time that customers use electricity. Conventional meters don't have that capability.
Our proposal would create an on-peak period of 5 p.m. to 9 p.m., which is the time of highest demand for electricity in Hawaii. Electricity used during this time would be billed at a rate of 39 cents per kilowatt-hour. Electricity used during other times of day would be charged at 24 cents per kilowatt-hour. This provides customers with an incentive to use electricity during off-peak periods, reducing the need to add new generation to meet demand.
When will the Time-of-Use rate pilot be available to customers?
This program would require approval from the PUC before it could be offered to customers.
What is Daytime Minimum Load (DML)?
When discussing electricity, "load" refers to the amount of electricity used by a customer.
Load varies throughout the day. In Hawaii, peak demand typically occurs between 5 p.m. and 9 p.m. when most people arrive home from work, turn on the TV, start laundry, cook dinner, etc.
Daytime minimum load (DML) is lowest amount of electricity used during the day. This typically occurs during the middle of the day, when residential customers are out of the house and their homes are using little electricity. This coincides with the period of time when PV systems are operating at their peak, during midday when the sun is high. This can result in having an excess of available PV energy.
The total amount of distributed energy resource on a circuit can be calculated as a percentage of the DML. In circuits with a generation-to-DML ratio over 250% extra care must be taken to ensure safe, reliable interconnection of distributed energy resources systems. This may require advanced equipment specified by the utility.
Visit the Locational Value Map, or LVM, on our website to find out the generation-to-DML percentage on your neighborhood circuit.