New energy contracts between power providers and Hawaiian Electric will lead to cheaper energy bills for Big Island customers.
Hawaiian Electric announced Monday that it has renegotiated three contracts with Big Island providers to eliminate language tying their rates to the fluctuating cost of oil, which should stabilize prices in the long term.
Previously, four energy providers had contracts wherein Hawaiian Electric purchased power at “avoided cost,” a holdover from 1990s and 2000s laws requiring utility companies to pay renewable providers the same rate as they would to providers reliant on oil.
As of April, three of those four contracts have been rewritten and await approval by the state Public Utilities Commission.
Hawaiian Electric spokeswoman Kristin Okinaka said the latest contract to be modified is with Wailuku River Hydroelectric, which generates up to 12 megawatts of power to the grid. Because it was the first of the four contracts scheduled to expire, it likely will be the first to go into effect upon renewal, which means customers could see the impact as early as this summer, she said.
“Savings will come from the lower-cost energy we purchase,” Okinaka said. “More than half the electric rate is for fuel and purchased power. … When oil prices increase, the price (Hawaiian Electric) pays for electricity increases.”
After the new contracts kick in, a household that uses 500 kilowatts a month eventually could see its power bills reduced by $9 to $13 per month, according to Hawaiian Electric.
Two other contracts, with Puna Geothermal Venture and Hawi Renewable Development, await PUC approval, and their amendments also would allow for significant increases in the power they generate.
PGV currently is contracted to provide up to 38 megawatts and Hawi Renewable Development up to 11 megawatts; the amended contracts, if approved, would increase those maximums to 46 megawatts and 34 megawatts, respectively.
The PUC granted conditional approval to the amended PGV contract in March 2022 contingent on an environmental review. The amended contract with Hawi Renewable Development was submitted to the PUC in January. Both those contracts would go into effect in 2026 when their upgraded facilities go online.
Once those contracts go into effect, roughly 65% of the power generated on the island will be renewable.
The fourth provider on the island still using an avoided cost contract is Pakini Nui Wind Farm, which can generate up to 21 megawatts, and whose contract isn’t set to expire until 2027.
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.
