When I first started working on energy legislation, the primary objective in establishing a net-metering program (NEM), revising the Renewable Energy Income Tax Credit (REITC) and adopting a Renewable Portfolio Standard (RPS) was to create a renewable energy market. Establishing Hawaii's renewable market was critical because of our over-dependency on imported fuels and the impact of fuel price volatility on our economy, as well as environmental issues such as climate change. The NEM program and REITC would incentivize and reward early adoption and the RPS would establish a minimum floor to give certainty to investors that there would be a buyer (the electric utility) for electricity produced from renewable resources.
Simply put, Hawaii progress has surpassed the need for the NEM and REITC early adoption strategies, with the burden of paying for the NEM program and REITC falling on non-NEM electricity ratepayers and taxpayers and causing the "purchase" of electricity generation that may not be the most cost-effective option. Here is a snapshot of some of the past costs impacts on non-participants (unfortunately, more current, on-going cost were not publicly available for the REITC):
In a Motion filed with the HPUC (Docket No. 2014-0192, Hawaiian Electric Companies' Motion for Approval of NEM Program Modification and Establishment of Transitional Distributed Generation Program Tariff at 34-35), the HECO Companies quantified the NEM cost shift as follows:
The Companies estimate annualized lost contribution to fixed costs (cost shift) of approximately $53 million (Hawaiian Electric, $38 million; Maui Electric, $7 million; and Hawaii Electric Light, $8 million) based on installed NEM capacity as of December 31, 2014 . . . The total lost contribution to fixed cost across the Companies has increased from an estimated annualized $19 million based on installed NEM capacity as of the end of 2012, to an annualized $38 million at the end of 2013, and to an annualized $53 million at the end of 2014.
For the tax year 2012, the State Department of Taxation reports that the REITC accounted for 48.41% (total $179,018,000) of all state tax credits claimed (total $369,811,000).
A successful energy transformation requires that everyone benefits from Hawaii's clean energy policies.