Will HECO be next to reinvent itself? Its regulators are pushing it hard
Quick Take: As you scan the story below, the key point is not that HECO is planning for a new business model. It is that HECO's regulators are demanding it. This sea change is coming first to bellwether states like California, New York, Illinois and Hawaii. But it is sure to migrate to your service territory as well. â€“ Jesse Berst
Not long ago Smart Grid News alerted you that New York's Public Service Commission wants to reinvent the role of utilities in that state. Not long before, we told you about the prediction from Rocky Mountain Institute (RMI) that utilities will soon be obsolete in Hawaii and California.
Apparently Hawaii's regulators are on the same track. They recently rejected the integrated resource plan from Hawaiian Electric Company (HECO). They complained it was a series of unrelated projects with no clear focus. The year before the commission had warned HECO that its current business model did not align public policy goals and the needs of customers. Unless it did something about it, regulators threatened to "employ arduous regulatory scrutiny."
As HECO CEO Dick Rosenblum explained, piecemeal plans were standard procedure in the old days. Now, however, the PUC wants an all-encompassing vision. And it wants that new business model to be aligned with clean energy and customer empowerment. Unless that happens, Hawaii may see serious grid defection. After all, the RMI report claims that solar plus storage has already reached grid parity for commercial customers.
HECO is apparently ready to deliver. On a recent earnings call, the utility said it is planning to become the utility of the future. In place of the old vertically-integrated model, it foresees an integrated grid. It is also planning for more renewable energy, more distributed generation, more customer engagement and utility-scale energy storage.
Meanwhile, it has retired five oil-fired generating plants as it labors to wean itself off oil in favor of renewables and liquid natural gas.
Jesse Berst is the founder and Chief Analyst of SGN and Chairman of the Smart Cities Council, an industry coalition.