Hawaii Regulator Approves Performance Mechanisms to Accelerate Clean Energy Goals

The Hawaii Public Utilities Commission approved performance incentive mechanisms, scorecards, and metrics as part of its  performance-based regulatory framework for the Hawaiian Electric Companies. The framework was created on Dec. 23, 2020, aiming at becoming a system that rewards “utility for exemplary performance,” while reducing utility costs for customers, and moving towards more renewable energy. The framework consists of a Customer Dividend that automatically provides rate reduction and is projected to yield approximately $69.9 million in total rate reductions by 2025.

The new portfolio also contains performance incentive mechanisms that are geared towards improving efficiency through faster interconnection of small-scale distributed energy systems and procuring grid services from customer-based programs. The measure is also designed to improve collaboration with Hawaii Energy to reach low-to-moderate income customers and promote energy saving measures, and better utilize next generation grid modernization infrastructure.

In May 2019 the commission had first publicly indicated its prioritization of new regulations targeted towards lowering electricity costs, increasing customer service, and meeting clean energy goals. In April 2018, Hawaii enacted the Ratepayer Protection Act setting a 2020 deadline for the commission to secure utility revenues while also ensuring utilities’ performance.

The portfolio of performance mechanisms uses financial incentives and penalties to facilitate exemplary performance in achieving Hawaii’s goals of reaching 100 percent renewable energy generation by 2045 and diversifying their energy portfolio providing low-cost and clean energy sources. The initiative supports their goals of balancing economic, and environmental considerations acknowledging the need to increase collaboration between public and private sectors.

The performance incentive mechanisms became effective June 1, 2021.