Tariffs for on-site generators draw fire
Hawaiian Electric wants businesses which have their own generators to pay a fee for standby power
Hawaiian Electric Co. Inc. is facing harsh criticism from companies that use on-site generators over new tariffs the company has proposed.
HECO wants businesses that produce some of their own electricity using on-site power plants to pay a fee for the utility to be on standby, in the case their generator unexpectedly breaks down or is shut down for maintenance. The fees vary on a case-by-case basis, but range from $9 to more than $11 per kilowatt per month.
The proposed tariffs do not apply to renewable-energy systems -- for example, those that use solar panels instead of fossil fuels to create electricity -- or to businesses such as hospitals that use generators only in emergencies.
But the affected companies, some of which were slated to testify at a Public Utilities Commission hearing yesterday evening, say the proposed tariffs would virtually wipe out any cost savings provided by so-called cogeneration plants.
More businesses, particularly large companies, are investing in these systems as a way to produce energy and, in the process, capture heat that is used to provide hot water for an entire facility. The systems cut the owners' electric bills and also reduce daily demand on Hawaiian Electric's grid.
The nonprofit Kahala Nui Senior Living Community, which spent $500,000 to build a cogeneration plant to heat water and generate 25 percent of its electricity, said its estimated annual cost savings of about $100,000 will be eliminated by the proposed standby charges. Based on a fee of $11.40 per kilowatt per month, Kahala Nui would pay about $125,000 a year.
"The only source to pay operating expenses, including energy expenses, is through the monthly fees paid by the residents," said Joyce Timpson, Kahala Nui board chairwoman, in testimony prepared for the Public Utilities Commission. "The level of these fees is critical in maintaining the affordability of the community so these seniors do not become over-extended financially."
Meanwhile, Pohai Nani Good Samaritan Retirement Community, which has a cogeneration system that produces about 60 percent of its electricity and about three-quarters of the heat used for its hot water, would pay as much as $50,000 a year under the proposed tariffs, said Todd Scheibert of Scheibert Machinery and Energy LLC, which maintains the cogeneration plant that is estimated to be saving the facility between $120,000 and $135,000 a year.
However, HECO maintains that the fees are necessary to allow the utility to recover the standby costs to be able to supply businesses with power from its electrical grid when they need it.
Businesses can choose how much standby electric power they want to buy, thereby controlling the total costs, said Peter Rosegg, HECO spokesman.
"We're trying to encourage cogeneration but not at the expense of other rate payers," Rosegg said.
