Sunday, August 1, 2010

Post # 33 - Surf's (Not) Up -- Smart Meter Problems in Hawaii

Another speed bump has appeared on the road to “a smart meter in every home” – this time, in Hawaii. Once again, a state public service commission has decided to go slow on the question of imposing smart meter installation costs on consumers.

In December 2008, Hawaiian Electric Co. (HECO), the state’s primary utility, sought approval from the Hawaii Public Utilities Commission to install smart meters at approximately 451,000 locations -- at a cost of approximately $115 million. HECO proposed to install 293,000 meters on Oahu, 92,000 on the island of Hawaii (or “the Big Island”), and 66,000 on Maui (see discussion at pp. 38-39 of the company’s 2009 annual report).

To date, HECO has installed approximately 9,400 meters as part of a pilot project. Last May, HECO petitioned the PUC to expand the pilot by installing 5,000 additional meters on Oahu at a cost of approximately $1.35 million. HECO stated that additional pilot testing would be necessary to yield a more detailed understanding of how advanced metering would interoperate with a new customer information system (CIS). The utility also told the PUC that the project would offer better insight into cybersecurity concerns.

Last week the PUC denied the request – and, in so doing, cast doubt on the entire project. In particular, the PUC indicated concern about the cost-effectiveness of the extended pilot, particularly in light of criticism the project has drawn. For example, the state’s Division of Consumer Advocacy argued that the new CIS had not proven itself viable - let alone shown that it could be successfully integrated with the AMI system. The Hawaii Solar Energy Association, questioned whether smart meters are even practical.

But in addition to nixing expansion of the pilot program, the Hawaii PUC also ruled that HECO now cannot proceed with the plans outlined in its original 2008 application The PUC said HECO should create a comprehensive plan for upgrading the electric grid before it makes another attempt to use ratepayer money to put advanced electric meters in homes and businesses.

As with the Maryland Public Service Commission's treatment of Baltimore Gas and Electric’s smart meter project (see Post Nos. 25 and 29), the Hawaii PUC has not necessarily killed the project. Rather, it told HECO to go back to the drawing board.

Nonetheless, the Hawaii PUC’s action is one more example of increasing state regulator sensitivity that the costs of smart meter installation may outweigh the benefits to the consumers being asked to shoulder the costs.

For more on the Hawaii PUC’s action, see here, here, and here.

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