Two California energy experts discussing their state’s energy crisis told state senators Hawai‘i should proceed cautiously before attempting to deregulate the local electric utility industry.
Karl Stahlkopf, vice president at the private nonprofit Electric Power Research Institute, and David Hawkins of the California Independent System Operators (Cal ISO), which transfer electrical power across California, said Hawai‘i can learn from California’s power crisis.
The Senate committees on Commerce, Consumer Protection & Housing, and Water, Land, Energy and Environment held the briefing last week to hear how the 1996 deregulation of California’s electric utility industry and other factors might have played a role in the state’s energy shortage.
California has been plagued with rolling blackouts because utility companies are on the edge of bankruptcy and cannot continue to buy power. Stahlkopf said the blackouts cost the state of California about $1.7 billion in losses up to Jan. 20, and led California’s governor to declare a state of emergency.
Stahlkopf and Hawkins said the deregulation of California’s electric industry has already left the California electric companies $12 billion in debt buying wholesale power at increasing prices. Because of deregulation laws, the utilities are not allowed to pass on the higher costs to consumers.
T. Michael May, Hawaiian Electric Co. president and chief executive officer, asked legislators to go slow on any restructuring of Hawai‘i’s power industry.
"Here in Hawai‘i, if the wrong decisions are made, we could potentially be worse off than California," May said. "We can’t get power from other states and countries if we don’t have enough; there is only one electric utility on each island, and none of the electric systems are interconnected."
But Warren Bollmeier of the Hawai‘i Renewable Energy Alliance believes the motives behind the California deregulation process to protect the consumer were honorable. He added that Hawai‘i needs to encourage more competition in the local energy market.
"History tells us that innovation typically does not come from monopolies or industry leaders," Bollmeier said. "We believe innovation will come from industry when markets are restructured to allow more competition in wholesale, but especially in retail."
Ron Menor, Senate Consumer Protection Committee chairman, said the Legislature has no plans to deregulate the Hawai‘i electric utility industry. State lawmakers will hear bills this session that would mandate utility companies to create a certain percentage of power using reusable energy sources to lower Hawai‘i’s dependence on oil and maintain energy costs.
"That’s a very complex issue, because the renewable sources technology is not economically feasible at this point," Menor said. "That might drive up the costs of electricity in the long run. But the Legislature is open to setting up target goals for the utility companies."
