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The Honolulu Advertiser
Posted on: Friday, August 26, 2005

Spike in electric bills simply a warning sign

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With crude oil prices spiking, Hawai'i power consumers might not be totally surprised to find their electric bills soaring as well.

And they are, but the explanation is somewhat more complicated than a simple one-to-one relationship between high oil prices and high utility costs.

Electric companies are permitted to pass on higher fuel costs in the form of "energy cost adjustments." This doesn't add to the bottom line but it does help cover increasing oil prices.

And in fact, as reported this week by staff writer Lynda Arakawa, the surcharge on O'ahu is up nearly 17 percent over a year ago. Neighbor Islanders are seeing even fatter increases. That adds up to a higher electric bill.

But the increase is not directly tied to what the electric company is paying, since it buys its fuel on long-term contracts. Thus, the price the company pays today might have been set some time ago, before spot prices began to soar.

Still, a 16.6 percent increase in the bill, even with no increase in use, will hit many households hard.

The situation simply underscores the importance of moving Hawai'i away from an almost total dependence on oil for its energy needs.

This takes many forms, some of them resting squarely in the lap of the electric companies. After what must be described as a somewhat slow start, Hawaiian Electric has become more aggressive about pursuing alternative energy options as well as encouraging more conservation within the home.

For instance, a proposed new power plant on O'ahu would be built so it could run on alternative fuels once they become available and economically viable. The company also is pursuing an extensive wind farm on the Leeward Coast.

But this cannot be up to HECO alone. Individual homeowners and companies must do their part to conserve energy and find alternative ways to heat water and cool their homes.

During the oil crisis of the 1970s, Hawai'i made strong efforts toward greater energy efficiency and use of alternatives. Some of that push evaporated when oil became readily available again and prices fell.

The plain fact is that over the long term, dependence on oil as our primary (indeed almost only) energy source does not make sense. We are too isolated and vulnerable.

The sooner Hawai'i makes a unified and determined effort to wean itself off oil and into the significant use of alternatives, the better.

Consider the current spike in the energy cost adjustment simply a warning sign of what is to come.