Arizona’s APS could take a lesson from Hawaii’s HECO

I couldn’t help but notice a recent article in the HonoluluStar Advertiser recognizing shifting plates in the energy marketplace, in particular, how the Hawaiian Electric Co. is addressing technological and the consumer-based changes in energy production. How the politics of what’s happening in a blue state like Hawaii relates to the politics in a red state like Arizona is anyone’s guess but some marketplace factors are universal regardless of the political climate.

Here are a few observations on the potentially tectonic plate-shifting changes taking place in the Hawaiian Islands. Keep in mind, Hawaii is unique in that it is isolated from the broader US electric grid and therefore all electrical production, transmission and distribution is self-contained. (It’s not as if they can tap into the grid of adjacent states.)

First, Hawaiian Electric Co. (HECO) presumed it would remain the sole producer of electric power on the Islands. HECO has underestimated customer demand for newer self-sustainable technologies and lessening reliance on its big utility production. During a recent announcement by the Hawaiian Public Utilities Commission (PUC) it chastised the utility monopoly for failing to prepare for renewable energy changes. “Most startling was the assertion that “HECO companies lack a strategic and sustainable business model to address technological changes and increasing customer expectations,’” noted the Star Advertiser.

Here in Arizona, APS seems to be experiencing the same identity crisis as HECO as energy consumers take self-sustainable energy matters into their own hands through independent solar energy production. Realizing the diversification of energy production into the hands of consumers can’t help but force a paradigm shift of APS’ big monopoly mindset away from sole producer to more of an energy distributor.

As the Star Advertiser describes HECO: “Going forward, the hope is for a collaborative, open discussion on how to make the “decoupling tariff” program less onerous for consumers, and on how the utility should transition to become primarily an energy distributor rather than a producer.” The decoupling tariff relates to fees and rates consumers pay as Hawaii transitions to renewable energy technologies – technologies that consumers themselves are pursuing independent of HECO.

Finally, much like our own Arizona Corporation Commission, the Hawaiian PUC is standing up for customers by insisting that utilities and utility shareholders should have to earn profits through a sound performance and an emphasis on customer service. As Commissioner Michael Champley stated in the PUC statement, “Attractive financial returns are not a utility entitlement. Instead, excellent utility performance with affordable rates and superior customer service should drive utility financial performance.” It would behoove APS’ corporate leadership to take this same advice when approaching the Arizona Corporation Commission over rate and policy changes.

Like Hawaii, Arizona’s energy marketplace is also changing to one that is driven by innovative consumer choices, independent production and self-sustainable technology. It’s time big utility monopolies like APS realize the ground is shifting and they are no longer the only major player in Arizona’s changing energy market.

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