Sunetric CEO Alex Tiller authored an opinion editorial for the Pacific Business News on the effects of a new “decoupling” plan approved by the Hawaii Public Utilities Commission to encourage greater energy efficiency beginning in 2011. According to Tiller, an imminent rise in electricity rates as a result of decoupling earnings from energy consumption should lead to increased demand among households and businesses for solar. 

When Hawaiian Electric, Maui Electric and Hawaii Electric Light adopt decoupling next year, they will see an immediate gain in their returns on equity. Maui Electric, for example, is currently operating at 5.2 percent ROE. Under the new decoupled rate system, MECO will be guaranteed a 10 percent ROE to meet a peak demand of 240 megawatts (although peak demand in December 2009 was 190 megawatts). The idea is that costs per kilowatt hour are based on total operating costs divided by peak demand. But this means that costs per kilowatt hour actually go up as demand goes down.

In HECO’s recent PUC filing, it proposed that each of the island utilities raise rates gradually each month for the remainder of 2010. This will likely result in a monthly increase of 5-10 percent beginning in April or May and continuing through December.

The bottom line? Consumers — even those who make a conscious effort to use less energy overall — will pay more per kilowatt hour for their electricity, and may see a significant increase in their utility bills.”

Read more here.