Hawaii utility program to vary rates based on time of day

Markets Associated Press

Regulators have approved a program for Hawaiian Electric customers to pay different rates for electricity based on the time of day.

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Under the pilot program announced Monday, customers will pay more for power at night when it's more expensive to produce. They'll be charged less during the day when the state's many solar panels reduce the cost of electricity.

Hawaii residents pay the highest electricity rates in the nation.

On a typical day, electricity demand peaks in the evening when people return home from work and turn on their lights, air conditioners, dishwashers and washing machines.

"It can help encourage people to use electricity during the day when solar is most productive, when our renewable resources are more productive," Darren Pai, spokesman for Hawaiian Electric, said of the rate change approved by the Public Utilities Commission.

The new program will be available to customers in about a month, Pai said. As many as 5,000 customers will be allowed to participate in the program, which will be available on Oahu, Maui, Hawaii Island, Lanai and Molokai.

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On Oahu, customers will be charged 14.82 cents per kilowatt hour in the midday, from 9 a.m. until 5 p.m. Rates will then more than double to 34.88 cents in the evening, from 5 p.m. until 10 p.m.

Then rate will fall to 21.28 cents overnight until 9 a.m.

Big Island customers will have a midday energy rate of 10.36 cents, an evening rate of 47 cents and an overnight rate of 32.10 cents.

"You want to create a rate structure, a pricing structure, to essentially force a change in behavior with respect to utility usage," said Delmond Won, executive officer at the Hawaii Public Utilities Commission.

Some solar advocates say the plan could encourage people to install solar systems that store energy for nighttime use.

The concept, also known as "dynamic pricing," originated in the 1970s and saw a resurgence in popularity in the late 2000s with federal incentives for the adoption of smart grid technology, according to Jocelyn Durkay, senior energy policy specialist at the National Conference of State Legislatures.

It requires smart meters to communicate pricing information between the residential or commercial building and the utility.