Hawaiian Electric Company Announces Rate Increase for 2023

Most of you are likely aware of the changes coming to electric rates from HECO, beginning in 2024. In this blog, we want to educate you further on what those changes could mean for you, why HECO is implementing the changes, and share with your how switching to solar energy can save you over 30% off your current energy bill.

Let’s dive into what the rate changes mean for Hawai’i homeowners.

How Much is the HECO Rate Increase?

Family First Solar owner, Kevin Medieros shared, 

“HECO just announced that they’re going to raise their rates to the public again. They’re actually going to triple the rate during evening usage. People in our community are not happy about it.”

The proposed changes to HECO rates involve splitting your bill into three time blocks and charging different rates during different times of the day. HECO calls it “time of use,” or TOU. The time blocks are:

• • Daytime hours: 9 am-5 pm

• • Evening hours: 5 pm-9 pm

• • Overnight hours: 9 pm-9 am

The daytime hours set the base rate, meaning power usage during this time is the least expensive. Customers will pay the most for their energy usage during evening hours—3x the daytime rate. And overnight, customers will pay 2x the daytime rate.

According to the Vice President of HECO, Jim Kelly,

“The idea is to send price signals to customers that are more closely aligned with the actual cost of producing the electricity at the time they use it.”

When Will the Hawaiian Electric Rate Increase Take Place?

HECO and the PUC (Public Utilities Commission) are working together to create a pilot program to test the new TOU rates. The pilot program will be implemented in select markets this summer. For those who aren’t in the pilot program, HECO plans to roll out the rate change to all customers between 2024 and 2025.

How Will the 2023 HECO Rate Increase Affect My Power Bill?

HECO is presenting this change as an opportunity for homeowners to save money on their bills by reducing the energy used during peak hours. In the words of the PUC Chair Leodoloff R. Asuncion,

“Time of use is really all about customer choice, you have the ability to control your usage you can see how much it’s costing you, make changes in your lifestyle or charging or use of energy so that you can maximize the use of energy.” 

But we all know, they are peak hours for a reason. In the average household, naturally the hours between 5 pm and 9 pm are when you’ll use the most electricity.

These are the hours when the household is home from work and school. They’re making dinner, they’re doing laundry, they’re using computers for homework and entertainment, they’re watching TV, and they’re running the AC to keep the home comfortable when everyone is around. And these are the hours HECO is planning to charge households three times the base rate.

The changes you’ll see on your power bill are specific to your home and energy use. Perhaps if you work evenings and do the bulk of cooking, laundry, and entertainment during the day, you could potentially save money, or at the least, not see much of a difference in your bill.

But the majority of HECO customers will see a significant increase in their monthly bills.

The PUC is aware that this change could cause bills to balloon for certain customers. They’re trying to combat that with “bill protection” for the first six months customers are on the new rates. During these six months, HECO will only be allowed to charge $10 more than what their bill would have been without the new rates.

While this might help during that six-month period, where does it leave customers after that? Will they just have to deal with massive energy bills at the end of the bill protection, or will they actually modify their habits enough during that time to keep their bill the same? Only time will tell, but we definitely can guess which way that will go.

HECO does have an “Energy Saving Toolkit” on its website that gives homeowners plenty of ideas on how to make their homes more energy efficient. While it’s good to take what steps you can to run your home more efficiently, we’re doubtful these tips would have such a large impact that you wouldn’t see a change in your bill with the TOU pricing.

Why is electricity so expensive in Hawaii?

There are so many things we love about living in Hawai’i—we wouldn’t trade it for anything. But one of the things Hawai’i residents deal with is a higher cost of living, electricity included. Unless it’s something made or produced locally, costs of goods include higher shipping costs (and therefore higher overall cost) compared to the mainland. Along the same lines, electricity prices in Hawaii are generally higher than in the continental U.S. due to the cost of imported oil used to power many of the islands’ generators. The actual cost of fuel, which makes up roughly 50% of a typical utility bill, is the biggest driver in seeing fluctuations in your bill.

Our isolated geographic location causes electricity costs to be higher because we don’t have a nearby utility that we could get power from in case of an emergency. To protect Hawaiians from power outages, the utility also imports enough oil to have a reserve generating capacity and multiple distribution routes. So your utility bill also helps cover that backup system.

It’s tempting to view HECO as the enemy since they’re the ones sending you that bill that keeps climbing each month. And while HECO isn’t entirely innocent in our opinion, one could argue that they’re just doing what they can to cover the increasing costs of fuel. But, that still doesn’t mean you don’t have another option.

Have You Considered Solar Power for Your Home?

If you’re already fed up with your increasing bills and are dreading the TOU update switching to solar is the answer to your problems. As a solar installer that was way ahead of the curve, we’ve been installing solar panels throughout the islands since 2002. In fact, we’ve installed over 6,500 solar systems, and those customers have been saving money on their utilities ever since.

Solar power allows you to:

• • Create your own energy so your household is energy self-sufficient.

• • Be untouched by local power outages

• • Be free from the ever-increasing HECO bills.

• • Have a consistent payment to your solar loan instead of fluctuating bills from the utility.

• • Save monthly, compared to your previous power bill (our customers save an average of 30%, even before solar tax credits/incentives.)

• • Take advantage of both state and federal solar tax credits (amounting to a tax refund worth 65% of your investment—30% refund in your federal taxes and 35% refund in your state taxes)

• • Feel the satisfaction of doing your part to reduce your environmental footprint and running your home on clean, renewable energy.

Truly, there is no downside to investing in solar. Not only will you get 65% of your investment back come tax time, but even with financing your solar panels, you’ll immediately be saving money because your loan payment will be lower than your former HECO bill.
Want to learn more about what going solar would look like for your household? Please give us a call at (808) 724-4072 or fill out the contact form on our website.