At Gov. George Ariyoshi's 88th birthday party in March, he took the stage and reminded us all to "Remember Our Future," meaning that we, the leaders of today, have a moral obligation to care about and plan for our children's future.
His words touched my heart. It made me realize that sometimes, we can get so caught up in our work, in the technical challenges and legal nuances, that we forget why we are working -- to make a better future for our children.
This is why we go to work every morning at Ulupono Initiative. It is our mission to help catalyze a better future for the children of Hawaii, focusing our investments on three areas -- local food, renewable energy and waste reduction.
If we work together, we can have an energy system that is lower cost and lower risk for everyone, and more profitable for the utility with half the carbon intensity. We could stabilize our costs at the equivalent of ~$80 per barrel, equalize rates across counties, and spur tremendous economic growth.
We have a gifted leadership team running our state's utilities. The cadre of new young executives at these companies is stellar. The last time we had an executive team assembled of this caliber, Jack Burns was governor and we built a refinery. Our energy leadership is long on intellect, but the currency of leadership is trust.
The cultural problem is not culture of the energy companies. The cultural problem we face is our dysfunctional politics of blame.
As business and regulatory leaders, we must accept responsibility for the mess we are in, instead of casting blame on others, or we will never build trust needed to work together. If every time an energy executive is this state comes up with an innovative idea, and we immediately distrust and criticize them, the corrosive effect on the morale of this new talented young executive core will be so great, that they will leave. Give them a chance to earn our trust with their actions. This does not mean I agree with everything our state's utilities say, but I respect them when I disagree.
We all like music, but our current business and regulatory model is as antiquated as a string quartet. The 21st century business and regulatory model is an orchestra with audience participation and far more diversity and complexity. That's why we need the energy sector and its regulators to get on the same hymn sheet and start harmonizing.
Hawaii is already undergoing the transformation from consumer to prosumer -- utility customers that produce and consume power, like Parker Ranch on the Big Island. This profound prosumer shift means that the largest customers are able to produce conventional and renewable power at a lower cost than the utility can generate from its obsolete power plants. Smaller customers can produce power at less than the utility charges to deliver power to them. Both could afford to buy their own storage, leave the grid and still be better off.
But they, and society, are better off if they stay. We are already at grid parity. The customer revolution has arrived in the form of conservative ranchers, the military and large users. They will be bringing lawyers, not picket signs. The revolutionaries are at the palace gates, and we are ill prepared as business and regulatory leaders for the reality that is already here.
The old regulatory thinking, that no renewable energy, energy efficiency, or distributed generation initiative can occur unless it benefits all ratepayers, is based on the principle that equality is more important than economics. Never mind that it was the prosumer's capital at risk, not the utility or the public, which is why the prosumer deserves the rewards.
For those regulators and energy leaders who choose to embrace the challenge of this century, let's work together to create the incentives for a new utility partnership with its customers. We need the Hawaii Public Utilities Commission, utilities and customers to address the 21st Century Regulatory Compact.
There are six key issues:
• Full recovery of utility distribution system investment and stranded asset recovery
• Allowing the utility to play on the customer side of the meter and the customer to play on utility side
• Using the market to build out the renewable infrastructure to interconnect our archipelago and the right LNG infrastructure to support renewables, distributed generation, and transportation
• Reinvesting in the utilities' smart grid with meters, switching, storage, ancillary services, forecasting, and control room upgrades
• Pricing reduction in volatility, rather than ignoring it, and making the customer suffer
• Performance incentives for the utility based on achieving our renewable energy goals efficiently, so that we share the savings from every renewable contract between the utility and its ratepayers whenever it is cheaper than the fuel that it avoids in that year
We need to act now. There will be no call from the Governor, no call from the Senator. We are the people we have been waiting for.
We have a moral obligation to care about, and plan for, our children's future.
Remember Our Future.