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Top Reasons for Energy Costs in Hawaii

  1. The price of oil, which is used to make electricity, has been increasing and is much higher than historically. Due to Hawaii’s need for oil for ground, sea and air transportation, our state has traditionally been an oil-based economy. Oil for electricity is refined from the same barrel imported for transportation use. It is a system that made more sense when the cost of oil was relatively low.  Now high fuel prices are affecting the cost of nearly all goods and services in Hawaii, including gasoline, airline tickets, shipping and electricity.

    We now need to change Hawaii’s dependence on imported oil by seriously increasing energy-efficiency and conservation and using more renewable energy sources to increase Hawaii’s energy security and address concerns about global warming.

    It will take more investment in facilities to harness renewable resources and upgrade the electric grid to reliably integrate large amounts of variable renewable energy resources. This will increase costs in the short-term but will help reduce our dependence on imported oil and provide more stable and even lower prices than if we maintain the current level of dependence on oil.
  2. We don’t have one electrical system; Hawaii actually has six separate systems (one for each island, other than Niihau and Kahoolawe) and that increases costs.
  3. Our electric systems are very small by national and international standards.  Without economies of scale, island systems are much more expensive to operate.
  4. The population base that supports each system is small and that increases per person costs. 
  5. Because we cannot get power through a national grid like mainland utilities, we have to maintain greater power reserves and that back-up costs more money.
  6. We can’t purchase surplus (and therefore, cheaper) power from other systems because we are not connected to other systems.
  7. We don’t have large-scale hydro projects like the dams in the West or the Tennessee Valley Authority that provide cheap power (though at substantial environmental cost.) 
  8. We also don't rely much on coal, which is currently a “cheaper” source of fuel for many mainland U.S. utilities.  On the other hand, that’s good for our island environment, especially since burning coal is a large contributor to greenhouse gas emissions.
  9. Because of factors like shipping costs, the cost of goods and doing business in general is higher in Hawaii.
  10. Hundreds of millions of dollars have been invested in new or upgraded facilities to maintain or improve our electric system over the years.  New infrastructure increases costs.

At the same time, we have very successful energy-efficiency programs, making our state one of the most energy-efficient in the country. All of our customers benefit from these programs because the energy saved helps defer construction of expensive new power generators. In particular, we have one of the best solar water heating programs in the country (1 out of three single-family homes in Hawaii has solar).