Hawaiian Electric Co. is sending out letters to potential solar customers saying their rooftop systems won't be approved until the state Public Utilities Commission rules on HECO's request to decrease the rate it pays for energy from home solar systems.
HECO sent the letters last week to Hawaii island customers in neighborhoods with high solar penetration and will follow soon with similar letters to applicants on Oahu and in Maui County.
HECO is in effect halting all solar installations in neighborhoods that already have 120 percent of what the utility defines as solar capacity.
The letters are being sent even though HECO recently acknowledged that it is safe to increase neighborhoods to 250 percent of solar capacity without causing problems to the grid and that it plans to approve solar systems to that level.
Critics say HECO is trying to force the PUC to quickly approve its request to lower the rate paid for solar.
"HECO's efforts send the wrong signal to the renewable energy industry and to customers in Hawaii," said state Sen. Mike Gabbard (D, Kalaeloa-Maka¬kilo), chairman of the Senate Committee on Energy and Environment.
In the letter obtained by the Hono¬lulu Star-Advertiser, Hawaii Electric Light Co. wrote, "Until the Public Utilities Commission makes a decision on our proposal, it is in the best interest of all customers and the utility to suspend approving additional interconnections in areas highly saturated with distributed generation other than interconnections for those customers who applied for interconnection on or before Oct. 22, 2014."
HECO asked the PUC on Jan. 20 for permission to cut the rate the utility pays solar customers on Oahu who feed excess power into the grid to about 15 cents per kilowatt-hour from 29 cents. It asked for similar reductions on neighbor islands. That means if a customer was able to zero out his or her electrical bill with a solar system with, say, 25 panels at the old rate, the customer would need 50 panels under the new, lower rate to achieve the same results.
In the same filing, HECO said it wants to increase the cap on solar installations on any circuit, or neighborhood, to 250 percent of capacity. HECO asked the PUC for a decision on the change in solar payments within 60 days.
The PUC has not said when it will respond to HECO's request.
"This (halting solar installations until the PUC decides) is a classic abuse of monopoly power," said Robert Harris, spokes¬man for the Alliance for Solar Choice. "Utilities can't deny service to customers in order to force policy changes that benefit themselves."
The Alliance for Solar Choice sent a letter Tuesday to the PUC, asking the commission to end HECO's "illegal efforts to stop customers from installing rooftop solar."
Restructuring the rate paid to future solar customers with rooftop solar is what is fair, said HECO.
HECO's decision to halt solar approvals in areas with 120 percent solar capacity until the PUC rules on its request could further damage the prospects for Hawaii's rooftop solar industry.
In September 2013, HECO required customers to get utility approval before installation, citing safety and reliability concerns associated with large numbers of rooftop solar connected in certain neighborhoods.
The rule change led to a dramatic drop in the number of solar systems being installed in Hawaii.
Last month the number of rooftop solar permits was 70 percent below where it was in January 2013.
Solar companies have complained since 2013 that it takes too long to get HECO approval of new systems.
In October, HECO committed to speed up the approval process for the waitlist of approximately 2,500 pending solar applications in Oahu neighborhoods with high numbers of PV already connected to the grid
HECO said that as of Monday it had approved 548 of those applications. The utility said it would approve most of those systems by April and all by the end of 2015 as long as the applications were filed on or before Oct. 22.
Hawaiian Electric Cos. include Hawaiian Electric Co. on Oahu, Maui Electric Co. and Hawaii Electric Light Co. on Hawaii island.
There are 331 applications still waiting approval on Maui and 336 on Hawaii island.
HECO is trying to bargain more authority on energy policy than it is allowed by sending letters that refuse customers' approval, said Colin Yost, principal at RevoluSun, a Hono¬lulu solar company.
The utility should not be pressuring the PUC, Yost said. "It is all up to the PUC to decide what is best for energy policy in Hawaii," Yost said.
"HECO has to keep approving applications and has to keep processing stuff through the current system unless the PUC says otherwise," Yost said.
Of the 416 HECO circuits, or neighborhoods, on Oahu, there are 46 that have met or are above 120 percent solar capacity, said Leslie Cole-Brooks, executive director of the Hawaii Solar Energy Association.