Hawaii Spent Hundreds of Millions on Coal Plant Shutdown Rather than Wildfire Prevention

Following the massive fire that engulfed the island of Maui, questions have been raised about whether the island’s electrical lines may have been the cause.

Hawaii’s electrical utility, Hawaiian Electric, had plans to improve their grid and fix ailing power lines and poles as the risk of a fire was “significant.” They made a request to the state government in June of 2022 to raise rates to help pay for the upgrades, citing concerns that they could see a situation similar to that of California, where the state utility, PG&E, has been hit with over $15 billion in expenses as a result of wildfires. But Hawaiian Electric’s proposal didn’t go anywhere.

Raising electrical rates might not be such an easy task considering that Hawaii pays the highest rates for electricity of any state by far. Based on U.S. Energy Information Administration (EIA) data, the average retail price for electricity on the island is 30 cents per kilowatt-hour. Most states average around 10 cents per kilowatt-hour. The only other state that even comes close to that is Alaska at 20 cents.

But instead of trying to keep prices low, Hawaii forced the closure of their lone coal plant right as oil prices were going through the roof leading to even higher electricity prices.

Electricity in Hawaii is particularly expensive because, as an island, Hawaii is limited in what fuels it can import as it doesn’t have much access to natural gas pipeline infrastructure. As a result, it depends heavily on burning petroleum oil for electricity—one of the most expensive and dirtiest energy generation sources. Not only is it expensive, but it also fluctuates dramatically with the price of oil on international markets.

Another island with limited access to fuel, Puerto Rico, has similar issues. The burden of high costs via its electrical utility is one of the major reasons Puerto Rico waivers in and out of bankruptcy on a regular basis. Yet even Puerto Rico pays less than Hawaii—25 cents per kilowatt-hour on average.

Hawaii’s massive electrical bill only got worse since 2022 as oil prices grew and the state mandated the shutdown of its only coal plant for climate change mitigation.

The AES coal plant on O’ahu was one of Hawaii’s lowest cost fuel sources—12 cents per kilowatt-hour—and providing 10 to 20 percent of O’ahu’s electricity—.65 to 1.3 million megawatt-hours annually based on 2022 SEC reports. A refuse-fired plant around Honolulu provides similarly low rates, but with substantially lower capacity.

Even with the plant’s closure coming near the end of the 2022 fiscal year in September, the closure was the main reason that the utility cited a $124 million increase in expenses from the prior year.

With higher oil prices following the Russia-Ukraine war, Hawaii is now spending 40 cents per kilowatt-hour—over twice the national average.

If AES provided O’ahu with between 10 to 20 percent of its annual electricity generation (6.5 million megawatt-hours in 2022) at 12 cents per kilowatt-hour, that would mean that Hawaii spent an additional $182 to $364 million a year now that electricity prices are so high—much more than the $2.5 million they were requesting for wildfire mitigation efforts a year ago.