Michael Angelo joins producer/host Coralie Chun Matayoshi to discuss how the State Division of Consumer Advocacy (DCA) advocates champions the interest of consumers of regulated utilities and helps customers navigate billing issues and reimbursements for prolonged power outages, why newly enacted Senate Bill 897 which enables Hawaiian Electric to finance resilience infrastructure investment at a lower rate ultimately helps consumers, whether a wildfire fund would benefit customers, ways to lower utility costs, and how the public can get involved.
Michael Angelo is the Executive Director of the Division of Consumer Advocacy at the Department of Commerce and Consumer Affairs, who is also known as the “Consumer Advocate.” He has a PhD in Engineering and 18 years of experience across different areas of the energy sector supporting the efficient decarbonization of Hawaii’s economy and further enhancing the safety, reliability, and resilience of our electrical grid. He previously served as a technology consultant with Hawaiian Electric; Senior Applications Engineer at Kevala, Inc. (a data analytics company serving electric utilities, regulators, and renewable energy project developers); research analyst with the DCA; and research faculty with the Hawaii
Q. What is the Division of Consumer Advocacy and on whose behalf does the division advocate?
Aloha Coralie – it’s a pleasure to be here talking with you today. Thank you for thinking of the office and the opportunity to share with the public the work that we perform. The Division of Consumer Advocacy, also known as the DCA, is a division within the State of Hawaii’s Department of Commerce and Consumer Affairs. The DCA is a team of attorneys, accountants, economists, engineers, scientists, social scientists, and more.
We advocate on behalf of all types of customers of regulated public utility services (e.g., residential, agricultural, commercial, and industrial) in the electricity, gas, water, wastewater, telecom, and regulated transportation sectors (e.g., Young Brothers – interisland transport). Our primary role is reviewing requests from utilities seeking approval from the Hawaii Public Utilities Commission, or PUC, to undertake various actions. The scope of utility requests can range from broad (e.g., long-term strategies, such as Hawaiian Electric’s Wildfire Safety Strategy and rate increase requests) to smaller in scope on things such as requests to purchase major infrastructure components.
Our review of a utility’s requests typically involves analyzing the utility’s application and making information requests to the utility. We consider the impacts on key customer concerns such as safety, keeping services on, affordability and cost-effectiveness, and alignment with public policy objectives such as increasing renewable energy. We provide our position to the PUC as to whether the utility’s request is in the interest of all utility customers and whether other protections need to be in place to protect customers. The PUC ultimately determines whether or to what extent the utility’s requests are in the public interest and should be approved and whether other conditions need to be placed on the utility to protect the public interest. The PUC’s determination is informed by the DCA’s analysis, input from other parties participating in the docket, and the public.
Q. I recall you noting that you help customers navigate billing issues together with the utility. Can you talk some more about that?
Yes – appreciate you bringing that up! Another important role we play is in helping customers work with utilities to help resolve billing issues. As can happen to anyone, customers sometimes fall into challenging financial situations and need some time to get back on their feet, but bills start piling up. Utilities provide services that are critical to customers’ daily lives and sometimes their existence. Simply put, customers need to stay connected. We are an avenue to help customers engage with utilities to help seek solutions to keep them connected.
Q. Customers have also been financially impacted by outages such as the downtown outages. Can you talk about advocacy for Hawaiian Electric’s customers impacted by outages?
Yes – great question. Service outages are a significant burden to customers given how critical electricity availability is to our daily lives and operating a business. Extended outages, such as those that occurred in the Downtown Honolulu area about a year ago, hit businesses particularly hard financially. One cause of service interruption is failure of aging infrastructure. We continue to advocate within proceedings before the PUC that aging infrastructure be a priority to be addressed because of safety and reliability concerns and other adverse impacts that service interruptions have on customers. Customers that experienced an interruption in service may be eligible for compensation for any loss, cost, damage or expense during a service interruption that was determined by Hawaiian Electric to be within its control if customers file a claim with Hawaiian Electric within 30 days of the service interruption and subject to certain exclusions described within Hawaiian Electric’s Rule No. 16. Customers having filed timely compensation claims with Hawaiian Electric who are not satisfied with the outcome may also file a complaint with the PUC. DCA can help steer individual customers to the PUC’s complaint forms and the process for filing a complaint with the PUC, but DCA is not able to provide legal advice. The PUC has investigators to review the details of a customer’s complaint. Hawaiian Electric has been filing updates with the PUC on its work to improve reliability in the Downtown Network and anticipates providing its Consolidated Work Plan for the Downtown Network for increasing reliability in the area the by the end of July 2025 and will be filed with the PUC.
Q. Since you mentioned the Wildfire Safety Strategy, rates, disconnections, and public participation and input I would like to dive deeper into those. Can you first talk some about Senate Bill 897 and its impact on electric utility customers?
Yes – I am glad you asked about that. Senate Bill 897 from the 2025 Legislative session was recently signed into law by Governor Green as Act 258. This is a complex piece of legislation that is important to talk about and understand from a variety of perspectives. I can provide some context on the implications as they pertain to electric utility customers, but I note that there are broader societal considerations with the legislation that are outside of DCA’s purview.
Q. Does this legislation support Hawaiian Electric’s customer?
Yes – The legislation intends to lower Hawaiian Electric’s cost to finance resilience infrastructure investment to do things like decrease the risk of catastrophic wildfire by improving Hawaiian Electric’s credit rating and enabling Hawaiian Electric to use securitization to access financing at a lower cost than would be possible without securitization. Lower financing costs can result in less costs being passed onto customers, which is a benefit to customers. Hawaiian Electric recently filed its application to expend more than $350 million to recover the costs of implementing its wildfire safety strategy. While it is difficult to quantify the exact dollar amount on all types of customers, Hawaiian Electric’s application estimates that the average bill impact on “typical” residential customers using 500 kWh will be $1.05 for Hawaiian Electric, $2.86 for Hawaii Electric Light, and $5.41 for Maui Electric. The costs and corresponding bills will fluctuate though over the period of several decades that Hawaiian Electric will seek to recover its costs. The legislation seeks to lower Hawaiian Electric’s financing costs to implement its Wildfire Safety Strategy and supports utility customers because the customer bill impacts of implementing the Wildfire Safety Strategy may decrease with lower financing costs. I should also note that Hawaiian Electric has committed to not recovering the costs of paying claims for its Maui wildfire liabilities from customers.
Q. What does Hawaiian Electric need to do to improve its credit rating?
For one, Hawaiian Electric will need to continue paying down its liabilities on claims resulting from the wildfires. Hawaiian Electric has committed to doing that and, importantly, to not recovering the cost of those liabilities from customers. To be clear, Act 258 has nothing to do with Hawaiian Electric paying down its wildfire liabilities. I just mention it because it is a critical aspect of Hawaiian Electric improving its credit rating.
Q. How does the legislation specifically seek to improve Hawaiian Electric’s credit rating?
The legislation addresses three key components of improving a utility’s credit rating. There are numerous states in the unfortunate position of being at risk for catastrophic wildfires. As a result, many states have enacted legislation to address the financial risk of catastrophic wildfires. Moody’s Ratings, which is a credit ratings agency, has indicated that legislation intending to support utility credit ratings for utilities at risk of wildfire should do three key things:
· Cap the utility’s liability,
· Establish transparent guidelines or certifications requirements for mitigating fire risk.
· Establish a wildfire fund to pay damages if the utility is implicated in contributing to a catastrophic wildfire.
Importantly, it also enables the utility to use securitization as a financing method, which can directly enable Hawaiian Electric to access lower financing costs at its sub investment grade credit rating.
Q. Can you talk about the liability cap first – that seems to be a part of the legislation that has come up a lot recently?
Yes – The limitation on liability or “liability cap” would limit the amount money paid by the electric utility to property owners if the electric utility was involved in a catastrophic wildfire. The cap amount is yet-to-be-determined. One thing to point out is that the liability cap applies only to property damage from a catastrophic wildfire. I should also note that the legislation explicitly excludes claims for physical bodily harm or emotional harm. Additionally, and significantly, for an electric utility to be eligible for the cap, it must have a wildfire safety plan that was approved by the PUC and the electric utility must be implementing the plan effectively. This requirement is an important customer protection component of the legislation because the utility must be actively making wildfire risk reductions that were scrutinized through the regulatory process for the utility to receive the financial protection of a liability cap.
Q. How will the amount of the liability cap amount be determined?
The legislation includes several protective measures to help ensure the public interest is protected and considered in determining the cap amount. Notably, the legislation requires the PUC to open a rulemaking proceeding to determine the amount of the liability cap and prescribes several public interest components that must be considered in setting the amount. While the exact process that the PUC will use to establish the amount is yet to be determined, the expectation is that there should be a period for public comment because there will be an administrative rule making proceeding. Our office will be actively involved in reviewing and commenting on any liability cap amount proposed by the Commission and its impact on utility customers.
Q. What about securitization? Can you walk us through what securitization is and whether it might help electric utility customers?
Definitely – Securitization provides electric utilities the ability to issue ratepayer backed “securitized” bonds to receive cash to cover “infrastructure resilience costs.” Securitized financing is typically lower cost debt than the utility would otherwise be able to access. This is because securitized bonds typically have a higher rating than other financing options. Securitization is thus likely the most cost-effective option for Hawaiian Electric to pay for infrastructure investment to improve the resilience of the electrical grid, aside from federal funding, which is likely limited at the current time. From that perspective, securitization is a means to decrease the costs of debt that may get passed onto electric utility ratepayers. It is definitely helpful to customers have this option available.
Q. Does the legislation also establish a wildfire fund, and can you talk about whether that benefits Hawaiian Electric’s customers?
Good question – while the legislation does not establish the wildfire fund, it requires the PUC to investigate whether a wildfire recovery fun should be established. The concept of a wildfire fund is that it is essentially a pot of money available to an electric utility to provide a means to quickly make compensation payouts for catastrophic wildfire damage that they allegedly caused or exacerbated. While the establishment of a wildfire fund could help Hawaiian Electric’s credit rating, it is critical that utility customers are not the sole or primary contributors to such a fund. Improving the utility’s credit rating improves the financial health of the utility also benefits to Hawaiian Electric’s shareholders. Moreover, the degradation of the utility’s credit rating was not the fault of utility customers. Utility customers should therefore not bear the financial burden of improving the utility’s credit rating. Rather, customers pay for investments into the electrical grid which delivers a benefit to them.
Q. Appreciate that breakdown on Act 258 and the customer considerations. Since we are discussing costs, I would like to pivot to the proceeding reviewing “Performance Based Regulation” and what is happening on that front.
Yes – good segue. Performance Based Regulation or PBR was enacted through the Ratepayer Protection Act of 2018. The legislation was codified in Hawaii Revised Statue (HRS) §269-16.1 and enables the PUC to establish performance incentives and penalty mechanisms that directly tie an electric utility’s revenues to its achievement on performance metrics and break the direct link between allowed revenues and investment levels. In other words, the PUC can establish incentives for strong performance or penalties for substandard performance in key policy areas such as reliability and progress toward increasing renewable energy. The PUC subsequently led a process to develop a framework to further build out a concept of performance regulation for Hawaii that expanded PBR to include various mechanisms that speed up to the timing for when a utility can seek recovery of its costs. The framework also intends to control costs through mechanisms and formulas built into the framework. Since the time that PBR was enacted at the end of 2020, the amount of revenues enabled by PBR for Hawaiian Electric and its subsidiaries has increased by: Hawaiian Electric (+14%), Maui Electric (+15%), and Hawaii Electric Light (+15%). The PUC is currently undertaking a comprehensive review of the PBR Framework including to investigate whether the mechanisms are working sufficiently and to review Hawaiian Electric’s request to “rebase” the annual amount of revenues it is allowed to recover under PBR. We have emphasized that a fundamental aspect of performance-based regulation needs to be an assessment of whether and to what extent Hawaiian Electric (and its subsidiaries) are performing sufficiently. Additionally, if Hawaiian Electric is able to request to rebase its target revenues, we believe that the process needs to include sufficient scrutiny of its costs and prioritizations in key areas of safety, reliability, cost-effectiveness and affordability, equity and progress toward our clean energy and climate goals. In other words, there should be revisions to the current PBR framework to better enable cost control and deliver better utility performance.
Q. On a topic related to rates and affordability, utility disconnections seem to have increased since prior to the pandemic. Can you talk about what regulatory actions are being taken to help customers?
First let me say that keeping utility customers connected needs to be a primary goal of any utility. Regulated utility services such as electricity are critical to customers’ livelihoods. Being disconnected further exacerbates the challenges for customers that fall on financially hard times. As I mentioned earlier, we are a resource to help customers work with utilities to explore options to keep them connected. It’s important to point out that utilities will often work with customers to get them onto payment programs to help decrease their monthly bills for a time until they can get back on their feet. For that reason, it’s important for customers to reach out to the utility’s customer service departments prior to being disconnected. We also realize that there can understandably be some trepidation around that. So, we are here to help customers work together with utilities to navigate the process of getting onto payment programs and getting reconnected if they do get disconnected. When we engage with customers, we can also help link them to organizations that can, at times, help provide funds to help customers reduce their bill payments for a time and get reconnected. We can also connect them with information to other types of organizations such as Hawaii Energy which is an organization that we all pay a small surcharge on our electricity bills that helps utility customers offset the costs of purchasing energy efficient equipment to permanently decrease their usage, and in turn, their utility bills. We have provided our positions to the PUC on actions that can be taken to help customers facing disconnection such as terminating the reconnection fees that utilities charge. Additionally, the PUC recently opened a proceeding to analyze current electric utility disconnection practices where our office will continue to advocate for reforms to keep customers connected and make electricity more affordable.
Q. Speaking of electricity and affordability do you see any means to help reduce customer bills?
The cost of electricity in Hawaii is too high. Residential customers have the highest average bills and lowest average usage in the nation. The situation is similar for commercial and industrial customers. The largest opportunity to reduce the cost of electricity is to reduce our reliance on fossil fuel by using renewable generation with technologies and energy sources that are more cost-effective than fossil fueled generation. To put some context behind that point, more than half of Hawaiian Electric’s expenses across all its service territories went to purchasing fuel and ensuring sufficient generation capacity from fossil fuel-based resources in 2023. Fixed price large-scale renewable energy generation contracts have offered the most direct means to reduce the electric utilities operating expenses that benefit all customers. There are also opportunities for customer-sited resources such as solar and batteries provided that rates are carefully designed and scrutinized to compensate customers for the value of the service at the time it is provided. However, with the changing policy at the federal level, the costs of renewable energy will likely increase for the time being because of the expiration of things such as the renewable energy tax credits. However, it is important to note that State policy remains unchanged. We will continue to advocate for the procurement of renewable energy generation using energy sources that are cost-effective compared to fossil fuel and serve as an important hedge against unavoidable price volatility in fossil fuel and to help better ensure the State can generate its electricity without relying on entities outside of the State. It is therefore imperative that all electric utility costs are sufficiently scrutinized and delivering benefits to customers.
Q. With all this going on can you talk through how customers can get involved?
Definitely – It is critical that the public participate to have their individual voices amplified and heard directly by the Commission and our office. The public can participate in the regulatory process by seeking participation directly within a docket, which provides them with the ability to ask questions of the utility. There are instructions on the PUC’s website for how to do that. The public can also file a public comment in a docket in which they have an interest or concern to express. These comments become a matter of public record. The public can also reach out directly to our office to express its thoughts or concerns.
Q. Is there anything else that you would like to share regarding the DCA and its advocacy for customers of regulated utilities.
I really appreciate that question. It’s important for the public to know that the utility requests are often highly technical. Their requests are thoroughly reviewed by multi-disciplinary teams of subject matter experts at both the DCA and PUC prior to the PUC making its determination on the utility’s requests. The information requested from the utilities by DCA or PUC is publicly except in limited cases where it is deemed confidential. I am fortunate to be able to work together with such a talented team that works tirelessly to advocate on behalf of customers of the State’s regulated public utilities. I want to thank you again, Coralie, for thinking of the office and the opportunity to share with the public about the work that we do to advocate for utility services delivered safely, reliably, cost-effectively, equitably and in line with the State’s renewable energy and climate goals.
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Disclaimer: this material is intended for informational purposes only and does not constitute legal advice. The law varies by jurisdiction and is constantly changing. For legal advice, you should consult a lawyer that can apply the appropriate law to the facts in your case.