Advanced Rate Design
Advanced Rate Design (ARD) Track
In the ARD track, the Commission and the Parties are exploring dynamic and advanced rate designs intended to incentivize customer behavior to align with grid needs and realize the full value of DER investments.
The Commission and the Parties have been working collaboratively since 2020 in an ARD Working Group process to establish an ARD framework for residential customers and small and medium sized commercial customers, with the objective of ensuring rates are designed to encourage energy efficiency and demand flexibility, improve grid resilience, promote reliability, reduce environmental impacts, and achieve other State energy policy goals.
Following seven stakeholder working group meetings between August and October 2020 and the Parties’ Proposals in March 2021, the Commission issued Order No. 38680 establishing the ARD framework to implement time-of-use (“TOU”) rates.
The ARD framework introduces three phases for the implementation of TOU rates: the Ramp Up Period, the Roll Out Period, and the Evolve Period. The Commission re-established the ARD Working Group to kick off the Ramp Up Period in 2022, as the Companies prepare for rolling out the new TOU rates in October 2023.
Time of Use Study
Hawaiian Electric’s TOU Study launches on October 1, 2023 to a subset of customers across Hawaiian Electric’s service territories. Customers selected for participation in the study are notified by Hawaiian Electric two months in advance and provided with resources to help customers shift their energy usage and be successful on the rates. Customers may choose not to participate at any time.
For the TOU Study, Hawaiian Electric’s energy charge is divided into three time periods: the daytime period (9am – 5pm), the evening peak period (5pm – 9pm), and the overnight period (9pm – 9am). The rates are set in a 1:2:3 ratio for daytime, overnight, and evening peak periods, respectively, where daytime rates are cheapest and evening peak rates are most expensive. Daytime rates are approximately half of current rates, while overnight rates are approximately the same as current rates.
|TOU Study Residential Rates||Daytime
(9 a.m. to 5 p.m.)
(5 pm. To 9 p.m.)
(9 p.m. to 9 a.m.)
|O‘ahu||19 cents per kilowatt-hour||57 cents per kilowatt-hour||38 cents per kilowatt-hour|
|Maui||20 cents per kWh||59 cents per kWh||39 cents per kWh|
|Hawai‘i Island||22 cents per kWh||66 cents per kWh||44 cents per kWh|
The TOU Study will last for one year. Informed by data, lessons, and customer experiences from the TOU Study, Hawaiian Electric will begin rolling out TOU rates as the default rate to all residential and commercial customers on a schedule that will be determined based on experiences with the TOU Study.
TOU rates are a critical tool to help Hawaii reach its 100% clean energy goals and to provide customers the opportunity to save money on their bills. These rates were developed over multiple years in a collaborative process with input from the State Consumer Advocate, representatives from the solar industry, and Hawaiian Electric, all overseen by the Commission. For more information regarding what to expect from the study and how to participate, please see the Commission’s TOU Rate Study Fact Sheet.
Key Orders and Filings
|Date||Order No. and Link||Summary|
|June 29, 2023||Order No. 40044||The Commission established the rates for use in the TOU Study in response to Hawaiian Electric’s ARD Compliance Filing. The rates include a consistent customer charge and grid access charge across all five islands and varying energy charges for Schedule ARD TOU R, ARD TOU G, and ARD TOU J for each island.|
|June 21, 2023||Order No. 40021||The Commission granted the Consumer Advocate’s motion for enlargement of time in the procedural schedule, delaying the launch date of the TOU Study by three months to October 1, 2023 to enable additional review and decision-making on the rates for use in the TOU Study.|
|April 19, 2023||Order No. 39172||In addition to bill protection being provided for residential customers for the first six months of the TOU Study, the Commission approved Hawaiian Electric’s request to provide similar bill protection for commercial customers for the first six months of the TOU Study.|
|March 1, 2023||Order No. 39012||The Commission provided guidance on Hawaiian Electric’s efforts to implement the TOU Study, including customer bill presentation, marketing and education efforts, and options for customer opt-out.|
|February 7, 2023||Order No. 38847||The Commission added several procedural events from February through July 2023 to assist Hawaiian Electric’s implementation of the ARD TOU Study and to enable additional review.|
|October 31, 2022||Order No. 38680||The Commission established the Advanced Rate Design framework, which introduces TOU rates with three time periods using distinct prices to incentivize customers to shift energy usage. Daytime energy prices are the cheapest, reflecting the low cost of renewable energy produced during the day, while Overnight prices are slightly more expensive and Evening Peak prices are the most expensive.
The Companies will implement TOU rates over three phases. The first phase is the Ramp Up Period, during which the Companies will calculate the TOU rates, prepare effective marketing, education, and outreach materials, develop an evaluation and assessment plan, and prepare for the TOU Study. The second phase is the Roll Out Period, during which the Companies will conduct the TOU Study with a sample of customers enrolled in the new TOU rates to understand the impacts and effectiveness of the rates. The third phase is the Evolve Period, during which the Companies will refine the TOU rates and accelerate customer enrollment in the TOU rates.
The ARD framework also provides guidance on the application of rate adjustments and surcharges for TOU rates, the design of customer bills, and the design of a non-time varying rate option for customers that opt out of TOU rates.
See related Commission pages:
- DER Policies (Docket No. 2019-0323) – Homepage
- DER Policies (Docket No. 2019-0323) – DER Programs
- DER Policies (Docket No. 2019-0323) – Technical Issues
- DER Policies (Docket No. 2019-0323) – Past Events