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Revenue Decoupling for Electric Utilities: Impacts on Prices and Welfare

Under traditional (cost-of-service) electric utility regulation, regulated utilities may not recover their fixed costs when their sales are lower than expected. Revenue decoupling (RD) is a mechanism that allows price adjustments so that the regulated utility recovers its required revenue. This paper investigates the welfare and distributional impacts of RD. Theoretically, we find that the excess burden of subsidies for distributed generation is larger with RD than without. Contrary to how RD is specified on dockets in many states, electricity prices appear to demonstrate downward rigidity, while statistically significant upward adjustments on average are observed across utilities that experienced decoupling. We also find empirically that RD has generated negative welfare effects in most states even if we consider the social marginal costs of electricity generation given different energy mix across regional markets.

Working Paper

Mandatory Food Waste Recycling Ordinance for Large Food Establishments in Honolulu, Hawaii

A recent study by two University of Hawaii at Manoa researchers estimates that more than 26% of the available food supply in Hawaii is discarded each year. Food waste occurs at all stages of the food supply chain-- after food is harvested, during packaging, shipping and storage, and finally by consumers. Since most of the food consumed in Hawaii is imported, most of the food waste in Hawaii occurs at the consumer level.

Working Paper

Hawaii Construction Forecast: After Pullback, Construction Prospects Firm

Following two years of decline, the pace of building in Hawaii has stabilized. The value of construction permits is posting healthy gains across all sub-sectors this year, and projects either planned or in the pipeline will maintain construction activity near its current level through the end of the decade.

This analysis and near-term forecast is available as a service to the public. For more detailed multi-year forecasts, subscribe to UHERO's Forecast Project.

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UHERO State Forecast Update: Hawaii's Growth Down, But Not Out

Hawaii’s expansion has slowed along several dimensions. On top of the painful human toll, volcanic activity and flooding have dealt a setback to tourism. The construction sector has continued to drop back from its 2016 peak, and job growth has slowed to a near-stop. Still, the fundamentals look favorable. Global tourism continues to power forward, and there remains a healthy pipeline of construction work. And even with the recent labor market weakness, Hawaii continues to enjoy its lowest unemployment in many years.

This analysis and near-term forecast is available as a service to the public. For more detailed multi-year forecasts, subscribe to UHERO's Forecast Project.

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Scenario planning with linked land-sea models inform where forest conservation actions will promote coral reef resilience

Posted August 20, 2018 | Categories: Bremer, Leah

We developed a linked land-sea modeling framework based on remote sensing and empirical data, which couples sediment export and coral reef models at fine spatial resolution. This spatially-explicit (60 × 60 m) framework simultaneously tracks changes in multiple benthic and fish indicators as a function of land-use and climate change scenarios. We applied this framework in Kubulau District, Fiji, to investigate the effects of logging, agriculture expansion, and restoration on coral reef resilience. Under the deforestation scenario, models projected a 4.5-fold sediment increase (>7,000 t. yr−1) coupled with a significant decrease in benthic habitat quality across 1,940 ha and a reef fish biomass loss of 60.6 t. Under the restoration scenario, models projected a small (<30 t. yr−1) decrease in exported sediments, resulting in a significant increase in benthic habitat quality across 577 ha and a fish biomass gain of 5.7 t. The decrease in benthic habitat quality and loss of fish biomass were greater when combining climate change and deforestation scenarios. We evaluated where land-use change and bleaching scenarios would impact sediment runoff and downstream coral reefs to identify priority areas on land, where conservation or restoration could promote coral reef resilience in the face of climate change.



Integrating Renewable Energy with Time Varying Pricing

With increasing adoption of intermittent sources of renewable energy, effective integration is paramount to fully realizing societal benefits. This study asks the question, how valuable is residential real-time pricing (RTP) in comparison to time-of-use (TOU) rates to absorb increasing sources of intermittent renewable energy? We couple a detailed power sector model with a residential electricity demand response model to estimate the system and consumer benefits of these two time-varying pricing mechanisms, including greenhouse gas emissions.

Working Paper

Integrating Renewable Energy: A Commercial Sector Perspective on Price-Responsive Load-Shifting

Price-based demand response is an important component to achieving Hawaii's 100% Renewable Portfolio Standard. This report provides a review of the impacts of time varying pricing programs for the commercial and industrial sectors. It presents commercial sector load patterns and rates for Oahu to gain insight into the potential impacts by sector of implementing time varying pricing mechanisms that would be more compatible with renewable energy integration than the existing rate structure.

UHERO Report


The Conversation: Sumner La Croix on the Future of Tourism

Sumner La Croix appears on The Conversation to discuss the future of Hawaii's tourism industry.


Governing Green Power: How Should Utilities of the Future Make Money?

This report summarizes a two-day conference that addressed how future electric utilities will make money, a question provoked by advances in renewable energy and other distributed resources that cast doubt on conventional regulatory and business models. Engagement with issues in all of the sessions was strong, giving expression to a wide range of observations, opinions and questions.

UHERO Report


Well-Being Assessment in Hawaii Creating community-level composite indices in paradise

The purpose of this report is to provide the necessary foundation for the construction of a comparative well-being index for communities in Hawaii. We begin by comparing the composite index and dashboard approaches to describing well-being. We provide guidance on the selection of indicators, their normalization, the weighting of indicators to form a composite index, and the comparison of indices and indicator values across regions. Existing indices are compared to provide context. Available data sources are listed and opportunities to augment current data collection are identified. Specific recommendations are provided regarding the well-being model, data sources, indicator selection, interactive visualization, and communication.

Working Paper

The Conversation: Sumner La Croix on Managing Hawaii’s Tourism

Posted June 8, 2018 | Categories: Media, LaCroix, Sumner

Sumner La Croix appears on The Conversation to discuss the possibility of over tourism in Hawaii.


Not All Regions Are Alike: Evaluating the Effect of Oil Price Shocks on Local and Aggregate Economies

Using a sample of 48 contiguous U.S. states for the period 1973-2013, we study how oil price shocks influence state-level economic growth. The analysis incorporates (1) a structural decomposition of the supply and demand factors that drive the real price of crude oil; (2) heterogeneity of states in terms of their production and consumption of oil and natural gas; and (3) economic spillovers across neighboring states. Oil price effects vary across states, depending on the underlying source of the price shock and a state's average production of oil relative to its average consumption. Oil-exporting states are more vulnerable to unanticipated changes in oil prices, and the direct effect of oil price shocks can magnify or temper effects on neighboring states. Aggregated predictions from the state-level model also differ modestly from stand-alone aggregate model (Kilian, 2009). The aggregated state-level model implies that the recent (2005-2016) decline in U.S. dependence on foreign oil reduced aggregate sensitivity to exogenous supply shocks by more than a third.

Working Paper

UHERO County Forecast: Healthy county economies face growing pains

Hawaii’s four counties are enjoying robust economic conditions and look set for continued growth. Tourism keeps surprising to the upside, even as visitor numbers strain infrastructure and communities. Record low unemployment will limit job growth but bring welcome income gains. Kauai flooding and the Kilauea eruption remind us that the counties remain vulnerable to adverse developments, whether at home or beyond our shores.

This analysis and near-term forecast is available as a service to the public. For more detailed multi-year forecasts, subscribe to UHERO's Forecast Project.



Who are Driving Electric Vehicles? An analysis of factors that affect EV adoption in Hawaii

This study uses data on EV registrations by zipcode in Hawaii to analyze a variety of demographic and transportation factors that might affect EV adoption. After controlling for population and gasoline prices, zip codes with higher income and educational attainment are associated with higher levels of EV adoption. Longer commute times also influence EV adoption – which is somewhat surprising given the relatively limited travel distances of an island geography. This suggests that there may be strong risk-aversion associated with EV range anxiety as well as prompts further study of the effect of trip-chaining on EV purchase decisions.

Working Paper

Variable Pricing and the Cost of Renewable Energy

On a levelized-cost basis, solar and wind power generation are now competitive with fossil fuels, and still falling. But supply of these renewable resources is variable and intermittent, unlike traditional power plants. As a result, the cost of using flat retail pricing instead of dynamic, marginal-cost pricing--long advocated by economists--will grow. We evaluate the potential gains from dynamic pricing in high-renewable systems using a novel model of power supply and demand in Hawai'i. The model breaks new ground in integrating investment in generation and storage capacity with chronological operation of the system, including an account of reserves, a demand system with different interhour elasticities for different uses, and substitution between power and other goods and services. The model is open source and fully adaptable to other settings. Consistent with earlier studies, we find that dynamic pricing provides little social benefit in fossil-fuel-dominated power systems, only 2.6 to 4.6 percent of baseline annual expenditure. But dynamic pricing leads to a much greater social benefit of 8.5 to 23.4 percent in a 100 percent renewable power system with otherwise similar assumptions. High renewable systems, including 100 percent renewable, are remarkably affordable. The welfare maximizing (unconstrained) generation portfolio under the utility's projected 2045 technology and pessimistic interhour demand flexibility uses 79 percent renewable energy, without even accounting for pollution externalities. If overall demand for electricity is more elastic than our baseline (0.1), renewable energy is even cheaper and variable pricing can improve welfare by as much as 47 percent of baseline expenditure.

Working Paper

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