Why the high cost of operation for Hawaiian electric industies

The high cost of operations for Hawaiian Electric Industries can be attributed to several factors: 1. **Fuel Costs**: A significant portion of the cost of operations for Hawaiian Electric Industries is due to the high cost of fuel, which is a major contributor to the overall energy mix in the state. Hawaii relies heavily on imported fossil fuels, particularly oil, which is refined locally but still results in a high cost of procurement. 2. **Purchasing Energy Costs**: The cost of purchasing energy from independent power producers and the associated costs of operation and maintenance for these power sources also contribute to the overall cost of operations. 3. **Transmission and Distribution Costs**: The company incurs costs related to the maintenance and expansion of transmission and distribution lines to ensure reliable electric service, which can be substantial, especially for an island state with a dispersed population. 4. **Regulatory Costs**: Hawaiian Electric Industries must manage regulatory requirements and comply with decoupling mechanisms such as the Energy Cost Recovery Clause, Purchased Power Adjustment, IRP Cost Recovery, Renewable Energy Infrastructure Cost Recovery Provision, and Revenue Balancing Account Adjustment, which can vary on a monthly or annual basis and increase overall costs. 5. **Operations and Maintenance Expenses**: Higher operations and maintenance expenses, including costs associated with wildfire response and other maintenance activities, can increase the overall cost of operations. 6. **Interest and Return on Investment**: The company must pay interest and return on investment to investors, which is included in the cost of operations. 7. **Renewable Energy Initiatives**: The cost of transitioning to renewable energy sources and the associated infrastructure development can increase the overall cost of operations, as seen in the investment in the Hawaii Clean Energy Initiative. In summary, the high cost of operations for Hawaiian Electric Industries is influenced by a combination of fuel and purchasing costs, transmission and distribution expenses, regulatory requirements, operations and maintenance expenses, interest and return on investment, and the cost of transitioning to renewable energy. These factors, when considered together, create a complex environment that affects the overall cost of operations for the company.