LNG Plan Puts Hawaii's Electricity Customers at Risk

Hawaii is considering a multibillion-dollar commitment to liquefied natural gas (LNG) to replace oil in generating electricity on Oahu, but this plan poses significant risks. LNG infrastructure construction would take years and could be delayed or exceed budget estimates, mirroring the experience with other large energy projects.

Another major uncertainty is the price of LNG. The global supply route through the Strait of Hormuz has been disrupted, causing sharp price increases in Asia and Europe, and it's impossible to predict what LNG will cost in 2030 or subsequent years.

The financial risk ultimately falls on Hawaiian Electric's customers if the costs are higher than projected. Even modest delays or cost overruns could eliminate the projected savings of 1-2 cents per kilowatt-hour, which is a diluted estimate considering that fuel accounts for only about 35% of an average electricity bill.

The crucial question is whether these modest savings are worth making a multibillion-dollar commitment to long-term LNG dependence. If the assumptions behind those savings prove wrong, the downside could fall largely on Hawaiian Electric's customers, potentially increasing their electricity bills instead of reducing them.