In the first phase of a plan to significantly reshape how Hawaiian Electric Co. delivers power to some 450,000 customers statewide, the utility has unveiled a $205 million proposal to upgrade its electric grid over six years.

The draft proposal represents a big reduction in cost and scope from a previous $736 million proposal for a sweeping grid modernization.

Utility regulators rejected the earlier proposal, saying the benefits to ratepayers didn’t justify the costs. A common complaint was that the plan didn’t provide an adequate vision for mushrooming distributed resources like residential rooftop solar systems, an increasingly important source of electricity.

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The Public Utilities Commission cited the need to accommodate about 77,000 solar systems set up by HECO customers.

The state’s goal is to produce 100 percent of its energy from renewable resources by 2045, and a key component is distributed energy resources. The PUC made clear it wants a grid that can accommodate more such resources.

“The power grid must become a ‘plug-and-play’ platform that integrates an ever-growing set of DER technologies,” the PUC said.

HECO is scheduled to submit a final revised plan to regulators in August. In the meantime, stakeholders are studying the draft document to glean what effects it could have on consumers, as well as producers of distributed energy resources.

“Hawaii already pays the highest rates in the country by far,” said Robert Harris, a spokesman for the Alliance for Solar Choice, a trade association for solar companies. “Any time the utility proposes to spend hundreds of millions of dollars, there should be a careful review to determine whether this is actually in the public interest and not just a way to make rates go even higher.”

Hawaii’s residential rate increased 12.6 percent to 30.3 cents per kilowatt hour in April 2017 from 26.9 cents the previous April, according to the U.S. Energy Information Administration. Hawaii’s rate was more than twice the 14.1 cents paid by California residents and more than three times the 9.4 cents paid by Washington residents, the agency reported. The national average was 12.7 cents per kilowatt hour.

HECO’s draft proposal is not yet part of a formal proceeding before the PUC, said Delmond Won, the commission’s executive officer. Only when HECO submits a final draft in late August will the document become part of an official PUC docket, Won said.

In the meantime, HECO plans to meet with stakeholders and the public to discuss the grid modernization and is taking public comments on it through Aug. 9.

HECO’s plan calls for a more modest roll-out than the previous plan, with a number of ideas focused on the distributed solar systems that the PUC wants to see. For instance, the company proposes to set up high-tech “smart” electric meters for customers with private rooftop solar or on heavily used circuits, rather than system wide.

HECO also plans to rely on gadgets known as advanced inverters, which can help regulate the flow of electricity between rooftop solar systems and the grid to prevent overloads. Also, to help maximize circuit capacities for rooftop solar and other distributed resources, HECO proposes to expand the use of voltage management tools, especially on circuits with heavy solar penetration.

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“Our grids were originally designed for one-way flow of electricity to customers from a handful of power plants,” Colton Ching, HECO’s senior vice president for planning and technology, said in a statement. “We can use advanced technology to transform these grids for two-way power flow from nearly 80,000 privately owned rooftop solar systems today and tens of thousands more in the future, along with thousands of energy storage systems that will be part of our grids by 2045.”

The draft plan is an improvement on HECO’s earlier proposal, said Kyle Datta, general partner with the Ulupono Intitiative, a Hawaii-based social investment firm focused on renewable energy, local food production and waste management.

Ulupono was founded by Civil Beat publisher, Pierre Omidyar, and his wife, Pam Omidyar.

“It is an improvement from the previous effort in that it focuses on building on fundamentals that underly the grid modernization and grid expansion,” said Datta, who has previously worked on utilities and energy issues as a managing director of the Rocky Mountain Institute and the consulting firm Booz Allen Hamilton.

Before unveiling the plan, HECO held numerous presentations involving stakeholders as well as focus groups with customers. Datta said the efforts appear to be more than window dressing.

“From a process perspective, they’ve sincerely tried to get more input from their stakeholders and their customers,” Datta said.