Why LNG Won’t Change Hawaiʻi Electric Bills

Estimated reading time: 5 minutes · Last updated: 2026-08-24

Hawaiʻi faces a decision about whether to build multibillion-dollar infrastructure to import liquefied natural gas for Oʻahu’s power plants. Analysis from the Hawaiʻi Natural Energy Institute shows that, once infrastructure costs and correct accounting are applied, switching to LNG would move retail electricity bills by only about 1 cent per kWh — roughly 1–3 percent — under the study scenarios. That small impact means cost alone should not be the deciding factor. Policymakers need to weigh reliability, lifecycle emissions, refinery effects and contract terms instead of relying on headline percentage claims.

Why headline savings diverge so widely

Three different public studies have produced starkly different headline numbers for how LNG would affect Hawaiʻi electric bills. The Hawaiʻi State Energy Office (HSEO) initially circulated projections of greater-than-15 percent bill reductions and 40 percent CO2 cuts in January 2025; JERA’s March 2026 submission proposed up to $170 million per year in system production savings and a 20 percent household-bill reduction; HNEI ran its own modelling after HSEO’s errors were flagged and reached far smaller bill impacts.

The core technical mistake that created the largest gaps is how production-cost savings were converted into retail-rate changes. HSEO applied per‑MWh savings from LNG generation to every MWh sold by the utility, including output from renewables. When the same per‑MWh savings are applied only to the generation that would actually shift to LNG, the studies align much more closely. In other words, incorrect allocation of generation savings to total sales inflates headline rate impacts.

How big the real bill impact is

HNEI’s modelling, which compared more than 70 scenarios for Oʻahu between 2030 and 2045, shows that total system production savings can be substantial in dollar terms but translate into modest retail changes. Using HSEO’s more optimistic timeline and fuel-price assumptions, HNEI found total system savings of about $730 million versus HSEO’s $651 million, yet the ratepayer effect works out to roughly 1 cent per kWh — about 1–3 percent of a typical bill.

JERA’s $170 million annual production-savings claim is real as an operational figure in its submission, but spreading that amount across projected utility sales produces about a 6 percent retail reduction, not the 20 percent JERA cited. HNEI also shows that these modest retail gains evaporate quickly if projects face delays or cost overruns, making the net effect uncertain and small relative to the scale of investment.

Which non-cost considerations matter most

Because direct bill impacts are small, decision-makers should prioritise other concrete trade-offs. First, reliability: HNEI’s grid work indicates Oʻahu will need some form of firm generation beyond solar, wind and batteries. Hawaiian Electric Co.’s proposed repowering at Waiau and the Pearl Harbor projects and the proposed Barbers Point plant would all deliver comparable system reliability regardless of whether the fuel is oil or LNG.

Second, emissions: LNG burns cleaner than oil at the point of combustion, but HSEO’s own analysis shows that much of the projected emissions decline comes from higher-efficiency new plants rather than the fuel switch. Lifecycle factors — local re‑gasification emissions and methane leakage in the supply chain — reduce LNG’s greenhouse‑gas advantage. Third, fuel diversity and price stability: many LNG contracts remain oil‑linked and thus exposed to similar geopolitical price swings as oil. Fourth, refinery impacts: Hawaiian Electric is an anchor customer for PAR Hawaiʻi’s refinery, and materially reducing oil purchases could affect local supplies of gasoline and aviation fuel; that operational exposure deserves deeper analysis.

How delays, contracts and flexibility shape outcomes

Two practical points determine whether an LNG project helps or hurts ratepayers. One is execution risk: HNEI emphasises that project schedule slips or cost overruns can wipe out the modest retail savings the studies identify. The other is contractual detail: long-term supply contracts, price‑indexing clauses and who bears capital risk will dictate whether operational savings flow to ratepayers or to other parties.

Finally, future fuel flexibility matters. HSEO and JERA highlight potential reuse of LNG infrastructure for hydrogen, but HNEI notes that any new repowered plant could be made fuel‑flexible and that the State’s 100 percent renewables target for 2045 leaves open several post‑2045 fuel paths. Given small near‑term retail impacts, retaining optionality and avoiding stranded assets should be central to any commitment.

Case for and against prioritising LNG

The bottom line

HNEI’s analysis makes a clear numerical point: the retail electricity‑bill effect of an LNG conversion for Oʻahu is small once the accounting is done correctly. That does not end the debate, but it reframes it. With roughly $2 billion in investment at stake and more than two‑thirds of that tagged for new plant capacity that would be needed regardless of fuel, the decision should rest on reliability needs, lifecycle emissions, contract design and potential impacts on the local refinery — not on inflated headline savings. Lawmakers and regulators should demand full contract transparency, lifecycle accounting and contingency planning before committing public funds.

What to watch

• Watch for final decisions on repowering projects at Waiau and Pearl Harbor; no date has been set.
• Watch for a state decision on the proposed Barbers Point LNG terminal and associated permits; no date has been set.
• Watch for published contract terms from any selected LNG supplier, including price‑indexing and length; no date has been set.