HECO Says ‘Aloha’ to Old Retail Base Rates; Requests $106M Increase from PUC

by | Dec 20, 2016

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Hawaiian Electric’s (HECO’s) Oahu customers will be assessed their first base rate increase in six years, if the utility’s December 16 proposal (Docket No. 2015-0170) to the state Public Utilities Commission (PUC) is approved.

The utility said that its rate request – which would increase company revenues by $106 million –would help to pay for system upgrades to increase reliability, improve customer service, and interconnect more renewable energy with the local grid.

That would work out to a hike of about 6.9 percent, or $8.71 per month – for a new total of $141.03 for the average residential customer.

In explaining the need for the increase, Hawaiian Electric CEO Alan Oshima noted that the utility had spent big bucks in the past few years on hardening the grid. “Since 2011,” Oshima wrote to ratepayers, “we’ve spent more than $900 million replacing and upgrading equipment to improve the efficiency and resilience of the power grid that serves our island.”

What’s more, he said, “The number of approved rooftop systems on Oahu has gone from 5,000 to nearly 54,000. Part of our request helps pay for skilled personnel, specialized equipment, and hands-on research to keep service safe and reliable with the growing amounts of variable renewable energy on our system.”

And there are other growing challenges like cybersecurity and customer service, Oshima explained, asserting that, “Over the past six years, our company has absorbed a large portion of these increased costs without passing them on to [the ratepayers].”

Still, he acknowledged that customers would feel the pain: “I understand the impact of higher electric bills on families and businesses. A big part of my job is ensuring that our company is run as efficiently and cost-consciously as possible so that reliable electricity remains affordable for everyone,” Oshima said.

As part of the filing, Hawaiian Electric is proposing new benchmarks to measure its performance and link certain revenues to goals in key areas, including customer service, reliability, and communication for the rooftop-solar interconnection process.

Hawaiian Electric rates are “decoupled.” According to the Alliance to Save Energy, decoupling refers to policies designed to disconnect utility profits from total electric or gas sales, so that power companies do not have an incentive to try to sell more energy. Decoupling modifies traditional ratemaking practices to adjust rates frequently – ensuring that utility revenue is neither more nor less than what is needed to cover costs and a fair return.

PUC Chairperson Randy Iwase told The Honolulu Star-Advertise that the commission would be busy over the next few months, because it has four rate cases to review, including one proposed by Hawaii Electric Light on the Big Island. On September 19, HELCO — a sister company of HECO– filed its own rate case application.

The PUC has to issue a decision nine months from the day HECO filed the application to review.

“We can issue an interim decision if we are not going to be able to issue a decision in that period of time,” Iwase told the local news outlet.

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