Categorized | Business, Energy

PUC approves HELCO rate increase and decoupling mechanism

MEDIA RELEASE

PUC Decision and Order for HELCO (PDF file)

(HILO, HAWAII) The Hawaii Public Utilities Commission (PUC) yesterday issued a final decision for Hawaii Electric Light Company’s (HELCO) 2010 rate case. The decision may result in a small reduction in electric rates for Hawaii Island electric customers going forward.

HELCO must still perform the detailed calculations to implement the rate adjustment, which must be approved by the PUC. The Hawaii State Office of Consumer Advocacy will also review the calculations. Previously, the PUC had approved a 1.74% interim increase, or $6 million in revenues, which has been reflected on electric bills for more than a year, since January 2011.

The 2010 rate case, filed in 2009, was requested to help pay for more than $200 million in capital improvements that are already serving customers. Some examples include HELCO’s steam generating unit at Keahole, which generates power using waste heat from two existing generators rather than using oil, and two West Hawaii transmission line upgrades. The rate case also covered increasing operations and maintenance costs for the island’s electric system. HELCO’s original request was for a 6% increase, or $20.9 million in revenues.

“We understand high electric bills are creating an even heavier burden on our customers. These investments will enable us to improve service, make better use of clean energy, and reduce our dependence on imported oil. Currently, more than half of a customer’s electric bill goes to pay for oil,” said Jay Ignacio, HELCO president.

In addition, the PUC decision implements a new method for setting future electric rates called “decoupling.” Decoupling is one of many major policy steps intended to reduce Hawaii’s dependence on imported oil.

Decoupling breaks the historic link between electricity usage and utility revenues. This allows utilities to better support increased energy efficiency, conservation and increased use of renewable energy resources. This helps to reduce the amount of fuel oil used to produce electricity. Individual electric bills will still be based on the amount of electricity a customer uses, so customers will still have an incentive to conserve and use electricity efficiently.

Decoupling will have no immediate impact on customer bills. Any annual adjustment, after review by the Consumer Advocate and PUC, is expected to be modest and begin no earlier than this summer.

Hawaii 24/7 file video of the PUC in Hilo and Jay Ignacio explaining decoupling

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