Categorized | Business, Energy

PUC issues rate decisions for the Hawaiian Electric Companies

MEDIA RELEASE

On May 31, 2013, the state Public Utilities Commission (PUC) issued decisions for Maui Electric’s 2012 rate case and the Hawaiian Electric Companies’ decoupling filings.

Decoupling Adjustments

The PUC also approved the annual revenue decoupling adjustments for the Hawaiian Electric utilities. First approved in Hawaii in 2010, decoupling is a regulatory model adopted by many states that supports efforts to increase integration of renewable energy and encourage higher levels of energy efficiency.

Decoupling breaks the traditional link between utility revenues and sales of electricity. It encourages the utilities to help customers lower their electricity use and their bills and has helped facilitate the growth of clean energy throughout the state.

As of the end of 2012, almost 14 percent of the Hawaiian Electric Companies’ electricity came from renewable energy, already close to the state’s next milestone goal of 15 percent by 2015. Hawaii is also ranked third in the nation in installed photovoltaic capacity per capita.

“With more than 50 percent of electric bills going to pay for fuel costs, we must reduce our dependence on oil to lower long-term energy costs for our customers. That means making the upfront investments in clean energy and strengthening our grids to reliably accept as much clean energy as possible,” said Robbie Alm, Hawaiian Electric executive vice president. “We are also pursuing other lower-cost options such as liquefied natural gas.”

The decoupling adjustments, effective June 1, 2013, will increase typical residential monthly bills as follows, based on the amount of energy use shown:

* Oahu: 2.8 percent, or $5.53 (600 kilowatt-hours)

* Hawaii Island: 1.6 percent, or $3.17 (500 kilowatt-hours)

* Maui, Molokai, and Lanai: The estimated bill impact for Maui Electric customers is being recalculated as a result of the 2012 rate case final decision. The impact is expected to be largely offset by lower rates implemented as a result of the rate case decision.

The actual bill impacts of the decoupling adjustments will vary by customer type and actual electricity usage.

This year’s decoupling adjustments will allow the Hawaiian Electric Companies to begin recovering important capital improvements made from 2011 to 2013.

Examples of these improvements include the following:

* Interconnection projects and other work to integrate more renewable energy from projects such as the Kawailoa wind farm, Auwahi Wind farm, Kaheawa Wind II wind farm, H-POWER waste-to-energy plant, Kapolei Sustainable Energy Park, and the Sunpower International project

* Replacements of and upgrades to infrastructure for more reliable service, including completion of the East Oahu Transmission Project, a generating unit overhaul at the Maalaea Generating Station, transmission structure replacements, preventive and corrective replacements to overhead and underground equipment, fuel tank improvements, and other upgrades to improve operations and efficiency

* Interconnections and equipment to serve new customers

* Upgrades for compliance with environmental, safety and other regulations

Decoupling doesn’t provide the Hawaiian Electric Companies with a guaranteed amount of profit. Many factors can cause them to earn less than the amount allowed by the PUC.

The PUC also announced plans to conduct a review of the decoupling mechanism. This type of review was provided for by the PUC when it originally approved decoupling in 2010.

This is a logical step now that all three of the Hawaiian Electric utilities have implemented decoupling. The Hawaiian Electric Companies will fully participate in this process.

Maui Electric 2012 Rate Case

The PUC’s final decision in Maui Electric’s 2012 rate case will result in a refund for Maui County electric customers.

The amount approved in the PUC’s final decision is $7.8 million less than the interim increase approved last year. In its final decision the PUC authorized a 1.29 percent increase in annual revenues, or $5.3 million, for customers on Maui, Molokai and Lanai. The earlier interim increase of 3.16 percent, or $13.1 million, has been reflected in customer bills since June 2012.

The difference, including interest, will be refunded to customers in the form of a credit on electric bills. The estimated refund, with interest, is $8.1 million, resulting in a one-time refund in the range of $39 to $49 for a typical Maui Electric residential customer.

Maui Electric must perform detailed calculations to determine the exact amount of the refund. Those calculations must be submitted to the PUC for approval before the refund may be issued to customers.

Former customers during the time the higher interim increase was in effect will also be eligible for the refund. Instructions will be publicized later for those customers. Current Maui Electric customers do not need to take any action to receive the credit.

“We understand the hardship on our customers from high energy prices. That is why we are working hard to replace high priced oil through the use of clean energy,” said Sharon Suzuki, Maui Electric president.

Maui Electric has made significant progress in integrating increasing amounts of clean energy. Currently, more than 20 percent of the electricity used by Maui Electric customers comes from renewable resources.

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