Maui Electric agrees to 3.7 percent rate hike
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Maui Electric Co. is one step closer to raising its rates.
The utility, a subsidiary of HEI Industries Inc., has reached an agreement with the state Division of Consumer Advocacy on an interim 3.7 percent rate increase expected to generate an additional $13.2 million in annual revenue.
The interim increase must still be approved by the state Public Utilities Commission, which could happen later this month or in January. The funds will largely go toward the addition of two units in recent years at the Maalaea Generating Station.
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Maui Electric Co. customers may see their electric bills jump next year.
The utility, which serves 66,211 customers on Maui, Molokai and Lanai, has reached an agreement with the state Division of Consumer Advocacy on an interim 3.7 percent rate increase expected to generate an additional $13.2 million in annual revenue.
MECO was unable to provide how much the increase would boost monthly bills because it is awaiting approval from the state Public Utilities Commission. The PUC is expected to rule on the increase either later this month or in January, said Catherine Awakuni, executive director of the state Division of Consumer Advocacy. The PUC would decide at that time when the rate increase would go into effect.
MECO notified the PUC in September 2006 that it would be seeking an increase. In February, it applied for a 5.3 percent rate increase, which it lowered in September to 5.1 percent. The utility reached a settlement this month with the consumer advocacy division to reduce its rate-increase request to 3.7 percent.
The decrease was largely based on a $4.75 million difference related to MECO's cost of borrowing, Awakuni said. The division initially suggested a rate that would boost revenue by $8.9 million, she said.
MECO spokeswoman Kaui Awai-Dickson said the rate increase is necessary for the addition of two units in recent years at the Maalaea Generating Station. It also would cover other investments to replace and upgrade aging equipment and help manage higher operation and maintenance costs, the company said.
MECO last applied for a rate increase in January 1998, when it asked for an 11.9 percent increase, worth $16.4 million in annual revenue.
An interim rate increase of 8.5 percent, worth $11.7 million, was granted in December 1998 but lowered to 8.2 percent, or $11.3 million, in April 1999 when the PUC issued its final order. MECO awarded its customers refund credits, including interest, for the difference in the interim and final rates during that four-month period.
The rate increase request by MECO follows a 7.58 percent interim rate increase by Hawaii Electric Light Co. approved in April and a 4.96 percent interim increase by Hawaiian Electric Co. in October. HELCO serves about 74,000 customers on the Big Island, while HECO's increase affects 293,000 customers on Oahu.