Electric company eyes rate increase

Oahu and Maui customers will face costlier power bills if HECO gets the OK

Hawaiian Electric Co., still awaiting final approval on the 3.3 percent interim rate increase it was granted in September 2005, has filed a notice of intent with the state Public Utilities Commission that it intends to boost rates on Oahu again.

Maui Electric Co., a subsidiary of HECO that serves Maui, Molokai and Lanai, also filed a similar notice of intent to raise rates.

HECO spokeswoman Lynne Unemori said both companies are still calculating the amount of the requests, and have not decided yet when they will file their rate-case applications.

"We (HECO) have been incurring much higher operation and maintenance costs for the electrical system to maintain reliable service and we've made some significant capital investments since the last case," Unemori said. "That would be the same overarching reason for the Maui Electric case as well."

Hawaii Electric Light Co., a HECO subsidiary that serves the Big Island, is still awaiting a PUC decision on the 9.2 percent rate-increase request it filed for in May. A decision on that case is expected no earlier than the spring, Unemori said.

HECO and MECO filed their notices of intent with the PUC on Sept. 22; the filings were disclosed by parent company Hawaiian Electric Industries Inc. in a quarterly filing last month with the Securities and Exchange Commission. The Oct. 15 Hawaii earthquake and resulting power outages occurred after the filing.

"We've been evaluating a rate-increase request long before the earthquake occurred," Unemori said. "Also, any increase request must be based on what must be considered a typical year anyway, and if there were one-time costs related to taking care of the earthquake, like maintenance costs, they would not be included. I think the significance of the October earthquake really drove home how critical electrical power is in both our homes and our businesses."

HECO, which serves about 292,000 customers, hadn't sought a rate increase for a decade until it filed an application in November 2004 for a 7.3 percent increase, worth additional annual revenue of $74.2 million. That rate-increase request was later bifurcated, with about $40 million related to energy conservation programs stripped out and transferred to a new docket that is being looked at separately by the PUC. In September 2005, the PUC granted HECO an interim rate increase of 3.3 percent, worth $41.1 million in annual revenue. The PUC is still studying whether to make that increase permanent.

MECO, which has about 64,000 customers, 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.

HELCO, with about 74,000 customers, applied in May 2006 for a 9.2 percent increase, worth $29.9 million in annual revenue, that was tiered with a set of rates to award lower payments to people who conserve energy and to require higher payments for bigger power users.

In the recent HECO and MECO intent notices, both utilities said their financial returns are "expected to be lower than that required to provide a fair return ... unless a rate increase is obtained."

Unemori said any interim decision likely would not become effective until roughly a year from when the cases are filed.

"It will be a long time before there would be a potential impact on customers," she said.