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Thursday, April 02, 2015
PUC: Decoupling Boosts Electric Rates--'Adjust Revenue' up by 229% 'Without Review'
By News Release @ 8:49 PM :: 4846 Views :: Energy, Cost of Living

MODIFYING DECOUPLING MECHANISMS AND ESTABLISHING BRIEFING SCHEDULE

From PUC Decision and Order Docket # 2013-0141, March 31, 2015 (excerpts)

... decoupling mechanisms separate a utility's revenues from its sales. Thus, when sales decline due to energy efficiency measures or customer installations of solar and other types of renewable energy, the utility's revenues are protected. In theory, this means that the utility should be indifferent to energy efficiency programs or interconnection of customer-sited renewable energy projects as its revenues will not decline even though its sales might decline as a result of those projects....

More specifically, as the HECO Companies' decoupling mechanisms have operated over the past few years, the commission has observed that ever-increasing amounts of so-called baseline capital projects have been flowed through the decoupling mechanism. These projects are associated with the maintenance and operation of the grid and, where the project costs are less than or equal to $2.5 million, the costs - for all projects in a given annual period - are automatically passed through the Revenue Adjustment Mechanism ("RAM") without prior commission review.

To be sure, these costs may later be reviewed by the commission in a rate case that occurs one or more years after they are recovered from ratepayers. However, given the rapid increase in the overall level of these costs - the baseline project costs have doubled since the inception of the RAM, and are projected to triple or quadruple in the near future(2) - it is clear to the commission that the RAM mechanism must be modified to provide sufficient timely regulatory review and appropriate incentives to the HECO Companies to contain these costs consistent with safe and reliable utility service. Stated differently, the commission concludes that the current RAM mechanism requires a "tune up" to provide proper incentives to encourage the HECO Companies to prudently manage these costs.

The RAM was not originally intended, nor is it reasonable to continue to function, as a mechanism by which the HECO Companies' unprecedented anticipated levels capital expenditures are allowed to enter utility rate base without effective, timely regulatory review. Without approved integrated resource plans. Power Supply Improvement Plans ("PSIPs"), or any other clear, well-vetted strategic plans, and without timely rate cases to provide normal opportunities for periodic review, the Commission has scant assurance that the extensive planned capital expenditures over multiple years are prudent and affordable. The RAM was certainly not intended to serve as a means to circumvent appropriate and timely regulatory review of sizeable utility expenditures or as a substitute for comprehensive resource plans....

The RAM mechanism shall be modified to include a cap that shall be applied to the total annual RAM Revenue Adjustment. The cap shall limit the automatic component of RAM adjustment increases to an amount equal to or lower than the Gross Domestic Product Price Index ("GDPPI")....  (That's nice, but it uses the current elevated capital expenditures as a baseline from which to grow.)

... the commission will not adopt Performance Based Ratemaking at this time.... (An even bigger scam designed to tie HEI rate increases to its support for solar and wind.)

...the Order limits the amount of unapproved capital project expenditures that can automatically be incorporated into effective rates through the RAM without timely prior regulatory review. ...

read ... PUC Decision and Order

(2)--According to the Companies' 2014 decoupling submittals, for 2013, HECO's baseline expenditures increased from $94 million in 2009 to $254 million, MECO's baseline expenditures increased from $33 million in 2009 to $55 million, and HELCO' s baseline expenditures increased from $34 million in 2009 to $59 million.

Do the math -- Since decoupling, total 'baseline expenditures' increased 229%--from $161M to $368M.

2014: Decoupling: How HECO's "Money Printing Machine" Causes High Electric Rates -- Editor's Note: Parties 'Promoting Decoupling' on the docket include the Blue Planet Foundation and the Hawaii Solar Energy Association as well as HEI itself

April 2, 2015: HEI Agrees to Stop Hiding 'Performance Metrics'

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