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Saturday, July 23, 2011
PUC grants HECO $38M Rate Increase
By News Release @ 1:20 AM :: 5020 Views :: Energy, Environment

Rate increase supports grid modernization and clean energy

HONOLULU, July 23, 2011 /PRNewswire/ -- Hawaiian Electric Company (HECO), subsidiary of Hawaiian Electric Industries, Inc. (HEI) (NYSE: HE) announced today that the Hawaii Public Utilities Commission (PUC) issued an interim decision in Hawaiian Electric's 2011 rate case. It will result in a $3.31 a month increase for a typical Oahu residential customer using 600 kilowatt-hours a month effective July 26, 2011. The 2.2% increase ($38 million in annual revenues) will help pay for approximately $80 million in capital improvements such as grid modernization and other projects that support Hawaii's transition to clean energy and make electric service more reliable.

Today's interim decision is consistent with a settlement reached earlier this month between Hawaiian Electric, the Hawaii Division of Consumer Advocacy and the U.S. Department of Defense, who are parties in this proceeding. That settlement pared back Hawaiian Electric's original request to 2.2%, or $38 million, after netting out $15 million already being recovered through a surcharge on bills. Hawaiian Electric's original request, filed in July 2010, was for a 6.6% increase ($113.5 million in revenues).

"We know these are still difficult economic times, but these investments are modernizing our electric system to improve service and integrate more clean energy. Currently, more than half of a customer's electric bill goes to pay for fuel oil. As we strengthen our grid and add more renewable energy, our customers will see lower and more stable electric bills than if we continue to rely so heavily on fossil fuels," said Robbie Alm, Hawaiian Electric executive vice president.

The decision is one step in the ratemaking process. The PUC will continue to review details of the request and will later issue a final decision. The timing and amount of that final decision is at the discretion of the PUC. If a lower final amount is approved, the difference will be refunded to customers with interest.

The increase will help cover the cost of programs and projects which will help reduce Hawaii's dependence on fossil fuels and further improve reliability. These include:

  • New programs to increase the amount of renewable energy purchased from independent power producers;
  • Upgrades to Hawaiian Electric's existing generation facilities to allow for expanded use of biofuels, reduced use of oil by increasing the efficiency of existing generating units, and reduced emissions, including greenhouse gasses;
  • A comprehensive modernization program for Hawaiian Electric's existing transmission and distribution system to ensure service reliability and manage future operating and maintenance costs;
  • Modifications to the Kahe Power Plant generating unit #3 to test the use of biofuels in existing generating units;
  • Distribution projects to serve new Department of Defense facilities;
  • Power plant instrumentation, control, and boiler work to increase reliability and operating flexibility of aging existing generating units;
  • Investments in overhead and underground cables, transformers, poles, meters, switches, and other facilities to maintain reliable service and fulfill new customer service requests.

Hawaiian Electric has made a concerted effort to control costs, increase efficiency and reduce spending wherever possible. For example, the company has re-bid and re-negotiated contracts with vendors for a wide variety of supplies and services, implemented electronic payment systems, and increased centralization of processes.

Hawaiian Electric's last interim rate increase was a 5.7% interim increase, the majority of which went into effect in August 2009. The PUC reduced the increase to 5.1% when it issued a final decision in that case in December 2010.

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