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HECO gets approval for 2.2% rate hike

The higher amount is effective Tuesday and will be added to a June increase

By Alan Yonan Jr.

LAST UPDATED: 11:36 p.m. HST, Aug 5, 2011

Hawaiian Electric Co. customers will pay 2.2 percent more, or $3.31, for a typical customer's monthly bill, beginning Tuesday.

The state Public Utilities Commission tentatively approved the rate hike Friday, reducing the size of the 6.6 percent rate hike originally sought by HECO last year.

The interim rate hike is consistent with a settlement reached earlier this month among HECO, the state Consumer Advocate's office and the Department of Defense, who are all parties in the proceeding.

The 2.2 percent increase will generate $38 million in annual revenue for the utility and help pay for approximately $80 million in capital improvements such as grid modernization and other projects, HECO said in a news release.

Hawaiian Electric's original 6.6 percent rate hike request, filed in July 2010, would have added $113.5 million in revenue.

Separately, HECO on June 1 began collecting an additional $15 million from ratepayers as part of its decoupling program launched last year to encourage the development of renewable energy and energy conserva- tion. Combined with the interim rate hike, customers will pay 3.1 percent more on their bills.

"We know these are still difficult economic times, but these investments are modernizing our electric system to improve service and integrate more clean energy," said Robbie Alm, Hawaiian Electric executive vice president, in the news release. "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."

The PUC will continue to review details of the rate hike request and issue a final decision at a later date. If the PUC approves a final increase that is less than the 2.2 percent interim hike, the difference will be refunded to customers with interest.

Also Friday, Maui Electric Co. filed a request with the PUC to raise rates by 6.7 percent next year for its customers on Maui, Lanai and Molokai. If approved the request would result in a revenue increase of $27.5 million.

Any increase, if granted, would not go into effect until mid-2012 at the earliest, MECO said. The monthly increase would vary by customer depending upon customer category and the amount of electricity used.

Based on the tiered rate structure approved by the PUC in January, which rewards customers who use less electricity with lower rates, a typical bill for residential customers on each island would increase by approximately $13 a month.

The bill for a Maui customer using 600 kilowatt-hours a month would rise to $243. For customers on Molokai and Lanai using 500 kilowatt-hours a month, bills would increase to $243 and $241, respectively.

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