Hawaiian Electric rates will rise

Electricity bills for most Hawaii residential customers will increase by nearly $5 a month, starting immediately.

On Friday the state Public Utilities Commission approved the increase requested by Hawaiian Electric Co., the Hawaii Electric Light Co. on Hawaii island, and Maui Electric Co. as part of an annual adjustment designed to compensate the utility for increased capital expenditures and declines in sales over the past year.

An Oahu household using 600 kilowatt-hours a month will see its bill rise by $4.89. That increase will help pay for more than $200 million in capital proj­ects placed in service on Oahu in 2013 and 2014, HECO said.

On Hawaii island the increase will be $4.71 for a household using 600 kilowatt-hours a month, and for Maui County it will be $4.90 a month for a household using 600 kilowatt-hours a month. The usage per household varies by island and is typically lower on Hawaii island, Lanai and Molo­kai.

The PUC refers to the increase as the "annual sales decoupling tariff." Decoupling, which began in 2011, is structured to encourage the development of renewable energy and energy conservation by eliminating the economic incentive on the part of the utility to sell more electricity. Decoupling, or breaking the link between sales and total electric revenue, essentially guarantees utilities enough revenue to cover their fixed costs even if their electricity sales decline.

Hawaii residents pay the most in the nation for electricity. They paid an average of 38.5 cents per kilowatt-hour for electricity in March, compared with the national average of 12.3 cents, according to the most recent data from the U.S. Energy Information Administration.

"We really do know that any increase in electric bills is difficult for our customers, and that is why we’re working so hard to add more renewable energy and reduce the expensive fuel costs that are reflected in electric bills," HECO spokes­woman Lynne Une­­mori said.

"If you add it all up, more than 70 percent of the electric rate goes to pay for fuel-related costs directly or indirectly. So that is the lever that we, as a company and as a state, really need to pull to bring down costs for our customers. That is why we’re also looking at other clean fuel alternatives like liquefied natural gas."

The Hawaii Clean Energy Initiative, adopted by the state in 2008, set a goal that 40 percent of the state’s electricity will be generated from renewable resources by 2030.

At the end of 2013, 18 percent of the Hawaiian Electric’s sales were made using renewable sources, surpassing the company’s goal of 15 percent by 2015, Connie Lau, chief executive officer of parent company Hawaiian Electric Industries Inc., said earlier this month on the company’s earnings conference call.

"We share the PUC’s vision that utility-scale and customer-sited distributed generation will increasingly help us transition from fossil fuel to renewable energy," Lau said. "For the past five years, we have been consistently reducing our usage of imported oil while increasing our use of renewables."

Kauai Island Utility Cooperative is seeking to implement its own decoupling mechanism and filed an application with the PUC in January.

PUC spokesman Jay Griffin said the agency is now re-examining certain aspects of the rate adjustments to determine whether changes should be made to appropriately track utility performance measures and incentivize cost savings to customers.

He said a decision is expected by the end of the year.