Hawaiian Electric Co. customers will save about $2.40 on their monthly electricity bill after Chevron Corp. was selected as the primary fuel provider for the utility.

Parent company Hawaiian Electric Industries Inc. said Thursday in a filing with the U.S. Securities and Exchange Commission that it will not renew its low sulfur fuel oil supply contract with Hawaii Independent Energy. Houston-based Par Petroleum Corp. created the subsidiary to run the local operations when it purchased the Hawaii Tesoro refinery, retail operations and other assets last September.

HEI said amending its existing contract with California-based Chevron will enable HECO to lower prices for customers and help the utility meet U.S. Environmental Protection Agency standards. Chevron is the primary provider of the utility’s low sulfur fuel oil.

"This is a substantial break on the price," HECO spokesman Peter Rosegg said.

"It is important not just for the price but they will give us a blend to meet EPA standards."

HECO said the savings of $2.40 will be seen on the typical residential 600-kilowatt-hour bill.

The utility’s contract with Chevron, which was scheduled to end on Dec. 31, was extended to the end of 2016.

"We are extending it with our understanding that we are trying to bring natural gas here by the end of 2017," Rosegg said.

HECO wants to begin using liquefied natural gas as a transitional energy source from imported fossil fuels. The transition was highlighted in the utility’s plan for Hawaii’s energy future filed last month with the state Public Utilities Commission.