A 6.6 percent rate increase being sought by Hawaiian Electric Co. would be cut in half under a proposed settlement reached between the utility, the office of the state Consumer Advocate and the Department of Defense.
The settlement, which is subject to approval by the Public Utilities Commission, would reduce the proposed rate increase to 3.1 percent, HECO’s parent company said Tuesday in a regulatory filing with the Securities and Exchange Commission.
Under the agreement, HECO would be allowed to charge Oahu ratepayers an additional $53.2 million to cover a range of capital improvement projects and other initiatives designed to boost the utility’s ability to generate electricity from alternative energy sources. The proposed amount is down from the $113.5 million rate increase HECO first proposed last July.
The Consumer Advocate is involved in the case because one of its missions is to protect the interests of Hawaii consumers of regulated public utilities.
The Department of Defense is a party in the case because it is one of HECO’s largest customers.
The new rates would not be reflected on ratepayers’ bills until after the PUC issues an interim decision expected later this month.
The schedule approved by the PUC contemplates the issuance of an interim decision by July 22, according to the filing by Hawaiian Electric Industries Inc., the parent company of HECO.
However, "management cannot predict or provide any assurances concerning the timing or amount of any interim decision in, or the ultimate outcome of HECO’s 2011 test year rate case proceeding," the filing said.
Among other things, HECO said it would use the revenue increase to upgrade its power plants to allow them to burn biofuels; undertake a "comprehensive replacement program" for its existing transmission and distribution infrastructure; and build distribution projects to serve new Department of Defense facilties.
"We know these are still tough economic times but as a community we need to make these improvements to ensure energy security and keep service reliable for our customers," said HECO spokesman Darren Pai.
"We’re doing our best to control our costs, but these investments in clean energy will pay off in the long run and help protect our environment and our economy."