State OKs rate hike for Maui Electric

The electricity bill for a typical household on Maui will rise by $6.60 a month starting June 1 under an interim rate increase announced Wednesday by Maui Electric Co.

The state Public Utilities Commission approved the agreement on Monday, which allows MECO to raise rates on an interim basis on Maui, Molokai and Lanai by an average of 3.2 percent, or $13.1 million.

The PUC will continue to review details of the interim agreement and issue a final decision at a later date. If the PUC ultimately approves a smaller increase, the difference will be refunded to customers with interest, according to MECO.

MECO originally submitted its rate hike application to the PUC in July 2011, seeking an increase of 6.7 percent, or a $27.5 million increase in revenue. The PUC in October held public hearings on Maui, Lanai and Molokai on the proposed increase. The proposed rate increase was later lowered after negotiations between MECO and the state Division of Consumer Advocacy.

The interim increase comes less than three weeks after the PUC gave final approval to MECO for a 1.5 percent rate hike that the company first applied for in 2010 in an earlier rate case.

The amount of the interim rate hike approved on Monday will vary by island and electricity use. Residential customers on Maui using 600 kilowatt-hours a month will see their bill rise by $6.60 to $242.23. The bill for Molokai residential customers using 400 kilowatt-hours a month will rise by $5.25 to $193.21. On Lanai, the typical bill for a household using 400 kilowatt-hours a month will go up by $5.56 to $195.79.

The latest rate hike will be used to help cover operations and maintenance costs, including energy storage projects that will allow MECO to integrate higher levels of renewable energy into its grid, according to the utility. Those projects include a battery system at MECO’s Wailea Substation and an energy storage system on a distribution circuit in central Maui.