HECO proposes rate hike of 6.9% for Oahu

Oahu customers could face an $8 increase in their electrical bills if Hawaiian Electric Co.’s request for a 6.9 percent raise in rates is approved.

The state’s dominant electrical utility made its case to boost its revenue in a filing Friday with the state Public Utilities Commission. If HECO gets the green light on its proposal, the company would increase its revenue by $106 million annually, and customers’ electrical costs would rise by $8.71 a month based on December bills.

The bill for an Oahu household using 500 kilowatt-hours in December was $132.32.

HECO said the base rate increase would help improve customer service, pay for operating costs and add more renewable energy resources to the electric grid. The utility said it has spent more than $900 million upgrading the electrical grid on Oahu since 2011.

“The company has absorbed a significant amount of these increased costs in the years between rate cases without passing them on to customers,” HECO said in a statement Friday.

These expenses include replacing 6,800 poles and 4,800 transformers, installing advanced cybersecurity technology, and clearing trees and other vegetation from around poles and power lines to prepare for storms, according to the utility.

HECO said the company also has spent more than $25 million since the last rate case to improve customer service, spending that money on increasing staff, new technology and providing more online options.

“They are entitled to a reasonable rate of return,” PUC Chairman Randy Iwase said. “That is one of the key issues we have to look at, whether they are entitled to that amount.”

The last rate case HECO opened seeking an increase was in May 2010. HECO asked for a 6.6 percent increase. The total amount requested was $113.5 million, according to HECO. The PUC approved a 3.4 percent increase, or $58.1 million, in September 2012.

The electrical utility said due to lower fuel prices over the last year, if its proposed rate case is approved, the average bill still would be lower than the bills customers saw in 2015.

HECO said many of its grid upgrades were to add more renewables to get the utility closer to the state’s goal of having 100 percent renewable electricity by 2045. In the filing, HECO proposed linking certain revenue to its performance in customer service, reliability and its communication regarding rooftop-solar interconnection.

HECO’s base rate is only part of the cost customers see on their bills.

The rates customers pay change monthly, as they include HECO’s base rate as well as surcharges such as the Energy Cost Adjustment, the Purchased Power Adjustment, Integrated Resource Planning Cost Recovery, Revenue Balancing Account Adjustment and the Renewable Energy Infrastructure Program.

Iwase said the PUC will be busy over the next few months as it has four rate cases that the three-member panel must review, including Hawaii Electric Light Co. on the Big Island. On Sept. 19 HELCO — a sister company of HECO — filed a rate case application.

“We’re going to be quite busy over the next year,” Iwase said.

The PUC has to issue a decision nine months from the day HECO filed the application to review.

“We can issue an interim decision if we are not going to be able to issue a decision in that period of time,” he said.

The review will include public hearings similar to the two the PUC hosted on Hawaii island for the HELCO rate case.

HELCO asked for a base-rate increase of $19.3 million, or 6.5 percent. If approved by the PUC, a typical residential customer on Hawaii island using 500 kilowatt-hours per month will see a $9.31 monthly bill increase.

“We’ll have the same kind of process,” Iwase said.

HECO asking for a rate increase wasn’t a surprise.

In parent company Hawaiian Electric Industries’ third-quarter earnings call, President and CEO Connie Lau said HEI would be asking the state for a rate increase at each of its three utilities: HELCO, HECO and Maui Electric Co.

Lau said MECO is expected to file sometime next summer.

HECO said the rates would not take effect until the second half of 2017 at the earliest, depending on PUC approval. The rate filing is part of a required periodic regulatory review in which the PUC gets access to all of HECO’s financial statements.