HECO proposes 4.1% rate increase for Oahu

Oahu’s electric utility wants customers to pay 4.1% more for power to help cover costs for system improvements and renewable energy investments.

Hawaiian Electric Co. filed a request Wednesday with the state Public Utilities Commission to increase the base rate for electricity used by its customers.

The requested increase would generate $77.5 million, the company said.

For a typical residential customer using 500 kilowatt-hours of electricity a month, the bill for that use would rise by $8.67.

The PUC will review HECO’s application along with input from others including the state consumer advocate, and make a decision that could be different from what the utility is seeking.

HECO anticipates that any approved change in the base rate wouldn’t likely take effect until mid-2020 at the earliest.

The last rate change petition from HECO sought a 6.9% increase and was filed in December 2016. The company later lowered its requested hike to 3.5% after reaching a settlement with the consumer advocate. In December 2017, the PUC approved a 2.5% “interim” rate change subject to further review. HECO initially said it would ask the PUC to reconsider that decision.

Ultimately though, customers realized a savings on their bills, according to HECO, because federal corporate income taxes last year were cut. Such taxes are included in the base electric rate.

The base rate is only part of what customers are charged for. Other items on bills include a variety of surcharges.

As a regulated utility, HECO is required to submit rate cases every three years so the PUC can analyze costs for providing service. The company is entitled to a reasonable rate of return.

Last year, the utility’s parent company, Hawaiian Electric Industries Inc., which also owns utilities on Maui and Hawaii island along with American Savings Bank, generated a $201.8 million profit, up 22% from $165.3 million the year before.

HECO, which has about 305,000 Oahu customers, said it has spent more than $1 billion since 2013 upgrading equipment to improve the efficiency and resiliency of the island’s power grid and operations. The company also is investing in renewable energy to meet a goal of generating 100% of electricity from renewable resources by 2045.

One upcoming new renewable energy project is a 12.5-megawatt solar farm approved by the PUC last week.

The project called AES Solar West Oahu is slated to be built and run by an affiliate of AES Corp. on 80 acres north of the University of Hawaii at West Oahu campus. It will produce enough energy to power 4,600 homes a year, HECO estimated. Power from the project will be firm, meaning it doesn’t have to be used when the sun is shining, because of a 50-megawatt-hour storage system.

HECO agreed to pay roughly 10.6 cents per kilowatt-hour over a 25-year contract, which in time will help reduce customer bills, according to the company. HECO said it costs about 15 cents per kilowatt-hour for energy from fossil fuels.

In addition, HECO said the AES project can replace the use of 546,000 barrels of liquid fuel and 64 tons of coal over 25 years and reduce greenhouse gas emissions by 244,394 tons.