Hawaiian Electric proposes first rate increase in six years

The company says the $106 million request is necessary to upgrade O’ahu’s grid to improve reliability and customer service, as well as integrate more solar.

December 22, 2016 Frank Andorka

For the first time in six years, O’ahu residents may have to pay more for their electricity.

The Hawaiian Electric Co. (HECO) has petitioned the state’s Hawaiian Public Utilities Commission (PUC) for a rate increase of 6.9% to raise $106 million in new funds on the island, which is home to the state capital, Honolulu. HECO says the new revenues will upgrade a grid whose needs have changed significantly in the past half decade.

As pv magazine has reported, HECO has wrestled with how to solve its “solar-oversupply problem” since 2013. Under previously generous net-metering programs, the distributed-generation (DG) solar boom took hold too quickly, and the company’s grid couldn’t handle all the electricity being exported to it.

According to the company, HECO leads the nation in the adoption of solar power, with nearly 79,000 customers have been approved on Oʻahu, Maui County, and Hawaiʻi Island for DG systems.

By law, the company must submit full rate cases every three years for an updated review by the PUC of the current costs of service. After review by the regulatory body, any change would likely not take effect until the second half of 2017 at the earliest. A typical O’ahu residential customer using 500 kWh/month would see an increase of $8.71 in their bills.

The utility says that since 2011, it has spent more than $900 million replacing and upgrading equipment to improve the efficiency and resilience of the O’ahu power grid, made necessary by the state’s decision last year to set a goal of reaching 100 percent renewable electricity by 2045.

Unlike most Mainland utilities, HECO’s rates are “decoupled,” which allows HECO to increase revenues without increasing expenditures on sales-and-marketing to obtain new customers. The budget savings allow the utility to focus on providing service to customers and invest in improving transmission systems.

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