Hawaii Electric Light Proposes Rate Hike
Hawaii Electric Light recently announced a proposal for the first base rate increase in nearly six years.
The 6.5% increase ($19.3 million) revenue request would help pay for operating costs, including expanded vegetation management focusing on removing albizia trees, system upgrades to increase reliability, improve customer service and integrate more renewable energy.
Every three years, the Public Utilities Commission requires rate reviews.
If the revenue request is approved, a typical residential bill on Hawaiʻi Island for 500 kilowatt hours would increase by $9.31 a month to $171.16.
The proposed rate change will be reviewed by regulators and at the earliest, if approved, would likely not take effect until the summer of 2017.
Due to lower fuel prices, bills reflecting the new rates, if approved today, would still be lower than one year ago.
In 2013, Hawaii Electric Light withdrew a request to increase base rates, keeping in place the same base rates established in 2010.
As part of the current review, Hawaii Electric Light is also proposing benchmarks to measure its own performance in key areas of customer service, such as reliability and communication for the rooftop solar interconnection process, and to link certain revenues to that performance.
Included in the increased operating costs driving the rate increase is an extensive vegetation management and tree removal initiative.
In 2014, after Tropical Storm Iselle, the threat from invasive albizia trees toppling in high winds became clear and led the company to triple its annual spending on vegetation management. Since then, Hawaii Electric Light has spent $14 million on tree trimming and removal, concentrating on areas where falling albizias threaten utility equipment and highways.
The ongoing tree removal program reduced the impacts on roads and power lines of the recent Tropical Storms Darby and Madeline, which resulted in fewer outages and quicker restoration of power.
Over the past six years, Hawaiʻi Electric Light has also spent more than $14 million over improving customer service systems, developing technical solutions to integrate more private rooftop solar, replacing and upgrading equipment to improve efficiency and reliability, as well as developing detailed plans to achieve the state’s goal of 100% renewable energy.
In the years between rate review cases, the company has absorbed a large portion of these increased costs without raising customer rates.
Investing in new technology and more customer service staff have resulted in significantly improved service with reduced call-waiting times. The customer calls answered within 30 seconds went from 33% in 2010 to 93% in 2015. In addition, 94% of the customers who called in to stop, start or change electric service in 2015 said they were satisfied with their experience.
Using wind, hydroelectricity, solar and geothermal to replace oil imported to generate electricity, Hawaii Electric Light has increased its use of renewable energy from 35% in 2010 to 49% in 2016.
The company reduced its use of oil by 13% over the same time period.
Part of the proposed rate change will help pay for ongoing improvements to the power grid to help integrate additional renewable resources while improving reliability.
At the end of 2016, Hawaii Electric Light will have made more than $290 million in capital investments over the past six years. These investments range from replacing and upgrading transmission lines in West Hawaiʻi to modernizing generation equipment to increase efficiency and to increase grid capacity and system reliability, as well as adding or replacing lines, transformers, and more than 4,500 poles for new and expanded service.
Hawaii Electric Light has “decoupled” their rates with the regulatory model that periodically adjusts rates to remove the company’s need to increase sales to recover a level of PUC with approved costs for providing service to all customers. Every three years, the company is required to submit full rate cases for an updated review by the PUC of the current costs of service.