Hawaii Electric Light Company Files 2010 Rate Request

Hawaii Electric Light Company (HELCO) today submitted to the Hawaii Public Utilities Commission (PUC) a request for a rate increase for Hawaii Island customers late next year to help pay for system upgrade projects including its new generating unit at Keahole and two major West Hawaii transmission line upgrades, as well as increasing operations and maintenance costs for the island’s electrical system. If approved, the request would result in an overall increase of 6% above current electric revenues in the fall of 2010 at the earliest. The PUC and the state Division of Consumer Advocacy will conduct an extensive review of the request, so any rate increase is not expected for some time.

"These are tough times to be asking for a rate increase, but we have a responsibility to meet the current and future energy needs of our customers. That means adding more efficient generation resources and making the investments to upgrade and maintain our island’s electric grid. These investments will allow the integration of even larger amounts of renewable energy, make better use of fuel and improve reliability. In the long run we will be in a better position against high oil prices that significantly impacted all of us last year,” said Jay Ignacio, HELCO President.

In a separate proceeding, HELCO is proposing the adoption of a new regulatory model called "decoupling” that will delink utility revenue from the amount of electricity sold. If approved, decoupling would help encourage the utility to support customers to use less electricity and install more distributed renewable generation. HELCO is requesting that decoupling commence with this rate case.

HELCO’s filing also asks for adoption of inverted tiered rates and optional time-of-use rates for residential customers. If approved, these rate options will provide more opportunities for residential customers to manage their bills.

The request is for a 6.0% increase in revenues, or $20.9 million. If the entire increase is approved, a typical residential household using 500 kilowatt-hours a month would see its monthly bill increase by $9.57 from $167.94 to $177.51.

The Keahole generating station’s $92 million "ST-7” steam generating unit was placed into commercial operation in late June, completing the build-out of a high efficiency dual-train combined cycle generating system. Instead of using oil, the exhaust heat from two existing combustion turbines is used to produce steam in a boiler, which then drives the new steam turbine to generate electricity.

In addition to significantly increasing efficiency and saving fuel, the new unit also adds generating capacity where it’s needed most on the island -- in West Hawaii which now accounts for about half of the island’s demand for electricity.

"The rapid growth in West Hawaii has shifted the demand for power on our island,” Ignacio said. "Along with other generating units installed at Keahole over the years, the new unit adds significantly to our generating resources in West Hawaii. This reduces the amount of energy lost when transmitted across the island from power plants in East Hawaii and also improves reliability in West Hawaii.”

HELCO has also upgraded two major transmission routes in West Hawaii that further improved reliability, reducing energy losses and allowing acceptance of more renewable energy on to the HELCO system. HELCO continues to lead the State and the nation in use of renewable energy sources. In 2008, more than 31% of the energy produced on the Big Island came from renewable energy sources including geothermal, wind and hydro.

The requested increase would cover more than $289 million in investments in new capital projects since 2006, including:

• The net 16 MW steam generating unit at Keahole and associated construction for noise mitigation;
• The two West Hawaii transmission line upgrade projects;
• Power plant controls upgrades; and other upgrades or replacements to increase efficiency and reliability of aging generating units; and
• Investments in overhead and underground cables, as well as transformers, poles, meters, and other facilities to maintain reliable service and fulfill new service requests from customers.

HELCO also is increasing operating and maintenance activities that include more frequent inspections of utility lines and poles, increased vegetation management and servicing of generators.

The PUC is expected to hold a public hearing on the proposed increase in early 2010 and an evidentiary hearing is likely to be held in late 2010. The PUC may grant an interim increase within 10 to 11 months following HELCO’s application; however, there is no guarantee of such an increase. The timing and amount of any final increase is at the discretion of the PUC. If an increase is granted in late 2010, it will have been more than three and half years since HELCO’s last rate increase, a 7.58% interim increase granted in April 2007.

Hawaii Electric Light Company, Inc. is a subsidiary of Hawaiian Electric Company, Inc., which is owned by Hawaiian Electric Industries, Inc. (NYSE: HE). Hawaiian Electric Company, Inc. together with its subsidiaries Maui Electric Company, Limited and Hawaii Electric Light Company, Inc., supplies power to over 400,000 customers, or 95% of the population on Oahu, Hawaii, Maui, Lanai and Molokai.