PUC Adjusts Hawaiian Electric Rate Request

The Hawaii Public Utilities Commission (PUC) approved recovery of the cost of Hawaiian Electric’s new biodiesel-fueled generating unit at Campbell Industrial Park effective February 20, 2010. This will increase utility revenue by 1%, or $12.7 million.

The impact of today’s increase will vary by type of customer and actual electricity usage. A typical residential customer using 600 kilowatt-hours a month will see their monthly electric bill increase by $1.34, resulting in a total bill of $149.57, based on current fuel costs.

The new 110-megawatt generating station, to be fueled by renewable biodiesel, represents a significant step towards reducing Hawaii’s dependence on fossil fuels. It is a combustion turbine, which can start very quickly in emergencies and can also increase or decrease power output quickly. This capability can help maintain reliability as Oahu’s grid adds more renewable energy sources, such as wind or solar power. It also has "blackstart” capability to help restart the electric system should an island-wide outage occur.

The generating unit has been successfully tested on biodiesel and a contract for additional biodiesel supply is pending with the PUC. In the meantime, under the PUC decision, the generator, which is more fuel efficient than older combustion turbines in the Hawaiian Electric fleet, will be used to help meet Oahu’s energy needs during peak demand hours.

Hawaiian Electric’s original request, filed in July 2008, was for a $97 million increase in revenues. The request has gone through extensive review by the State Division of Consumer Advocacy (Consumer Advocate) and the U.S. Department of Defense (DOD), who are parties in the case. Hawaiian Electric earlier reached a settlement agreement with the Consumer Advocate and DOD on most of the issues in the case, including a recommended increase of $79.8 million. Including unsettled items, the company has reduced its total request to $80.2 million, or 6.2%.

In August 2009, the PUC authorized Hawaiian Electric to start collecting a 4.7% interim increase in revenues, which did not include cost recovery for the new generating station. Today’s decision coupled with the previously implemented increase totals 5.7% or $73.8 million in revenues.

In addition to the new generating station, the combined rate increases are helping pay for more than $375 million in major capital improvements over the last several years and increased operating costs, such as more frequent inspections of utility lines and poles, increased tree trimming around power lines, and increased servicing of power plants, which have been running harder and longer as power generation reserve margins have narrowed over time.

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