Residential customers of Hawaiian Electric Co. on Maui, the Big Island, Molokai and Lanai will be charged less per kilowatt hour as their electricity usage declines under a tiered rate structure being implemented on the islands this week.

The new system went into effect yesterday on Maui, Molokai and Lanai. It takes effect tomorrow on the Big Island. Regulators also have approved the concept for HECO’s customers on Oahu. HECO hasn’t yet announced when the plan will start on Oahu.

The new structure consists of three tiers, with the rates at each level of electricity usage varying depending on the island. The potential for savings would be greatest on the Big Island where customers in the lowest tier would pay nearly 20 percent less per kwh than those in the highest tier.

"This tiered rate design offers our customers an incentive to use energy efficiently. The less you use the more you save," said Jay Ignacio, president of Hawaii Electric Light Co. on the Big Island.

The Big Island rates reflect the impact of the Public Utilities Commission’s decision last week to grant HELCO an interim rate increase to help pay for system upgrades, including an expansion of the Keahole power plant. The 1.7 percent rate increase will generate an additional $6 million in revenue for HELCO.

HELCO originally had asked the PUC for a 6 percent, or $20.9 million, increase. The smaller increase reflects a settlement agreement between HELCO and the state Division of Consumer Advocacy. The PUC must still issue a final ruling in the rate case.