Hawaiian Electric Industries Inc. said Monday it has no plans to file for additional rate increases over the next three years beyond what it is getting annually to compensate for declining sales due to more customers using alternative energy sources.
The company "is forgoing a rate increase request in recognition that its customers are already in a challenging high electricity bill environment," Hawaiian Electric said in a filing with the U.S. Securities and Exchange Commission.
Hawaii residents pay the most in the nation for electricity, averaging 38.5 cents per kilowatt-hour. That compared with the national average of 12.3 cents, according to March data from the U.S. Energy Information Administration.
Hawaiian Electric said it expects to file its next rate case in 2017, adding the caveat that "if circumstances change, a rate case may be filed earlier." The last rate increase was in 2011 for 3.4 percent.
"We know how tough high electric bills have been on our customers," said Lynne Unemori, Hawaiian Electric vice president for corporate relations, in a statement. "So even though we could have asked for an added rate hike at this time as part of our regulatory schedule, we’re not. What we are doing is focusing our efforts on lowering customers’ bills by going after the main driver of high bills — expensive imported oil. That’s why we’re pursuing more renewable energy, lower-cost liquefied natural gas as an alternative to expensive oil, and modern smart grids."
While foregoing the "normal" rate increase, Hawaiian Electric will continue to get annual rate adjustments designed to compensate the utility for increased capital expenditures and reduced sales.
Since 2011, the state Public Utilities Commission has allowed Hawaiian Electric to request an "annual sales decoupling tariff." Decoupling is structured to encourage the development of renewable energy and energy conservation by eliminating the economic incentive on the part of the utility to sell more electricity. Decoupling, or breaking the link between sales and total electric revenue, essentially guarantees utilities enough revenue to cover their fixed costs even if their electricity sales decline.
In May the PUC approved decoupling increases requested by Hawaiian Electric Co., the Hawaii Electric Light Co. on Hawaii island, and Maui Electric Co.
On Oahu, homes using the typical 600 kilowatt-hours a month saw their bills rise by $4.89 due to the decoupling adjustment. That increase will help pay for more than $200 million in capital projects placed in service on Oahu in 2013 and 2014, HECO said.
On Hawaii island the increase was $4.71 for a household using 600 kilowatt-hours a month, and for Maui County it was $4.90 a month for a household using 600 kilowatt-hours a month.
Hawaiian Electric has said more than 70 percent of the rate it charges goes to pay for fuel-related costs directly or indirectly, and 70 percent of the state’s electricity is generated by burning oil. The Hawaii Clean Energy Initiative, adopted by the state in 2008, set a goal that 40 percent of the state’s electricity will be generated from renewable resources by 2030.
At the end of 2013, 18 percent of the Hawaiian Electric’s sales were made using renewable sources, surpassing the company’s goal of 15 percent by 2015.
