MECO Requests 6.7% Rate Increase

By Wendy Osher

Maui Electric Company offices in Kahului. Photo by Wendy Osher.

Maui Electric (MECO) today filed a request today with the Hawaii Public Utilities Commission (PUC) for a rate increase.  The request calls for a 6.7% for Maui customers in 2012, and is projected to generate an estimated $27.5 million in net revenues.

Based on MECO projections, a typical bill for residential customers on each island would increase by approximately $13 per month.  Typical monthly residential electric bills would increase to $243 on Maui for 600 kwh, $243 on Molokai for 500 kwh, and $241 on Lanai for 500 kwh under the proposal.

The estimates are based on the tiered rate structure approved by the PUC in January, which rewards customers who use less electricity with lower rates.  If the full request is granted, the monthly increase would vary for customers depending on the category they are in and the amount of electricity used.

MECO officials say the increase would cover the cost of improvements to integrate additional renewable energy and improve the reliability of service to customers in Maui County.

Any increase, if granted, would go into effect in mid-2012 at the earliest.

“We know that any increase is difficult for our customers,” said MECO President Ed Reinhardt. “It is critical that we continue to make investments that will enable us to add more clean energy to our grid and ensure service that our customers can continue to count on,” said Reinhardt.

MECO officials say more than 15% of the electricity sold by MECO in 2010 came from renewable sources. MECO will also begin integrating an additional 21 megawatts of wind energy from the new Kaheawa Wind Power II project in early 2012.

According to officials at MECO, the requested increase would help cover the operations and maintenance costs of safely and reliably integrating existing and future renewable energy resources into the company’s  three isolated, island electrical grids.  Energy storage projects are planned in both Central Maui and at the Wailea Substation.

The increase would also help pay for more than $80 million in investments including:

• Upgrades and improvements to generation facilities on Maui, Lanai and Molokai that are aimed at increasing efficiency, improving service reliability and helping to reduce emissions;
• Replacement of aging underground electric lines and equipment to increase service reliability;
• Upgrades to underground electric lines and equipment to add capacity to MECO’s electrical system;
• Installation of fiber optic equipment at the Maalaea Power Plant that is aimed at improving communication and data acquisition and providing greater reliability of service

A public hearing on the proposed 2012 increase is expected later this year, with an evidentiary hearing anticipated sometime next year. There is a possibility that an interim increase may be granted within 10 to 11 months following MECO’s application; however there is no guarantee of this.

The timing and amount of any increase is at the discretion of the PUC.  MECO’s last increase of 3.3% (an interim increase) went into effect in August 2010.