PUC Finalizes MECO 2010 Rate Increase

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

By Wendy Osher

The Hawaii Public Utilities Commission has issued a final decision for a 2010 rate case involving Maui Electric Company.

Under the PUC decision, a 1.5% increase, or $4.7 million in annual revenues was finalized, effective May 4, 2012.

Company officials say the amount has already been reflected in electric bills since August 2010, when the PUC approved an interim increase.

The PUC continues to review a separate 2012 rate request filed by MECO.  An interim decision in that case may be issued as early as this month.

The 2010 rate filing was requested to help pay for more than $122 million in capital improvements, including: the replacement and upgrade of power plant control systems at the Maalaea Generating Station; new or expanded substations to support past and future growth and improve service; and increasing operations and maintenance costs for the utility’s electric system.

The PUC decision also implemented a new method for setting future electric rates called “decoupling.” Decoupling is one of many major policy steps intended to reduce Hawaii’s dependence on imported oil.

MECO and PUC officials say decoupling breaks the historic link between electricity usage and utility revenues, removing the incentive for utilities to increase the use of electricity. The benefit, they say, is that utilities are better able to support increased energy efficiency, conservation and increased use of renewable energy resources. This in turn, helps to reduce the amount of fuel oil used to produce electricity.

Individual electric bills will still be based on the amount of electricity a customer uses.  That means customers will still have an incentive to conserve and use electricity efficiently.

The PUC and MECO officials say decoupling will have no immediate impact on MECO customer bills.  Decoupling is already in place for Hawaiian Electric Company on Oʻahu and Hawaii Electric Light Company on Hawai’i Island.