Trending
WAILUKU -- Doug McLeod, a veteran of the energy business, finds it "remarkable" that despite strong economic growth on Maui over the past few years, demand for electricity hasn't risen.
That's why he understands Maui Electric Co.'s request for a 9.3 percent rate hike to boost revenue by $30 million.
"There is a statement you hear a lot in business that 'growth solves a lot of problems,' " McLeod said. "The corollary is also true -- when your business is not really growing, you need to execute perfectly on your plans or things can go very wrong financially."
McLeod was one of three people to testify on MECO's proposed rate increase during a public hearing Tuesday night at the Velma McWayne Santos Community Center.
If the increase is approved, the typical Maui residential bill for 500-kilowatt hours would increase by $13.46 a month to $161.10. On Lanai, a typical home bill for 400-kilowatt hours would raise bills by $13.83 a month to $160.55, and on Molokai bills would increase $11.25 a month to $147.60, also for 400-kilowatt hours. It would be the utility's first base rate increase in six years.
The Public Utilities Commission has to issue an order by August, nine months after the application was completed, said Delmond Won, executive officer for the commission.
MECO says it needs the increase to cover costs of improving the grid. Since 2014, MECO has spent more than $50 million replacing and upgrading 1,400 poles, 1,400 transformers and miles of power lines, MECO President Sharon Suzuki said Tuesday.
The utility also has made grid improvements to help accelerate the switch from fossil fuels to renewable energy. Since 2008, MECO's use of renewable energy has risen from 14 percent to 37 percent. Hawaii's goal is to reach 100 percent renewable energy by 2045, though Molokai and Lanai could get there even sooner.
Switching from unpredictable oil prices to renewable energy is expected to help stabilize costs in the long run. However, in the meantime, Suzuki said electric bills are "not necessarily going to go down, because there's a cost for our wind developers, our solar developers and even those who put rooftop PV on."
"It does take investments in the grid for us to integrate all of the renewable energy," Suzuki said. "And what we're trying to do is kind of stabilize and try to neutralize the increases. But it's not free to get to 100 percent (renewable energy)."
Customers may not see the savings in the short term, "but over the long term, based on our forecast that oil prices will continue to go up, renewable energy will help stabilize the bills," Suzuki said.
Kahului resident Walter Enomoto was neither for nor against MECO's proposed increase. He simply saw it as "inevitable," given all of the replacements and upgrades the utility has had to do.
Enomoto has been in the energy field for nearly 20 years and is an energy adviser for the Hawaii Energy efficiency program. Many people don't realize that MECO often has to spend the money for improvements upfront, Enomoto explained after the hearing. When the utility asks for a rate increase, it's usually to recover costs.
"They're in a very disadvantaged position because they have to spend the money first, and then the rate cases are to recover the cost of what they've done," Enomoto said. "Who can spend money for six years and not get repaid for that?"
Enomoto said that puts the onus on MECO "to be efficient in how they go about spending" because the utility will have to justify all of its costs to the commission.
Enomoto said the benefits of switching to renewable energy are likely seen more at the household level than countywide. Many people who have installed rooftop solar have seen their bills go down.
"But on the macro scale . . . more of the renewable energy and implementing that into the grid is not going to make it cheaper necessarily," he said. "Because it's a lot more coordination from Maui Electric to balance all the other renewable energy from every home, every business, the wind farms, when before they only had to deal with their own generation" and that from the Hawaiian Commercial & Sugar Co. Puunene mill.
The increase in rooftop PV has partially contributed to the lack of growth for MECO, McLeod said. The former Maui County energy commissioner and owner of the consulting firm DKK Energy Services was concerned about large commercial customers potential leaving the grid.
McLeod said there are many discussions happening on-island about taking loads off the grid. Most are happening privately, but he pointed to recent public debate over Anaergia's proposed renewable energy project that could take the Wailuku-Kahului Wastewater Reclamation Facility off the grid.
"On a small island like Maui, there will be a significant ripple effect on our isolated grid if large commercial accounts start leaving the grid," McLeod said. "It will be the wealthy who have the means to exit the grid, leaving our kupuna and others with limited incomes to face the true cost of these actions."
McLeod suggested that MECO consider an exit fee or tariff for businesses looking to leave the grid, to help the utility avoid returning to the commission for an emergency rate increase if revenues are less than expected.
To view MECO's requested increase, visit dms.puc.hawaii. gov/dms/ and search for Docket No. 2017-0150 in the "quick link" box.
The commission also has started investigating how the recently passed federal tax legislation might affect Hawaii customers' bills. The commission has asked public utilities like MECO "to immediately begin tracking any savings incurred from lower tax rates," until the commission can decide how best to return the benefits to customers, according to a news release. Won said it was too early to tell how the investigation might affect a decision on MECO's rates, but that it wouldn't change the August deadline.
* Colleen Uechi can be reached at cuechi@mauinews.com.