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PUC agrees to interim rate hike for Maui Electric

Typical Maui bill will rise $7.75 a month

Facing a deadline, the Public Utilities Commission on Thursday in an interim decision and order granted Maui Electric Co. a 3.8 percent revenue increase, or $12.5 million annually, effective next week that will lead to higher power prices countywide.

The rates hikes will be applied uniformly percentage-wise across all rate categories, the decision and order said. The rate hikes take effect Aug. 23.

A typical monthly bill for a Maui customer using 500 kilowatt hours a month will rise $7.75. A typical monthly residential bill for 400 kWh on Molokai will increase by $7.17 and on Lanai, $7.69, said MECO spokeswoman Shayna Decker on Monday.

“This request helps pay to keep service safe and reliable to our growing communities, while at the same time making real progress in replacing fossil fuels with renewables,” said Sharon Suzuki, president of MECO, on Monday.

“I understand the impact higher bills have on families and businesses we serve, so we’ll continue to look for more ways to help customers reduce their overall energy bills,” she said.

Suzuki said this effort includes greater efficiency and new options like electric vehicle adoption; demand response programs, where businesses and government entities agree to reduce power on short notice to keep the grid stable; and time-of-use rates, where customers agree to pay varied rates based on usage during different periods of the day.

The commission approved an agreement hammered out between MECO and the state consumer advocate, part of the Department of Commerce and Consumer Affairs, and filed with the panel July 5. An interim decision was needed because state law requires the PUC to act on a rate case filed by a utility within nine months or render an interim decision within a month after the nine-month deadline.

MECO filed its rate request for a $30 million revenue increase, or a 9.3 percent hike, on Oct. 12. The nine-month period ended July 12, which meant the PUC had to approve an interim rate agreement by Monday.

“Based on the docket record before the commission, without interim rate relief, MECO may be denied an opportunity to recover its normalized expenses and earn a fair return on its rate base,” the decision and order said.

The PUC said that MECO “is probably entitled” the interim rate hike. The commission said it will continue to examine MECO’s original request for a larger rate hike and will issue a final decision at a later date.

In its October filing, MECO said the rate increase was filed on the three-year interval per the PUC’s decoupling decision, which severed the connection between rates and power sold in an effort to encourage sustainable energy.

The utility pointed to increases in use of wind energy and decreases in fuel oil use, which required MECO to make capital improvements to utilize renewable energy sources.

Since 2014, MECO has spent more than $50 million replacing and upgrading 1,400 poles, 1,400 transformers and miles of power lines, Suzuki said at a sparsely attended hearing on the rate hike at the Velma McWayne Santos Community Center in Wailuku in late January.

The 9.3 percent rate hike proposal would raise the typical Maui residential bill for 500 kWh by $13.46 a month to $161.10 from current rates. On Lanai, a typical home bill for 400 kWh would raise bills by $13.83 a month to $160.55, and on Molokai bills would increase $11.25 a month to $147.60 for 400 kWh.

MECO also requested the end of required filings of monthly reports showing how much wind power was used. The PUC had initiated the requirement in 2012 after learning that the utility was not using as much as 30 percent of wind power produced.

The utility has made strides to use more renewable energy since then and should be relieved of the requirement, MECO said. It would continue to post some information on use of renewable energy on its website, updated quarterly.

In June, MECO has used 26.8 gigawatt hours of wind power and dumped or “curtailed” 2.4 gWh, per the PUC-required report.

The commission agreed to end the required filings of the reports.

* Lee Imada can be reached at leeimada@mauinews.com.