Maui Electric Co. filed a request Wednesday asking that the state Public Utilities Commission reconsider its May 31 decision to lower the utility's profit level from 10 percent to 9 percent and to refund its customers a total of more than $8 million.
The commission approved a final rate increase of 1.3 percent in annual revenues or $5.3 million. However, since June 2012, MECO has been charging an interim rate increase of 3.2 percent or about $13.1 million in annual revenues.
The commission ordered the utility to pay back the difference - about $8.1 million with interest - to its 68,000 Maui County customers.
In a statement last year, the utility said that the rate hike would be used to help cover operations and maintenance costs, but the commission found that certain operating expenses such as pensions, technical studies and the new customer information service computer system were "not reasonable and prudent."
Commissioners added that many ratepayers had grown frustrated by high electric rates and poor customer service from Hawaiian Electric companies not only on Maui, but on Oahu and Hawaii island.
"Hawaii should have financially healthy electric utilities; however attractive financial returns are not a utility entitlement. Instead, excellent utility performance with affordable rates and superior customer service should drive utility financial performance," PUC Commissioner Michael Champley said.
Additionally, the PUC lowered the utility's profit level from 10 percent to 9 percent, citing lower interest rates and "inefficiencies found in its system operations."
The utility is appealing the commission's decision, asking for an evidentiary hearing in which it hopes to secure the 10 percent return on equity, as well as a final annual revenue increase of between $9.3 million and $13.1 million.
"The 9 percent ROE authorized to MECO was the lowest authorized to an electric utility for the period covering 2012 through part of May 2013, according to SNL Financial data," MECO's filing said referencing the company that offers breaking business news and financial analysis of business sectors.
The utility added that the average authorized electric ROE for the same period was 10 percent.
The utility's lawyers also said that the utility never had "due process" to defend its operating costs and is requesting an evidentiary hearing in which the utility may present additional evidence.
"The issues regarding curtailment and the adequacy of efforts to implement study recommendations and to retire certain generating units were not fully vetted in this rate case," according to the utility's request.
MECO will be submitting an action plan for the Integrated Resource Planning proceeding June 28, as well as a System Improvement and Curtailment Reduction Plan before the Aug. 29 deadline, as outlined in the commission's order last month.
* Eileen Chao can be reached at email@example.com.
* This article includes a correction from the original published on Saturday, June 15, 2013. Maui Electric Co. requested last week that the Public Utilities Commission allow some accounting clarifications and permit MECO to provide more information to the commission. Currently, there is no change in plans to refund money to customers, the utility said. The headline did not accurately describe MECO's request. The Maui News apologizes for the error.