Electric utility works to resolve confusion over time-of-use rates

Surcharges (or credits) from the cost of oil will change monthly, like current residential bills

Maui Electric Co. officials tried to clear up confusion over the utility’s optional rate program, which varies charges based on time of use, because of differences in the rates published in its October rollout and those on letters recently received from the utility by those who have signed up.

The letters from MECO welcoming those customers who have opted into the program listed rate schedules that were higher than publicized in its October announcement of the time-of-use program.

The letter listed Maui rates of 19.9 cents per kilowatt hour for midday (9 a.m. to 5 p.m.), 45.1 cents for peak use (5 to 10 p.m.) and 38.7 cents for off peak (10 p.m. to 9 a.m.). The October news release listed Maui rates at 13.7 cents per kWh at midday, 39 cents at peak use and 32.5 cents at off peak — about 6.2 cents lower per period.

The complicated reason for the differences is that apples are being compared with oranges, or base rates vs. base rates with “surcharges.” In actuality, the December bills for time-of-use ratepayers will be lower than the base rates appearing in the letters and the October rates in the news release and on the utility website, explained Shayna Decker, director of communications for MECO.

The higher rates noted in the letter are base charges and exclude “surcharges,” such as the variable rate of fuel costs. But here is where the formula gets confusing; “surcharges” as defined by the utility can be charges — or credits.

With the cost of producing power by oil currently relatively cheap by historical standards and hovering around the cost of renewable wind power, the base rates in the time-of-use program are adjusted lower to reflect credits. And the October figures reflected the surcharges or credits.

The December rates including surcharges — which is what the customer will be billed — will be lower than the October rates, Decker said. The midday rate will be 12.8 cents per kWh; peak, 38.1 cents; and off-peak, 31.6 cents.

That doesn’t mean the rate structure will remain this low; the prices will change monthly.

“The base rate (established in a rate-case-filing with the state Public Utilities Commission) remains the same while surcharges may decrease or increase from month to month due to the variable charges such as fuel costs,” said Decker. “That’s why in October, when the program launched, the surcharges resulted in a net credit due to the fluctuating cost of fuel.

“This will change each month as the variable surcharges are calculated each month.”

For the record, the average residential customer who consumes 500 kWh per month and is not part of the time-of-use program will pay 26 cents per kWh in December regardless of the time. The October rate was 26.9 kWh.

The time-of-use program, developed under the state PUC, will run for two years and involve only residential customers. Participation is voluntary and limited to the first 5,000 customers who enroll.

As of Dec. 16, Maui County had 158 enrolled in the time-of-use program, Oahu had 888 and the Big Island had 163, Decker said. In total, only 20 percent of the cap has been utilized.

The rates encourage customers to use electricity when solar power is abundant and away from the peak-use periods in early evening and night when there is no solar power. Decker noted that the time-of-use program “may not fit the needs of all customers.”

“This pilot program was designed to incentivize customers to shift their electric use away from ‘peak’ demand hours or when people use more electricity, typically between 5 p.m. to 10 p.m,” she said.

MECO apologizes for confusion caused by the listing of the differing rates, Decker said.

“We are working to more clearly note that time-of-use rates adjust month to month just like regular residential rates,” she said. “We’re also working to ensure the TOU rates provided in customer letters and on our website align.”

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

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