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Public Utilities Commission approves MECO rate hike

Increase is slightly less than interim rates set in August

The state Public Utilities Commission has approved Maui Electric Co.’s first base-rate increase in six years, MECO announced Friday.

On April 17, MECO filed tariffs and rate schedules for a final increase of 3.7 percent, which would generate about $12.1 million in annual revenue. MECO said the increase would help pay for operational improvements, including system upgrades to increase reliability, improve customer service and to integrate more renewable energy.

Regulators approved an interim rate increase in August. Under the interim rate, the typical Maui monthly residential bill for 500 kilowatt-hours increased by about $5 a month. A typical monthly residential bill for 400 kWh increased by about $5 on Lanai and by about $4.60 on Molokai.

The final tariff and rate schedules are subject to the approval of the PUC, which will also determine the effective date. Because the final amount is slightly less than the interim amount that MECO has been charging customers over the past eight months, the utility will issue a one-time refund of $556,200 in June, or about $3 to each residential customer using the typical amount of electricity.

The 3.7 percent base rate increase would be less than half of the original request for a 9.3 percent increase — or $30 million — filed by MECO in October 2017. Under that proposal, monthly bills for 500 kWh would have increased by $13.46 on Maui, while monthly bills for 400 kWh would have increased by $13.83 on Lanai and by $11.25 on Molokai.

The PUC approved a base-rate increase for MECO last month, but totals had not been finalized. As part of its decision, the PUC also ordered the utility for the first time to assume a small portion of the cost of fossil fuels for power generation.

MECO said Friday that it would no longer pass through to customers 100 percent of the costs of fossil fuels. Instead, fuel costs will be shared – 98 percent by customers and 2 percent by MECO, up to a cap of $633,000, MECO spokeswoman Shayna Decker said. The risk-sharing approach is consistent with a similar requirement set for Hawaiian Electric Co. last year.

MECO said that the approved increase will allow it to continue improving the efficiency and resilience of the power grids throughout Maui County. It will also help the utility to integrate more renewable energy by investing in new technologies. MECO’s renewable portfolio standard reached 38 percent in 2018, well ahead of the state’s mandate of 30 percent in 2020. Hawaii is aiming for a 100 percent renewable portfolio standard by 2045.

Last year, Maui’s first two utility-scale solar projects came online — Ku’ia Solar in Lahaina and South Maui Renewable Resources in Kihei — both run by Kenyon Energy and each capable of generating 2.87 megawatts of solar power. More large-scale solar and battery projects are also in the works, including a 15-MW solar and 60-megawatt-hour battery storage system in Ulupalakua and a 60-MW solar and 240-MWh battery project in Central Maui.