Hana Water Systems proposes $17,000 in customer refunds

Company overcharged users at higher rates

Hana Water Systems is proposing to refund a total of nearly $17,000 to 178 customers who were overcharged for water services received in September and December of last year.

The water company proposed its refund plan last month and is now awaiting approval from the state Public Utilities Commission, which ordered the company to issue the refunds.

"The overbilling was an inadvertent mistake, and we are taking steps to rectify this error on our part," Olivia Maki, manager for Hana Water Systems, said Tuesday. "We apologize for the confusion that this has caused our customers."

Maki said that the company has complied with the commission's order by proposing a calculation and refund.

"To date, the Consumer Advocate did not oppose our proposed calculation and refund," she said. "However, the commission has still not made a determination about whether or not they will approve this refund."

Hana Water Systems services two main areas -- a north services area that includes the Hana Airport and residents in the Hana Agricultural Park, and a south service area that consists of customers in and around Hana town, including Travaasa Hana Hotel, Hasegawa General Store and the post office.

The water company is proposing to refund 100 customers in the north area a total of $9,115.69, ranging from the smallest refund of $13.83 to the largest of $479.95. In the south area, the company is proposing to refund 78 customers a total of $7,827.59. The bulk of those refunds -- $5,328.92 -- would go to a single larger customer, while most of the other refunds are under $100.

The total proposed refunds come out to $16,943.28.

Last year, the commission approved Hana Water Systems' request to increase its rates in phases over the next four years, starting Oct. 1. Each new phase would go into effect on Jan. 1 every year through 2022.

However, on Nov. 16, the commission received a complaint alleging that the company had used the higher October rates in determining a north area customer's September 2018 billing statement, according to PUC documents.

But Hana Water Systems countered that the commission's decision allowed the company to apply the new rates to any bills issued after Oct. 1.

"The commission was clear that the new rates are effective on Oct. 1, 2018," the company said in a Dec. 17 response. "Thus, the rates should be used to compute billings issued on or after Oct. 1, 2018."

The company added that there was no discussion in the docket "to support (complainant's) allegation that the new rates are to be applied to water usage from Oct. 1, 2018, and beyond."

On Jan. 18, the customer filed another complaint alleging that Hana Water Systems had once again taken the same action -- using the January rate increase to calculate the customer's December billing statement.

Hana Water Systems attributed the complaint to the customer's "confusion" about the new rate system. The company said that its standard billing practice is to read customer meters at or around the last three days of a given month and bill the month's usage by the 15th of the following month.

"The billings for customer usage reflect the rates that are in effect at the time the bills are prepared," Hana Water Systems said in an April 26 response.

For example, in December, customer meters were read on or around Dec. 28, and both customers in the north and south service areas were billed for the measured usage on or around Jan. 15.

"The January 2019 bills for customers reflect the rates that are in effect as of January 1, 2019 (i.e., Step 2 of the phase-in)," the company said. "Thus, bills for all HWS-North and HWS-South customers were calculated in the same way for the same billing cycle."

But in July, the commission sided with the customer and ordered Hana Water Systems to calculate the amounts it may have overcharged customers -- in both the north and south areas -- and issue refunds.

The commission said that based on Hana Water Systems' response, "it appears HWS has misinterpreted" the decision and order filed on Oct. 1, "and has prematurely charged its customers for services at new rates before those rates' effective date."

The commission clarified that "the 'effective date' of a tariff is the date upon which a public utility may charge the rates reflected in the tariff for services it provides from that point forward." It said that Hana Water Systems' claim that the rates should be used in computing bills issued on or after the date of the increase (even if the bill was for a month prior to the increase) "is inconsistent" with past court rulings.

"As HWS's revised tariff did not take effect until Oct. 1, 2018, it would be inconsistent to apply it to water usage that occurred during September 2018, when HWS's preceding tariff was in effect," the commission stated.

"Simply because HWS calculated its customers' bills after the revised tariff went into effect does not permit HWS to retroactively apply those revised rate schedules to services that were provided when the previous tariff was in effect," the commission added.

The PUC made it clear that the rate step increases "may only be applied to services provided as of their respective effective dates; i.e., beginning Jan. 1 of each respective year."

Hana Water Systems apologized to customers and said it "believed in good faith that it was appropriately applying" the new rates and that "the over-collection was, therefore, unintentional."

* Colleen Uechi can be reached at cuechi@mauinews.com.