Confidential financial estimates filed Friday by Hawaiian Electric Co. suggest electric bills for Hawaii residents are increasing much more than they were supposed to under a rate-structuring policy put in place nearly three years ago.
Oahu residents are currently paying about $95 extra a year because of the so-called decoupling policy. On Maui, residents are paying about $57 more a year and on the Big Island, customers are being charged an additional $26 a year.
On Molokai and Lanai, residents are paying about $38 extra a year.
The fees are expected to jump even more in June, according to HECO’s projections.
Oahu residents are expected to be paying an additional $66 annually. The fee for Maui and Big Island residents is expected to jump by about $45 a year. And on Molokai and Lanai, residents are expected to be paying $29 more.
HECO’s estimates are part of a review by the Hawaii Pubilc Utilities Commission into the consequences of the 2010 decision by the PUC to allow HECO to structure rates in a way that allows the for-profit utility to continue to turn a profit while encouraging customers to use less electricity.
The new method for setting electricity rates was supposed to have a negligible effect on customer electricity bills. But the new financial projections suggest it’s been costly for Hawaii residents.
The projected rate increases, under a program known as “decoupling,” are based on an average 600 kilowatt-hour monthly electricity bill. The charges show up as a line item on customer bills called “RBA rate adjustment.”
HECO spokesman Darren Pai declined to comment on the filing.
The estimates were filed Friday with Hawaii’s Public Utilities Commission and were supposed to be kept confidential, PUC officials said.
But HECO’s projections were briefly made public when the PUC mistakenly posted it online. Civil Beat and others receive notification when a document is posted and can access it. The PUC took the document down shortly after it was posted.
PUC Chair Hermina Morita asked Civil Beat not to publish a story, arguing it is part of a confidential process. She said reporting the estimates would somehow harm the PUC’s review but she couldn’t articulate a reason beyond the fact that the utility doesn’t want the numbers to be made public and filed them with the PUC with the understanding they wouldn’t be released. Publishing them might make the utility reluctant to share information with the PUC in the future, Morita said.
But Civil Beat believes it’s important for the public to know as much as possible about why they pay high electric rates, especially if the rates have gone up because of a public policy decision.
The numbers in the document are estimates. Actual rate changes are expected to be made public in coming months.
Traditionally, HECO, like other utilities, had every incentive to sell as much electricity as it could in order to maximize profits. But as concerns have mounted about climate change and Hawaii’s heavy dependence on costly, imported oil, the state’s policy has shifted toward conservation.
This prompted the decoupling policy, which cuts the link between a utility’s total revenues and customers’ electricity use.
However, commissioners have grown increasingly concerned that the decoupling rate structure, which automatically adjusts rates up or down every year without requiring a PUC review of the utility’s costs, doesn’t include adequate protections for consumers.
Last June, the PUC decided to review the policy and HECO’s new estimates are part of that review.
Energy experts say that a central problem with decoupling is that HECO continues to increase its overall costs while its sales continue to decline, in large part due to the number of residents switching to solar electricity.
That means that there are fewer people left to cover HECO’s operating costs.
Doug McLeod, Maui County’s energy commissioner, said that the “large increase” in the monthly charge “is a direct result of the explosive growth” of solar.
As of the end of last year, 10 percent of Oahu customers, 8 percent of Maui customers and 7 percent of Big Island customers had solar, according to HECO.
“Imagine how large the decoupling charge will be when 25 percent of the utility’s customers have solar PV,” McLeod said in an email.
Some state officials and HECO executives said last year that they are considering raising the monthly fee of about $20 that solar customers pay the utility for keeping their systems hooked up to the electric grid. Increasing the charge, while unpopular with the solar industry, could take some of the burden off the rest of ratepayers who are having to cover most of the utility’s operating costs.
But state regulators have also said that HECO needs to do more to reduce its costs.
Regulators are concerned that there aren’t sufficient safeguards in place to make sure that the utility isn’t increasing costs in order to maximize profits at the expense of ratepayers.
“With the recent persistent decreases in utility electric sales volumes, for example, the HECO companies do not, by any discernible indications, appear to feel financially compelled to implement corresponding decreases in utility expenses to the extent that would occur with declining net revenues,” PUC commissioners wrote last year when they began the review.
HECO has announced policies in recent months to reduce its costs, including taking some of its oil-fired generators offline as increasing amounts of renewable energy come online.
Last week, HECO deactivated its Honolulu Power Plant and says it will take two generating units at the Waiau power plant on Oahu offline by 2016. HECO also plans to retire the Kahului power plant by 2019.
The utility has also deactivated its Shipman plant on the Big Island.
— Civil Beat Editor Patti Epler contributed to this story.