(Kahului, Hawaii) – The Hawaii Public Utilities Commission (PUC) has issued a final decision for Maui Electric Company’s (MECO) 2010 rate case.
The PUC finalized a 1.5% increase, or $4.7 million in annual revenues, effective May 4, 2012. This amount has already been reflected in electric bills since August 2010, when the PUC approved an interim increase. The PUC is still reviewing MECO’s pending 2012 rate request, and an interim decision in that case may be issued later this month.
The 2010 rate filing was requested to help pay for more than $122 million in capital improvements such as replacement and upgrade of power plant control systems at the Maalaea Generating Station, new or expanded substations to support past and future growth and improve service, as well as increasing operations and maintenance costs for the utility’s electric system.
In addition, the PUC decision implemented a new method for setting future electric rates called “decoupling.” Decoupling is one of many major policy steps intended to reduce Hawaii’s dependence on imported oil.
Decoupling breaks the historic link between electricity usage and utility revenues, which removes the incentive for utilities to increase the use of electricity. This allows utilities to better support increased energy efficiency, conservation and increased use of renewable energy resources. This helps to reduce the amount of fuel oil used to produce electricity. More than 50% of the cost electricity currently goes to pay for fuel.
Individual electric bills will still be based on the amount of electricity a customer uses, so customers will still have an incentive to conserve and use electricity efficiently.
Decoupling will have no immediate impact on MECO customer bills. Decoupling has already been implemented for Hawaiian Electric Company on Oahu and Hawaii Electric Light Company on Hawaii Island.