Hawaii PUC Approves New Electric-Rate Method To Help Spur RE

The Hawaii Public Utilities Commission (PUC) has approved a new method for setting electric rates designed to encourage a clean energy economy for Hawaii.

Under the new method, electric revenues would be de-linked, or decoupled, from the amount of electricity (kilowatt-hours) sold. The decoupling proposal was submitted jointly by the Hawaii Division of Consumer Advocacy and the Hawaiian Electric utilities as part of a PUC docket opened in October 2008.

‘Ensuring the right regulatory model is in place will help move Hawaii toward a clean energy future that will benefit customers and our economy, protect the environment, increase our energy security and allow the utility to better provide the services and support we need to get there,’ says Dick Rosenblum, president and CEO of Hawaiian Electric Co. (HECO).

Under a decoupled system, the PUC approves a revenue level based on the services it authorizes the company to undertake on behalf of customers. Rates are then adjusted based on varying sales levels, allowing the utility to continue recovering the costs of providing those services, but not earn additional profit from higher sales. This model provides greater support for energy efficiency and conservation and achievement of Hawaii's clean energy goals, according to HECO.

Under the agreement with the Consumer Advocate, rates also would increase or decrease between formal rate cases largely based on independent cost indices, and adjustments would be allowed to recover PUC-approved capital additions.

The PUC's decision requires the Consumer Advocate and the Hawaiian Electric utilities to propose a final decision and order within 30 days detailing the components and implementation for decoupling. Other parties in the docket will be able to comment on this proposed order. The PUC must issue a final decision and order before decoupling can be implemented.

SOURCE: Hawaiian Electric Co.

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