Agreeing that Maui County residents are "increasingly frustrated" with Maui Electric Co., Mayor Alan Arakawa has written to Public Utilities Commission Chairwoman Hermina Morita to thank the commission for its recent decision to lower power rates.
Maui residents "know that when the wind turbines are not moving on a windy day, something is wrong with MECO's system," he said in a Tuesday letter released Friday to The Maui News. "On behalf of our financially stressed residents, 'mahalo' for ordering a reduction in rates."
On May 31, the PUC ruled that MECO would get a 1.29 percent rate increase, which would generate $5.3 million. In a prior ruling, the PUC had given the power utility an interim rate hike of 3.16 percent, or $13.1 million. The commission ordered MECO to refund customers nearly $8 million after its ruling in favor of the lower rate increase.
In his letter to Morita, Arakawa was critical of Maui Electric.
"We are grateful to the commission for requiring consideration of a 'sustainable business model' that would allow the utility to make necessary upgrades to lower costs of operation," Arakawa said in his letter.
"We agree that, until now, MECO has not employed 'sound business practices focused on customer value,' '' he said.
Arakawa referred to "previously ignored studies by experts" that conclude that "cost-effective projects like replacing the 1948 and 1949 Kahului Power Plant (generators) would pay for themselves, either as standalone storage projects or a combination of quick start generation, plus storage."
The mayor supported a MECO plan to decommission the Kahului power generators by 2019, or sooner, beginning in 2014.
"This is a step in the right direction," he said.
Arakawa was critical of Maui Electric's action plan, saying that a sustainable business model, by definition, "must be based on rates the customer can afford and then it must incorporate community concerns and impacts."
"The MECO Action Plan does not respect community input received at countless public hearings," he said. "It seems to treat projects with significant public opposition - like the new 69-kilovolt transmission lines in South Maui to accommodate 'future growth' - as having equal value with projects like storage that could lower . . . operating costs of the business. The public wants projects to lower costs."
Despite multiple requests from Maui County, Maui Electric "still refuses to analyze 'lowest cost' as a scenario to be evaluated" under its integrated resource planning, the mayor said in his letter.
Darren Pai, a spokesman for MECO parent company Hawaiian Electric Co., said Friday that the utility respects Arakawa's opinions and shares his commitment to clean energy.
"We are working to meet our customers' needs through a wide range of actions to reduce costs to our customers, reduce our dependence on oil and modernize our grid," Pai said. "Given the increasingly dynamic energy environment, our action plans need to be flexible. The plans we filed with the Public Utilities Commission reflect this need and our commitment to increasing our use of clean energy and lowering costs for our customers.
"It's important to note that this is the first year that integrated resource planning is going through a new PUC-approved process and given the many different ideas and the number of parties involved, it's understandable that there are differing expectations," he said.
The planning work "is an ongoing process, and there will be many opportunities for further input," he said. "We appreciate all the contributions to this process. The costs that Maui Electric may recover will be ultimately decided by the PUC."
Because the Public Utilities Commission's May ruling reduced the rates being charged, MECO was ordered to refund $7.8 million, plus interest to its customers on Maui, Molokai and Lanai. MECO has announced a plan to refund the money in the form of a credit on customers' bills. However, the utility has asked the panel for a partial suspension of the refunds.
Under the current plan, a typical Maui customer using 600 kilowatt hours per month would be refunded about $30, while a typical Molokai or Lanai customer using 400 kilowatt hours would get $24.
If the PUC grants Maui Electric's request for a partial suspension of refunds, the amount returned to customers would be less than $7.8 million set by the commission's final decision.
Former customers during the time when a higher interim increase was in effect will be eligible for the refund. Information will be released later for refunds for those customers.
Maui Electric anticipated that it would start issuing refunds in September and complete the process by the end of October.
* Brian Perry can be reached at email@example.com.