Maui Electric Co. customers who are not on solar power will see their rates rise following the Public Utilities Commission's approval Friday of "sales decoupling" tariffs for the utility.
The sales decoupling mechanism includes the Revenue Balancing Account tariff, designed to "decouple," or break the link, between sales and power revenues, in the hopes of removing the disincentive for the utility to adopt energy efficiency and sustainable power sources, such as wind and rooftop solar, the PUC said in a news release Monday.
The formula-driven Rate Adjustment Mechanism, the second part of the program, is intended to compensate Hawaiian Electric Co. companies for changes in utility costs and infrastructure investment to reduce the frequency of rate increases.
Maui customers using 600 kilowatt hours per month, the average energy consumption on the island, will see their rates rise $4.90 in the tariff adjustment. The tariff adjustment will cause rates to rise $3.27 on Molokai and Lanai for 400 kilowatt hours per month. Molokai and Lanai have a lower average power usage.
The PUC said that the tariff increase was "largely due" to increased capital costs and lower sales over the past year.
The tariff increase applies from Sunday to May 31, 2015. This is the second annual filing for MECO. HECO has filed four consecutive years, while this is the third annual filing for Hawaii Electric Light Co.
Maui County Energy Commissioner Doug McLeod expressed concern Monday over HECO receiving these tariffs without long-range plans to wean itself off of them.
"Decoupling was never intended to be a permanent thing," he said. "It was always a stopgap thing."
He said decoupling was meant to help the utilities "buy time" as they come up with long-range plans to handle renewable energy. While allowing the utilities to buy time makes sense, Mayor Alan Arakawa is "worried" that HECO is "relying on" the decoupling tariffs "and that is a problem," McLeod said.
McLeod noted that only nonsolar customers pay the tariff; that means 90 percent of MECO's customers are "subsidizing" the 10 percent of customers who have solar and have signed net energy metering contracts. Those with rooftop PV receive retail credit for electricity generated for the grid, which is used to offset the electricity they use at night and on cloudy days.
"It (the tariff) is rising every year, and there is no end in sight," he said, noting the growing percentage of photovoltaic customers.
"Any increase in electric bills is difficult," said MECO President Sharon Suzuki on Monday, indicating that the utility does have a game plan for the future.
She explained in an email that, with more than 50 percent of electricity bills in the county tied to fuel prices, MECO has been "working hard to reduce that dependence" and "finding ways to add more renewable energy and lower any long-term fuel costs." That includes retiring the oil-powered Kahului Power Plant in the next few years.
The tariff is necessary to "make that important transition," Suzuki said, noting that the money netted will help pay for more than $100 million in new capital projects. Those projects include the installation of a battery energy storage system to help integrate more variable energy sources, such as solar and wind.
Suzuki agreed with McLeod that MECO needs to address the "incredible rate" of growth of photovoltaics as it maps out "a comprehensive and sustainable energy plan." Maui and Hawaii are the nation's leaders in PV installations, she said, adding that there are more than 5,000 PV systems in place in the county.
"We look forward to increasing that amount as part of our island's energy future," she said.
Suzuki said that "making that critical shift to a more modernized grid will mean balancing the transition to less oil and pursuing more renewable energy sources" while maintaining "reliable, affordable power."
In a different proceeding, the PUC said that it currently is reviewing whether changes should be made to the Rate Adjustment Mechanism to better track utility performance measures and to help create cost savings to customers. A decision on that proceeding is expected by the end of the year.
* Lee Imada can be reached at firstname.lastname@example.org.