PUC approves HELCO’s decoupling request

The state Public Utilities Commission on Wednesday approved Hawaii Electric Light Co.’s request to implement a decoupling mechanism.

HELCO filed the request, which was included with its 2010 rate request, in late 2009. HELCO officials said Thursday the decision may result in a small reduction in electric rates for Hawaii Island electric customers at an indeterminate point in the future.

The exact rate adjustment must be determined based on detailed calculations. The PUC must then also approve that rate adjustment, HELCO officials said.

HELCO filed the rate case to help pay for more than $200 million in capital improvements already being used to serve customers. Those improvements include the steam generating unit at Keahole and two West Hawaii transmission line upgrades. The rate case also covered increasing operations and maintenance costs for the island’s electric system.

HELCO’s original request was for a 6 percent increase, to generate $20.9 million in revenues. The PUC approved a 1.74 percent interim increase, which was seen on bills beginning in January 2011.

Decoupling will have no immediate impact on customer bills, officials said. Any annual adjustment, after review by the Consumer Advocate and PUC, is expected to be “modest” and begin no earlier than this summer.

Decoupling breaks the link between electricity usage and utility revenues. “This allows utilities to better support increased energy efficiency, conservation and increased use of renewable energy resources,” a news release from HELCO said. “This helps to reduce the amount of fuel oil used to produce electricity. 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.”