West Hawaii Today
Notice #: 0001276245-01
Legal Notices

On March 31, 2020, HAWAI’I ELECTRIC LIGHT COMPANY, INC. submitted its annual Revenue Decoupling Mechanism filing to the HAWAI’I PUBLIC UTILITIES COMMISSION (PUC). The Revenue Decoupling Mechanism is designed in part to encourage energy conservation and increase utilization of customer renewable energy resources by removing the link between the utility’s revenues and its sale of electricity. Simply stated, “decoupling” allows the utility to recover approved costs to provide service even if sales decline. It also allows the utility to file less frequent rate cases. The Revenue Decoupling Mechanism filing encompasses a Revenue Balancing Account (RBA) provision and a Rate Adjustment Mechanism (RAM) provision. In particular, under decoupling, the PUC approves in a formal rate case a revenue level needed to recover the investments and expenses the Company requires to provide electrical service to its customers. As electricity usage levels vary between formal rate cases, the RBA allows the utility to still recover the costs for providing those services, but not earn additional profit from higher sales. Rates increase or decrease with RBA shortfalls or over-collections. Between rate cases, the Company makes capital improvements and may experience higher costs due to inflation as well as new initiatives. Therefore, in addition to rate fluctuations due to the RBA, the RAM allows the Company to increase rates up to a factor of inflation to recover some of the cost increases. If the Company earns more than the authorized Return on Equity (ROE) approved by the PUC for the prior year (on a “ratemaking basis”), the Decoupling Mechanism requires the Company to share its earnings with customers through an Earnings Sharing Mechanism. The utility is not permitted to use the Earnings Sharing Mechanism to increase revenues to make up any differences from the authorized ROE. For year 2019, the utility’s ratemaking ROE was 6.72%, which is less than its authorized ROE of 9.50%. The RAM calculation reflected in the current decoupling filing was determined pursuant to the joint decoupling proposal submitted by the Hawaiian Electric Companies1 and the State Division of Consumer Advocacy and approved by the PUC on August 31, 2010. On March 31, 2015, the PUC issued Order No. 32735 which directed the Companies to make certain modifications to their decoupling mechanism and apply these modifications to the Companies’ 2015 decoupling filings and future decoupling filings going forward. Among the modifications, the PUC amended the RAM Revenue Adjustment to be the lesser of (a) the RAM Revenue Adjustment determined according to “existing” tariffs and procedures or (b) a RAM Revenue Adjustment Cap (RAM Cap). The RAM Cap is based on the target revenues, determined in accordance with the RBA and RAM tariffs, multiplied by the cumulative annually compounded increase(s) in the gross domestic product price index for intervening years, adjusted to include applicable revenue taxes. If the Revenue Decoupling Mechanism determines that the annual utility revenue should be decreased or increased, the difference will be reflected in a per-kilowatt-hour rate adjustment credit or charge during the period from June 1, 2020 to May 31, 2021. This would replace the existing RBA Rate Adjustment. According to the Revenue Decoupling Mechanism calculations provided in the March 31, 2020 filing, Hawai’i Electric Light Company’s revenues would be decreased by $6.761 million from the amount currently recovered through the existing RBA Rate Adjustment which has been reflected in customer bills since January 1, 2020. The Revenue Decoupling Mechanism is a cumulative mechanism and is reset at the next general rate case’s interim or final decision and order. If approved by the PUC, this will result in a decrease of 0.6475 cents per kilowatt-hour for each customer class reflected in the RBA Provision tariff. If approved by the PUC, a current typical residential monthly bill for a household using 500 kilowatt-hours would decrease by $3.24, effective June 1, 2020. The actual impact of the rate adjustment, if approved, will vary by customer type and actual electricity usage. For more information regarding the Revenue Decoupling Mechanism, please visit www.hawaiielectriclight.com or contact: Hawai’i Electric Light Company, Inc. P. O. Box 1027 Hilo, HI 96721-1027 Hilo: 808-969-6999 Kona: 808-329-3584 Waimea: 808-885-4605 ___________________________ 1The “Hawaiian Electric Companies” are Hawaiian Electric Company, Inc., Maui Electric Company, Limited, and Hawai’i Electric Light Company, Inc. (WHT1276245 4/12/20)