West Hawaii Today
Notice #: 0001322575-01
Legal Notices

On March 31, 2021, 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 primarily a Revenue Balancing Account (RBA) provision and an Annual Revenue Adjustment (ARA) 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. In addition, in between rate cases, the PUC provided a rate adjustment mechanism (RAM) to recover some of the costs for capital improvements, higher costs due to inflation, and new initiatives. Rates increase or decrease with RBA shortfalls or over-collections and increase for the authorized RAM. In addition, 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 above the authorized ROE 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 2020, the utility’s ratemaking ROE was 9.23%, which is less than its authorized ROE of 9.50%. On December 23, 2020, the PUC issued a decision and order in the Performance-Based Regulation (PBR) docket, which established a new PBR Framework for the Company, which is incorporated in the annual decoupling mechanism. The PBR Framework includes, among other matters, a five-year multi-year rate plan (MRP) with an index-driven ARA, which replaces the RAM. In addition to annual revenues provided by the ARA, the Company may seek relief for extraordinary projects or programs through the Exceptional Project Recovery Mechanism (EPRM), formerly known as the Major Project Interim Recovery (MPIR) adjustment mechanism, and earn financial rewards for exemplary performance as provided through a portfolio of Performance Incentive Mechanisms (PIMs) and Shared Savings Mechanisms (SSMs). The PUC also ordered the continuation of (1) the RBA, (2) the pension and other postretirement benefit tracking mechanisms, and (3) Energy Cost Recovery Clause, Purchased Power Adjustment Clause, and other recovery mechanisms. The transition to the new ARA includes the continuation of the 2020 RAM Revenue Adjustment for the 2020 RAM Period. If the Revenue Decoupling Mechanism determines that the annual utility revenues 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, 2021, to December 31, 2021. This would replace the existing RBA Rate Adjustment. According to the Revenue Decoupling Mechanism calculations provided in the March 31, 2021 filing, Hawai’i Electric Light Company’s recovery of the revenues through the existing RBA Rate Adjustment would increase by $3.961 million from the amount which has been reflected in customer bills since June 1, 2020. As part of the new PBR Framework, the Revenue Decoupling Mechanism is a cumulative mechanism that will continue during the five-year MRP in which there will be no general rate case applications. In the fourth year of the MRP, the PUC will comprehensively review the PBR Framework to determine if any modifications or revisions are appropriate. If approved by the PUC, this will result in an increase of 0.4676 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 increase by $2.34, effective June 1, 2021. 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 (WHT1322575 4/11/21)