Refund proposed for Hawaiian Electric customers

For more information at HECO:
Lynne Unemori: 808-543-7972

FOR IMMEDIATE RELEASE
October 26, 2007

(NOTE TO EDITORS: This PUC proposed decision relates to HECO’s 2005 rate case, not the 2007 rate case for which an interim increase was approved earlier this week)

(Honolulu, HI) -- The Hawaii Public Utilities Commission (PUC) has issued a proposed final decision in Hawaiian Electric Company’s 2005 rate case for Oahu customers. The decision, when finalized, could result in an estimated refund to Oahu customers of $15 million. The timing of any refund will depend on when the PUC issues its final order in the case.

Previously, in September 2005, the PUC approved a net 3.3%, or $41 million interim rate increase in the case, which has been reflected in electric bills since that time. Due to a change in method used in calculating the increase, the PUC’s proposed final decision would reverse a portion of that increase, and finalize a lower increase of a net 2.7%, or $34 million. The total estimated refund includes interest from September 2005 when the higher interim increase originally went into effect.

The impact of the refund would vary by type of customer and actual electric usage. For example, a residential household using 600 kilowatt-hours a month would see a one-time refund of about $17.

The PUC’s proposed final decision does not change its earlier approval of cost recovery for operations and other costs and capital improvements made to the electric system through 2005. The difference between the earlier higher interim rate increase and the proposed final amount is solely due to the PUC’s reversal of its decision on the ratemaking accounting treatment for the company’s prepaid pension asset.

The decision is a “proposed” final decision because two of the current PUC commissioners were not yet members of the Commission when the evidentiary hearing was held for this rate case. State law requires a proposed final decision first be issued when this is the case.

Hawaiian Electric filed the 2005 request in November 2004. Its final request was for an overall net increase in revenues of $42 million, or 3.4%. The 2005 rate increase was primarily to pay for capital projects to improve electric service reliability, including:

•	Major underground cable replacements, including upgrading the underground cables in the critical downtown network which serves key centers of government and business.
•	A new 46-kilovolt (kV) sub-transmission line from Waialua to Kuilima, placed in service in 1999.
•	HECO’s underground 138kV transmission lines connecting the Archer, Kewalo and Kamoku substations, completed in 2002 and 2003. (These projects are part of an important southern transmission corridor that HECO has been working on since the early 1990s to provide an alternate route to deliver power to customers.)
•	The cost of undergrounding lower voltage distribution lines along Kamehameha Highway in Pearl City in 1998.
•	A new, modern and more efficient underground fuel pipeline, running in the State Energy Corridor from Campbell Industrial Park to HECO’s Waiau Power Plant completed in 2004.

Hawaiian Electric also has an open 2007 rate increase request to recover costs of subsequent investments in capital projects and higher operating and maintenance costs incurred since the time of the 2005 rate filing. As previously announced, on October 22, the PUC approved a 4.96% interim increase, or $69.997 million in the 2007 case. A final decision in that case will come at a later date. As with the 2005 case, if the final decision approves a lower increase, the difference will be refunded to customers with interest.

# # #