We know our members and customers are feeling the crunch of skyrocketing electric rates. We at Kaua‘i Island Utility Cooperative want you to know what we are faced with, why rates are climbing, what we are doing about them and
We know our members and customers are feeling the crunch of skyrocketing electric rates. We at Kaua‘i Island Utility Cooperative want you to know what we are faced with, why rates are climbing, what we are doing about them and what you can do.
The last rate increase occurred in 1996, when Kauai Electric requested and received approval from the Hawai‘i Public Utilities Commission for a rate increase, largely to recover from damages resulting from Hurricane ‘Iniki. In 1996, the residential base rate was set at $0.17599 per kilowatt-hour. In 1998, there was a slight downward adjustment due to employee benefit cost changes, resulting in the base rate being set at $0.17489 per kilowatt-hour. This rate has not changed since then. When the base rate was set in 1996, the cost of diesel fuel used in KE’s generators was about $0.70 per gallon and gasoline was about $1.70 per gallon — and we all thought at the time that fuel prices were outrageously high.
Today, the same gallon of diesel costs KIUC $2.89 per gallon and we are paying about $3.75 per gallon for gasoline at the pump. Residential electrical base rates are still the same at $.17489 per kilowatt-hour. Because of the increase in fuel cost, the energy adjustment factor is now at $.21088 per kilowatt-hour, making the effective energy rate $0.38682 per kilowatt-hour. The energy adjustment factor — which we sometimes refer to as the Energy Rate Adjustment Clause, or ERAC — includes an efficiency incentive that has been used to increase KIUC’s operating efficiency, like the installation of what we call our Kapaia Power Station (formerly Kaua‘i Power Partners), which uses naphtha, a cheaper fuel, and operates at a higher efficiency.
If you think back to what other materials cost and what your salary was in 1996, I would venture to say that they were both a lot lower. While your salary has hopefully increased since then, I’m sure your costs have also increased. At KIUC, our costs have risen as well: materials, including copper and aluminum, and certainly wages. The fact that we are a cooperative, operating on a not-for-profit basis, has enabled us to continue operating successfully and return $17.7 million to our members during the past five years.
Your bill, however, is still high — and we know it. So, what are we doing about it? The 15-year Strategic Plan (www.kiuc.coop) recently developed by our Board of Directors includes several strategies that address this issue. These include increasing our sustainable supply of energy, increasing reliability, and ensuring fair and competitive rates. These strategies will increase the amount of our generation from sustainable, renewable sources to well more than 50 percent by the year 2023. Current projects include utilizing biomass resources that we already have on Kaua‘i. The first of these involves the Green Energy Hawaii project, for which we have a power purchase agreement for more than 47,000 megawatt-hours of energy. A 6.4-megawatt plant will utilize biomass from trees grown by Hawaiian Mahoganies in Knudsen Gap. The Green Energy Project hopes to be online sometime in 2009. We are also in discussions with Gay and Robinson, working toward an agreement that would increase, by several times, the amount of energy it supplies KIUC from sugar cane bagasse. We are also working with a wind developer on a project that could supply 10 to 12 megawatts of power from wind. Our engineers are currently reviewing solar photovoltaic and solar thermal opportunities and increasing our island’s hydroelectric generation.
No one project will provide the complete solution, but we are confident we can solve our energy problems with a diversified mix of solutions. The mix also includes the installation of newer, more efficient conventional generation units capable of burning different biofuels as well as petroleum fuels. This will ensure our ability to supply reliable power even when our generation mix includes several intermittent sources, like wind and solar.
We are currently reviewing our rate structure. The last rate change occurred when the utility operated as an investor owned, for-profit company; we are now a member-owned, not-for-profit company, and our goals are different. Our goals now target serving our members and customers, not providing a return for shareholders.
Change will occur, but the changes will take a few years. Decisions made by our Board of Directors today may take several years to reach completion. Generation projects take years to finish because of the engineering, permitting, manufacturing and construction time requirements. Meanwhile, oil prices continue to climb and affect the cost of everything.
Members and customers can do much for themselves by using less energy. To help our members use electricity efficiently and reduce their bills, KIUC already offers several energy-efficiency and member advantage programs. These programs help participants better manage their energy costs. The wise use of electricity and sensible energy use practices benefit all of the people of Kaua‘i. It results in lowered energy costs, with an improved quality of life and a cleaner environment. Call us and ask for help at 246-4300.
We work to provide the best service to our members, keep the lights on and keep our members and employees safe. We are working to build an electric utility that will use less oil, that will help you use less electricity and help you use what you do use more efficiently — all of this at fair rates.
We at KIUC are confident we can get there. We see a future where we will live on Kaua‘i efficiently using sustainable energy.
