LIHU‘E — A proposal to raise Kaua‘i Island Utility Cooperative members’ rates is likely to be a key topic of conversation at the KIUC quarterly update meeting at 6 p.m. today in the KIUC main conference room. The rate hike
LIHU‘E — A proposal to raise Kaua‘i Island Utility Cooperative members’ rates is likely to be a key topic of conversation at the KIUC quarterly update meeting at 6 p.m. today in the KIUC main conference room.
The rate hike of 10.5 percent would raise the average residential bill around $16 a month, said Anne Barnes, KIUC spokesperson.
The 1,263-page KIUC rate-increase application, filed at the end of June with the state Public Utilities Commission, has prompted several information requests, or IRs, from the PUC, KIUC Chief Financial Officer David Bissell said at last month’s KIUC board meeting.
He said there were many requests for “any and all” information on a particular matter, causing the KIUC staff to scramble to make the PUC’s 10-day IR response deadline for the “thousands of pages of data” requested.
Randy Hee, KIUC president and chief executive officer, said the PUC has scheduled a public hearing on the rate increase for 6 p.m., Aug. 25, at the Wilcox Elementary School cafeteria, which is likely a sign that the PUC has accepted the KIUC application as complete.
At the KIUC June board meeting, Hee thanked board members and staff for their work completing the rate-case application.
“Of course, this is just the beginning,” and there will be more time and effort needed to usher the application through the state PUC deliberation process, Hee said.
In March, KIUC gave notice of its intention to make this filing, then held public meetings and conducted a public-information program, according to an earlier KIUC press release.
In June, at a special meeting, KIUC’s board approved a resolution to proceed with the filing.
“We have listened carefully to the comments made at the public meetings that we held, what members have said to our directors, and discussion throughout the community prior to moving forward with this filing,” Hee said.
“We know that any rate increase is tough for our members, especially in the current economy,” he added. “Nevertheless, it is necessary so we can assure the cooperative’s financial stability and lay the financial foundation for a clean-energy future that is not so vulnerable to high oil prices.”
Hee said that, through the application, the cooperative is requesting PUC approval of the following items:
∫ Raising rates by 10.5 percent across all rate classes to collect an additional $12.99 million in revenues over the cooperative’s current projected 2010 revenues at current rates;
∫ Change the cooperative’s rate structure to be more open and transparent by showing the cost of fuel and purchased power separately from the cooperative’s other rates, and to eliminate the efficiency incentives in the ERAC (Energy Rate Adjustment Clause) so that it only allows for recovery of actual costs of fuel and purchased power.
“The current ERAC was approved with the last rate case in 1996,” Hee said.
“The ERAC adjusts as fuel and purchased-power costs fluctuate from the base amount established during that last rate case. The ERAC also provides an economic incentive to produce power efficiently,” Hee said. “That incentive provides additional revenues to KIUC when it can operate more efficiently than the target set forth during the last rate case. These additional revenues are linked to the price of oil.
“The good news is, this ERAC incentive provided the means to self-fund virtually all of our capital projects since becoming a cooperative, even while approximately $20 million has been returned to our members through patronage capital and other refunds,” Hee said.
“The bad news is, ERAC is tied to the price of oil. As the price of oil falls, so do our financial margins,” said Hee.
“Today’s lower oil prices leave us without enough revenue to remain financially stable. We have been concerned for some time that this could happen, and we had planned on filing for a rate adjustment later this year, but the recent economic downturn has also reduced our revenues and has required us to address this now,” Hee said.
“I want to emphasize that KIUC is committed to keep our members informed at every step along the way,” he said. “Our long-term goal is to give the members a financially stable cooperative and provide Kaua‘i a sustainable energy future.”
Barnes said Monday that today’s member update will include brief presentations on what each department at KIUC has been doing, discussion of progress on renewable-energy projects, the rate case and more.
What KIUC is really looking for, she said, is member input, questions and participation at tonight’s meeting, she said.
• Paul C. Curtis, staff writer, can be reached at 245-3681 (ext. 224) or pcurtis@kauaipubco.com
