LIHUE — The Department of Water announced there will be no cost of power adjustment rate for fiscal year 2016-2017, effective July 1.
The rate will decrease from 12 cents per thousand gallons to no cost at all.
The cost of power adjustment rate is determined by calculating the sum of two components.
The first is the difference between the budgeted energy costs and the projected energy costs for fiscal year 2016-2017.
The second is the difference between the actual energy costs incurred for the most recent 12-month period and the energy costs projected for fiscal year 2016-2017.
All energy cost projections are taken from the DOW’s water rate study.
In the future, if energy costs become higher than the DOW’s projected allowance then the cost of power adjustment rate will also increase.
Energy costs are a significant percentage of the DOW’s annual expenses. From April 2015 to March 2016, energy costs totaled to about $2.6 million, which is about 9 percent of DOW’s total water sale revenues of about $29.8 million during this same 12-month period.
The majority of DOW’s revenues are generated from water delivery sales, and are used for operational maintenance and construction replacement of the water system, according to a press release. The DOW does not collect any revenue from real property taxes or the county’s general fund.