Electricity rates sock Hawai'i residents
By Frank Cho
Advertiser Staff Writer
Despite passing the biggest rate hike in its history to stave off a summer energy crisis, California electricity is still a bargain by most Hawai'i standards.
Hawaiian Electric Co. Inc. and its Neighbor Island subsidiaries and Kaua'i Electric charge their customers on average more for power than any other utility in the nation, according to the U.S. Department of Energy.
Hawai'i residents pay even more than people in California, where rates have spiked nearly 50 percent since January to an average of 15.6 cents per kilowatt-hour — just behind Hawai'i's statewide average of 16.4 cents.
The average customer nationwide pays about 8 cents a kilowatt-hour.
It's the price of paradise, said Jenny Fujita, spokeswoman for Kaua'i Electric.
"We pay more because we are isolated, have poor economies of scale and have had two hurricanes after which we had to rebuild our systems," Fujita said.
But Hawaiian Electric, parent company of Maui Electric Co. Inc. and Hawaii Electric Light Co. Inc. on the Big Island, said higher Neighbor Island rates are skewing the survey.
Residential electricity users on O'ahu are paying an average of 14.4 cents per kilowatt-hour, the seventh-highest rate in the nation, Fred Kobashikawa, spokes-man for HECO, said yesterday.
Maui residential customers pay about 19.2 cents per kilowatt-hour while Big Island customers pay about 22.8 cents.
"Most of our paying customers are on O'ahu, so using a consolidated amount is not fair when making an assessment of what the rates are," Kobashikawa said.
Kobashikawa also said directly comparing Hawai'i rates with Mainland rates is difficult because not all utilities report rates the same way.
"We include everything in the rate: the cost of generation, transmission and distribution along with some other charges," Kobashikawa said. Mainland companies sometimes only handle a portion of the system and do not report the entire cost.
In general, Hawai'i utilities are more expensive to operate because they cannot import power from other regions and need to build all their own power-generating systems, Kobashikawa said. And because there is no outside source of backup power, local utilities say they have to build their own backup systems, increasing their costs even further.
Fujita said Hawai'i utilities also have a smaller population base to spread the system costs over, which increases the rate for each customer.
Despite Hawai'i's high rates, Kaua'i Electric, which charges about 23.3 cents per kilowatt-hour, has not raised rates since 1994, and even slightly lowered rates three years ago.
Hawaiian Electric has not raised rates in about six years, but its subsidiaries have received recent rate increases to pay for new equipment.
Hawaii Electric Light Co. sought a $15.5 million rate increase last year, but was opposed by the state consumer advocate.
State regulators eventually approved an $8 million increase for Big Island residents.
"(Consumers) want to pay the least amount they can to utilities and still ensure constant reliable service," said Gregg Kinkley, executive director of the division of consumer advocate.
Kinkley said that, on average, Hawai'i electricity costs are higher than on the Mainland, but he does not expect that to last for long.
California's electricity system is in shambles, the state is drawing down its budget surplus at a rate of $50 million or more a day to pay for electricity, utilities are broke, rates are going up and summer blackouts are looming.
Customers there will begin paying the new, higher rates this month to recoup more than $6 billion utilities there have spent to keep the lights on.
Kinkley said artificial price controls have kept prices in California below Hawai'i's rates for the time being, but problems there are likely to get worse before they get better.
"Despite recent increases in California, they are not meeting their costs (to produce electricity)," Kinkley said. "When those price caps come off people will be saying, 'Lucky we live Hawai'i.'"
Frank Cho can be reached by phone at 525-8088, or by e-mail at fcho@honoluluadvertiser.com.
