Posted on: Thursday, May 31, 2001

Big Island power company may lower large users' rates

By Frank Cho
Advertiser Staff Writer

Hawaii Electric Light Co. Inc. said it wants to offer discount electricity rates to some of the Big Island's largest commercial users, and it will likely ask residential customers and small business owners to pay for it.

Increased activity by independent energy service companies to lure hotels, hospitals and other large energy users is prompting the move, utility executives said.

HELCO, a subsidiary of Honolulu's Hawaiian Electric Co. Inc., said it plans to file a request by the end of this summer for permission to lower rates for large users contemplating leaving HELCO's network.

"While (competitors) have not had major success, they have stepped up their activities particularly on Maui and the island of Hawai'i, where our rates tend to be higher," said Michael May, president and chief executive officer of Hawaiian Electric.

The company said utility revenues lost by the planned discount will likely be made up later through higher rates for other customers, if state regulators approve he plan.

Commercial users represent only about 10,000 of the Big Island's 62,000 power users, according to utility officials. But commercial users represent nearly two-thirds of all electricity sales by the Big Island power company.

"So you can see the potential impact of losing one of those large customers," said Hawaiian Electric spokeswoman Lynne Unemori.

The size and structure of the planned discount has not been determined, Unemori said. HELCO is already authorized by the state Public Utilities Commission, which regulates power sales statewide, to offer discounts of up to 10 percent to only the biggest power users on the Big Island. Large O'ahu commercial users can get discounts up to 11 percent.

The state consumer advocate, tasked to look out for the interests of consumers, could not be reached for comment yesterday.

Hawai'i rate payers, on the Big Island in particular, pay some of the highest electricity rates in the nation, according to a study by the Center for the Advancement of Energy Markets.

"On the Big Island, they are probably in the situation most likely facing other (competitive) options that would make economic sense for them to switch because the electric rates are higher than on Oahu or Maui," Unemori said.

Commercial users that would be most affected by the discounts pay an average of 15.859 cents per kilowatt-hour on the Big Island, compared to 10.268 cents on O'ahu.

Unemori said that without the flexibility to offer the discounts, these users might leave HELCO's system to generate their own power — increasing the share each small business or residential user might have to pay to maintain the network.

Unemori said any rate increase for small business and residential customers would be lower than they otherwise would have to pay to make up the loss of a large customer.

Large commercial customers are those that have an electrical demand of 25 kilowatts or more.

The commission is considering a proposal by HELCO to charge $11.40 per kilowatt to companies who drop the utility but still want to use it as a backup source of energy.