Demand for power, telephone service to increase
By Frank Cho
Advertiser Staff Writer
An improving economy and growing new-home construction is expected to fuel rising demand for power and telephone services in the year ahead for Hawai'i's utility industry, helping utility companies improve their financial performance in 2003.
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While many utilities said they do not plan to seek rate increases in the year ahead, a few may be weighing the possibility.
An excavator lifts a section of steel pipe from a Hawaiian Railway Society locomotive and flat car, helping Island Mechanical Corp. build a pipeline for Chevron that will replace a pipeline that feeds fuel to Hawaiian Electric Co.'s Kahe Point generating plant.
"We are still reviewing our plans for 2003 and have not determined whether a rate adjustment is required," said Warren Haruki, president of Verizon Hawai'i, the main provider of local telephone service in the Islands.
Haruki said pricing on services such as long distance, wireless and high-speed Internet access are somewhat guided by market conditions and noted Verizon has not had a rate increase since 1995.
As utility companies weigh possible new rate filings, they also face taking their requests before new members on the Public Utilities Commission, which oversees the state's public utility and commercial transportation industries.
The commission has three relatively new members; the newest, former consumer advocate Gregg Kinkley, still has not been confirmed by the state Legislature. Wayne Kimura, PUC chairman, was state comptroller under former Gov. Ben Cayetano and appointed to the commission in November 2001 and chairman earlier this year. Kimura's term runs through June 30, 2006.
The third commissioner is Janet Kawelo, a deputy director of Department of Land and Natural Resources when Cayetano named her to the commission last January.
Hawaiian Electric Co. said it has no plans to seek rate hikes next year, but rising oil costs could still increase monthly electric bills as those costs are passed along to consumers.
HECO said electricity sales are expected to grow an average rate of 1.78 percent on O'ahu next year, primarily because of a boom in new-home construction that has been spurred by low interest rates. Statewide, however, the biggest growth in power demand is expected to be on Maui, 2.39 percent, and on the Big Island, 2.13 percent.
"Our greatest operational challenge for 2003 is on the Big Island, where power margins are slim," said Chuck Freedman, a spokesman for Hawaiian Electric. "We have a power plant under construction at Keahole on the west side of Hawai'i that is about 85 percent complete but has been halted by court action."
A court ruling forced Hawai'i Electric Light Co., a subsidiary of HECO, to stop construction on its nearly completed $100 million Keahole power plant expansion. Freedman said the utility has appealed the ruling to the state Supreme Court, but it is not clear when a decision could come.
On Kaua'i, a newly formed cooperative that bought the island's utility from Citizens Utilities said it also does not plan to seek a rate increase next year and is forecasting modest growth in sales of 1 to 2 percent next year.
Kaua'i Island Utility Co-op, as part of the utilities commission's approval of its purchase, is planning to rebate roughly $3 million to customers in April, said Ed Nakaya, an energy services specialist with the cooperative.
A change in ownership also will take hold at The Gas Co., sold this month by Stamford, Conn.-based Citizens to a Singapore investment firm for $115 million. Still, the owners said that no changes are planned at Gasco, which produces and sells natural gas to 115,000 consumers in Hawai'i.
Reach Frank Cho at 525-8088 or fcho@honoluluadvertiser.com.
