HEI may raise rates to pay for pensions

By Frank Cho
Advertiser Staff Writer

Hawaiian Electric Industries Inc. yesterday said it is considering asking for a rate increase to help offset rising expenses that may include millions of dollars in additional pension costs.

HEI, which owns the state's biggest electric utility company, and American Savings Bank said it projects pension expenses of $12.6 million this year, compared to a credit of $4.5 million last year, because of the poor stock market performance of its pension investments. Much of those projected costs, or about $9 million, will come from its utility subsidiary, which recorded a credit of $6.4 million last year.

Many public companies are struggling with rising pension costs because of the declining value of their investments.

HEI's $17.1 million swing in total pension benefit costs after taxes will reduce profits this year. The company's utility subsidiary has not made a determination on whether to seek a rate increase that would cover its pension costs as well as other projected expenses. Such a request would not be filed with the state Public Utilities Commission before this fall. The request would require PUC approval and would not take effect before next year. The utility has not raised rates since 1995.

"We will attempt to offset as much of the swing as we can through cost savings and productivity improvements," said Robert Clarke, HEI's chairman, president and chief executive officer. "But we are not going to jeopardize reliability or the pursuit of our strategic programs to mindlessly just offset all of it."

HEI said Monday that fourth-quarter profits rose nearly 14 percent, reflecting higher demand for electricity.

HEI stock closed yesterday at $43.28 a share, down 65 cents. The stock is up about 10 percent from a year ago.