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The Honolulu Advertiser
Posted on: Wednesday, January 14, 2009

Hawaii electric bills ease — HECO rates down 12% so far

By Greg Wiles
Advertiser Staff Writer

Tumbling oil prices are sending electricity prices in Hawai'i lower, with rates expected to decline through February and possibly March at Hawaiian Electric Co.

The company yesterday said rates for electricity used on O'ahu in January are 12 percent less than December and that rates at its Maui and the Big Island utilities are also lower. The Kaua'i Island Utility Cooperative also lowered its effective rate this month.

The decline is welcome news for Hawai'i consumers who were battered last year by rising gasoline and electricity prices as crude oil spiked. The effective residential rates didn't rise as steeply as oil prices did, but Hawai'i's already nation-leading electricity costs jumped to more than 30 cents per kilowatt-hour.

In September, the statewide average reached almost 37 cents a kilowatt-hour — more than three times the national average.

But rates have come down in recent months as utilities burn through fuel oil and other petroleum-based fuel in storage tanks and buy new fuel at lower prices. Petroleum fuels three-quarters of the state's electrical generators, according to U.S. Energy Information Administration data. That's more than any other state.

"We expect the effective rate for February to be lower than that for January ... based on fuel costs we are paying today," said HECO spokesman Peter Rosegg.

HECO said the average utility customers on O'ahu using 600 kilowatt-hours of electricity should receive bills of $138.98 if their billing period ran from Jan. 1 to Jan. 31.

That's down from the $158.05 the same customer paid in December for the same amount of electricity.

Rosegg said it is possible that electricity rates will decline further in March, but it's difficult to project because oil prices have been flattening in recent months.

HECO has been criticized in recent weeks because of the Dec. 26 blackout that darkened all of O'ahu. Even its recent announcements about effective rate cuts have been derided by some customers who contend rates should have fallen faster given plummeting oil prices.

Crude oil futures hit a record price of $147.11 a barrel in July and traded just under $38 yesterday. Meanwhile O'ahu's effective electricity rate has fallen at a much slower pace, about one-third since reaching a high in September.

Both the utility and the state Public Utilities Commission have received phone calls from customers asking why rates haven't fallen further. On Monday, the PUC put out a question-and-answer paper on the issue.

"We track this," said Carl Caliboso, PUC chairman, noting some people incorrectly compare the 70 percent-plus decline in crude oil prices to the 33 percent fall in electricity rates.

Caliboso said electricity prices never surged as much as crude oil and therefore aren't declining at the same rate. The PUC has been reviewing monthly reports from HECO. Other factors also make a direct comparison difficult.

"We haven't seen any problems," Caliboso said.

The O'ahu bills for January electricity usage will be charged at 21.7 cents per kilowatt hour, the lowest since October 2007. HECO passes through increases in fuel oil costs to consumers in something that's called the Energy Cost Adjustment clause on its bills.

EVERY ISLAND DIFFERS

Rate changes aren't uniform across HECO's units on O'ahu, Maui and the Big Island because each island uses a different mix of fuel.

O'ahu, for example, uses mostly low-sulfur fuel oil, while Maui uses diesel and the Big Island uses mostly medium sulfur fuel oil. The islands also have different storage capacities that figure into how fast fuel bought at higher prices is used up before lower-cost inventory is figured into the electricity prices.

Typical January bills will be as follows:

  • On O'ahu, the effective residential rate will decline to 21.7 cents per kilowatt-hour from 24.9 cents in December.

  • The typical Maui island household using 600 kilowatt-hours should see their January bill drop to $161.61, or $30.17 less than December. The effective rate is falling to 25.6 cents per kilowatt-hour.

  • Big Island residential customers will see a decline in January rates to 33.5 cents. The typical 600 kilowatt-hour bill will drop to $211.79 from $241.88 last month.

  • Kaua'i residential customers will be charged an effective rate of 24.3 cents per kilowatt-hour. That's 3.1 cents less than in December. Kaua'i's residential rate has fallen by more than half since reaching a high of 49.2 cents in August.

    Reach Greg Wiles at gwiles@honoluluadvertiser.com.