Hawaiian Electric Co. will charge its residential customers an average of $1.34 more per month to help pay for the utility's new biodiesel-fueled generating unit at Campbell Industrial Park.

The Public Utilities Commission on Friday approved the interim rate hike, which will boost Hawaiian Electric Co.'s revenue by $12.7 million, or 1 percent, HECO announced yesterday.

"The new 110-megawatt generating station, to be fueled by renewable biodiesel, represents a significant step toward reducing Hawai'i's dependence on fossil fuels," HECO said in a news release.

A typical residential customer using 600 kilowatt-hours a month will see the monthly electric bill rise by $1.34, resulting in a bill of $149.57 based on current fuel costs, HECO said.

It is the second interim increase approved by the PUC related to a rate case originally filed by HECO in July 2008. HECO initially sought PUC approval to increase revenue by $97 million to cover a wide variety of costs, including the new Campbell generator. That amount was negotiated down to $80 million in May 2009 after a review by the state Division of Consumer Advocacy and the Department of Defense.

In August 2009, the PUC authorized HECO to begin collecting a 4.7 percent interim increase in revenue, which did not include cost recovery for the Campbell generator. Yesterday's announcement , combined with the August 2009 decision, brings the total rate hike to 5.7 percent, or $73.8 million.

The PUC's Friday decision also allows HECO to use ordinary diesel fuel to fire the generator while it finalizes a contract with an Iowa-based company for a permanent supply of bio-diesel.

The contract with the Iowa supplier is under PUC review.

The Campbell generating station is operational, connected to the grid and available to serve HECO customers, a HECO spokesman said.