(Source: Business Wire)Maui Electric Company (MECO) late yesterday submitted an application to the Hawaii Public Utilities Commission (PUC) requesting an increase in electric rates for Maui County customers in 2010. The overall revenue increase of 9.7%, or $28.2 million requested for Maui, Molokai and Lanai is needed to help pay for capital improvements and increased operating and maintenance costs. The case also serves as the important starting point for a potential new regulatory model that could move the utility away from earning revenues based on the amount of electricity sold and instead encourage the utility to help its customers use less electricity and install more distributed renewable generation.

As part of the energy agreement signed under the Hawaii Clean Energy Initiative, Maui Electric, Hawaiian Electric and Hawaii Electric Light Company agreed, along with Governor Linda Lingle, the State of Hawaii Consumer Advocate, and the State Department of Business, Economic Development and Tourism, to pursue a new regulatory model called "decoupling," that would delink the earning of revenues from electricity usage. "This could be a game changer that sets a new environment for us to work even more with our customers to help them use energy efficiently and to use more renewable resources," said Ed Reinhardt, Maui Electric Company President. The level of revenues set in this rate case could be used to set the base starting point for decoupling. The PUC is evaluating the details of the decoupling model in a separate docket.

The PUC and the Division of Consumer Advocacy will conduct an extensive review of the rate request, and any rate increase, if approved, is not expected to take effect until mid-2010 at the earliest. At that time, it will have been almost three years since MECO's last general rate increase (monthly fuel surcharges increase or decrease based on actual fuel prices and MECO makes no profit on fuel purchases).

If the full request is approved by the PUC, a typical residential household in Maui County would likely see the following changes:

Maui (600 kwh per month): $13.43 per month increase, for a total bill of $172.46

Lanai (500 kwh per month): $14.61 per month increase, for a total bill of $181.80

Molokai (500 kwh per month): $13.65 per month increase, for a total bill of $172.69

"We know that these are challenging times and understand that any increase is difficult for our customers," said Reinhardt. "We've made concerted efforts to contain costs and improve efficiency but we must also make the investments to fulfill our responsibility to provide reliable service to our customers.