Consumer Advocate makes a Great Recommendation

by Henry Curtis, Life of the Land

HECO, MECO & HELCO signed a contract with Aina Koa Pono for biofuel biodiesel generated through a non-commercialized, unproven microwave process. HECO proposed that their ratepayers could wind up subsidizing HELCO ratepayers. Life of the Land and Hawai`i Renewable Energy Alliance applied to be parties before the Public Utilities Commission (PUC), but were denied.

The PUC stated they lacked legal jurisdiction for approving inter-island electric utility rate subsidies. The docket was put on hold so that HECO could alter the law.

In March HECO took an unrelated bill which has passed the State Senate that would require the PUC to adopt electronic filing of all documents. As part of late testimony before a House Committee, HECO sought to amend the bill to allow inter-island rate subsidies. The House passed the combined bill, and both parts survived conference committee. The bill was sent to the Governor and he signed it into law as Act 69.

The PUC then asked HECO and the Consumer Advocate if hearings were needed for the proposed rate hikes.

HECO: “The Companies believe that public hearings are not required by State law (including Act 069), but may be held at the discretion of the Commission. Act 069 (Section 4) of the 2011 Session Laws of Hawaii does not contain any requirement to hold public hearings prior to establishing a Biofuel Surcharge Provision. The Companies are unaware of any other state law requiring public hearings for the Companies' revised requests. In addition, the Companies also recognize that surcharges have been approved by the Commission in the past, with and without public hearings.”

Consumer Advocate: “The Consumer Advocate submits that HRS § 269-12(c) applies to this docket: the HECO Companies' proposed Biofuel Surcharge Provision clearly results in an increase in rates that triggers the contested case and public hearing provisions of HRS §269-16(b).

Furthermore, HRS section 269-16 (b) creates an exception for a rate "established pursuant to an automatic rate adjustment clause previously approved bv the commission." The Consumer Advocate contends that this language supports the conclusion that a public hearing is required for any new rate adjustment clause while changes in a surcharge already approved by the Commission would not require a public hearing for every change or increase made pursuant to the rate adjustment mechanism.

In the instant case, the HECO companies seek to recover their costs pursuant to the, recent amendments to HRS section 269-93 that allow for the HECO companies to aggregate their respective renewable portfolios and to then distribute and allocate these costs among the HECO companies respective ratepayers by way of an automatic rate adjustment clause that is to be established and approved by the Commission. This is a new rate adjustment clause that is governed by HRS section 269-16, which requires a public hearing prior to approval.

On a final note, while the Consumer Advocate contends that the existing statutory language supports the need for public hearings to be held as a result of the HECO Companies' request, the Consumer Advocate acknowledges that the governing statute may leave room for a differing interpretation. Even if the Commission deems that HRS § 269-16(b) does not require public hearings, the Consumer Advocate recommends that the Commission determine that conducting public hearings on this matter would best serve the public interest. This recommendation is predicated on the belief that allowing public hearings would offer the customers likely to be impacted by this Application an opportunity to better educate themselves on the issues as well as to voice their testimonies on those issues.”

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