Rep. Thielen introduces Task force for “reasonable rate of return” for electric utilities

News Release from House Republican Caucus January 14, 2013

Honolulu, Hawai‘i— Representative Cynthia Thielen, (R-Kailua), announced she will introduce legislation this Wednesday, January 16, 2013, to establish a permanent Task Force to determine and periodically revise a “reasonable rate of return” for electric utilities.  The bill also establishes a bipartisan joint legislative oversight committee to determine if the Public Utilities Commission (PUC) is enforcing the “reasonable rate of return” established by the Task Force.

Representative Thielen said, “The electricity costs for ratepayers in Hawaii have increased at a constant and precipitous rate, and these increases have created serious financial hardships for Hawaii residents.  One of the most important functions of the PUC is to approve or deny rate increases proposed by HECO, but in reality, the PUC rarely denies rate increases.” 

 “HECO, by ­statute, is guaranteed a reasonable rate of return on its rate base.  But what constitutes a reasonable rate of return?  The statutory language that created the PUC and gives it its powers do not elaborate.  This, in turn, gives the PUC vast powers to deny HECO rate increases, but more importantly gives the PUC the ability to allow HECO rate increases, without any concrete standards to review the proposals for ‘reasonableness’” explained Representative Thielen.

The bill's purpose clause explained that "for over 100 years, Hawaiian Electric Company (HECO) has had a monopoly on energy production in Hawaii with the objective of efficiently and adequately fulfilling the energy needs of the state and its residents.  In exchange for the privilege of providing non-competitive electrical services within the state, HECO is subject to supervision by the PUC and is required to abide by its regulations."

Representative Thielen said that requiring a reasonable rate of return for electric utilities,  “will keep HECO honest and provide more checks and balances, which translates into consumer rate savings for all of us."

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