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Testifiers Tell MECO ‘No’

Molokai cannot afford a 6.7 percent electricity rate increase requested by Maui Electric Company (MECO), residents testified during a Public Utilities Commission (PUC) public hearing at Mitchell Pauole Center last week.

MECO filed the request with the PUC in July in order to “cover the cost of improvements to integrate additional renewable energy and improve the reliability of service to its Maui, Lanai and Molokai customers,” according to a press release.

All 10 testifiers spoke against the proposal, saying the recent recession and Molokai’s high unemployment rate have already forced residents to make tough decisions with tight budgets. The increase – which would result in an additional $13 per month per residential customer, on average – would be unbearable, they said.

The exact increase per customer would vary because of MECO’s tiered payment structure, in which customers who use less electricity pay a lesser rate.

“I wanna state the obvious and the obvious is that no one on Molokai can [afford this increase],” resident Walter Ritte said. There is something “inherently wrong in how things [at MECO] are set up” for the increase to be necessary, he said, calling the request “ridiculous.”

“I’m very concerned,” added resident Kimo McPherson. “We can’t support this. We gotta eat. We gotta pay our bills.”

Resident Patrick Jones said he has continuously taken steps in recent years to reduce his energy bill – including installing an energy-saving air conditioner, refrigerator, gas stove and more – and “still [his] bill goes up.”

MECO raised rates by 3.7 percent in December 2007. That preceded a 3.3 percent interim increase approved by the PUC in August last year.

Jones questioned why MECO couldn’t dip into its own profits to fund MECO’s improvements.

“When is this gonna end?” he asked. “It just keeps going up and up.”

MECO President Ed Reinhardt said his company was authorized to accept returns of about 10 percent, but accepted returns of 3.9 percent last year.

The proposed 6.7 percent increase would generate an additional $27.5 million in net revenues to go toward improvements, according to the release. Reinhardt said MECO must make the improvements or else face penalties associated with new environmental laws, including potentially being shut down.

On Molokai, planned upgrades include adding supervisory control and data acquisition (SCADA) systems and new exhaust devices on generating units at MECO’s Pala`au Power Plant.

While MECO understands the difficulty of paying an increased rate, he said, “we hope you will understand that we need to provide service when you need it. So we’re in a catch-22… Instead of [service] 24/7, we could have a huge amount of outages and perhaps rolling black-outs.”

Although part of the purpose of the improvements is to allow future integration of renewable energy, Reinhardt maintained that the proposals have no impact on the “Big Wind” industrial turbines proposed by developers.

Prior to the meeting, MECO spokeswoman Kau`i Awai-Dickson said the “initial review” of a study on the Kaunakakai grid showed improvements could be made to allow 200 kilowatts more of renewable energy – such as personal photovoltaic panels.

“Should the upgrades be determined to be feasible and cost effective, MECO will work on implementing them and update the Locational Value Maps with the additional capacity on the Kaunakakai circuit as it becomes available,” she said in an email.

During the meeting, Reinhardt said those upgrades would likely include adding a new battery system, which requires an additional study, and requiring developers to reset their trip.

An evidentiary hearing is set for April 30, 2012. Customers may mail written comments to the Division of Consumer Advocacy, P.O. Box 541, Honolulu HI 96807, email them to consumeradvocate@DCCA.hawaii.gov, call 808-586-2800 or fax 808-586-2780.


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