LIHU‘E — Kaua‘i Island Utility Cooperative officials on Tuesday told co-op members that financial projections indicate the co-op will need to increase revenues by 10.5 percent to maintain financial stability and to begin positioning itself financially to obtain 50 percent
LIHU‘E — Kaua‘i Island Utility Cooperative officials on Tuesday told co-op members that financial projections indicate the co-op will need to increase revenues by 10.5 percent to maintain financial stability and to begin positioning itself financially to obtain 50 percent of its energy from renewable sources, according to a press release from KIUC.
“We need additional revenue to meet financial criteria set by our lenders, and to get into financial position to shift to more renewables,” said KIUC Chief Financial Officer David Bissell in the release. Bissell was among those at an informational meeting held at Lihu‘e’s War Memorial Convention Hall.
For an average member using 500 kilowatt-hours per month, if the residential rate is increased by 10.5 percent it would add $16 to the bill each month, increasing it from $155 to $171, the release said.
KIUC said its revenues were down 9 percent in the final three months of 2008 and down 8 percent the first three months of 2009, primarily due to the economic downturn.
“After the oil price shocks we saw last year, the message was very clear that KIUC must move aggressively to reduce our dependence on oil,” said KIUC President and Chief Executive Officer Randy Hee. “In response to this economic downturn we have also trimmed our cost and held back salary increase from our non-union employees.”
At the meeting, KIUC outlined various options it could pursue to meet its strategic plan goal of reducing greenhouse gas emission back to 1990 levels, which would require at least 50 percent renewable generation for the co-op. The plan includes several potential generation sources, including solar photovoltaic, biomass, hydropower, and low-emission multi-fuel options.
The cooperative will ask Hawai‘i’s Public Utilities Commission to eliminate the efficiency incentive in the Energy Rate Adjustment Clause. This efficiency incentive can increase financial margins if heat rates — efficiency — beat the fixed heat rate of 11,230 Btu/kWh set by the PUC in 1996 as a genuine incentive to encourage utilities to operate more efficiently.
Hee added, “As a cooperative, we do not need a financial incentive to operate efficiently.”
“The ERAC should clearly show nothing but the pass through costs of fuel and purchased power,” said Bissell.
Another suggested component of the rate case would give KIUC’s board flexibility to determine patronage capital refund levels, rather than a flat 25 percent, which the PUC currently requires KIUC to recommend approval to pay from our primary lender, the Rural Utilities Service.
KIUC officials said that following its filing for a revenue increase, a number of additional rate design issues will be addressed. They could be addressed as part of the final rate design or in subsequent filings, depending in part upon how the PUC decides to proceed with the case. Such issues could include a feed in-tariff or net metering for renewables, the Hawaii Clean Energy Initiative, and Schedule Q, green rates, and lifeline rates.
KIUC’s board is scheduled to take action on the staff recommendations with the expectation of formally filing the rate increase in the first half of 2009.
Tuesday’s meeting was the second in a series of public information meetings KIUC has planned to discuss its proposed rate increase.
More than 50 people attended the session, according to the release. Co-op officials heard comments and answered questions for more than an hour.
For more information, visit KIUC’s Web site, www.kiuc.coop
