LIHU‘E — In a move prompted by a confluence of lagging sales and inflation, the Kauai Island Utility Corporation is proposing to raise electric rates in 2023.
The cooperative filed a rate case on Wednesday with the Hawaii Public Utilities Commission that calls for an increase of 9.42 percent in its electric revenues.
For the average residential customer, who uses 500 kilowatt hours a month, the increase would be approximately $19 per month. The proposed rate hike, which is subject to approval from the commission, is not expected to hit customer bills no earlier than the second half of 2023.
“There’s never a good time to increase rates,” said David Bissell, CEO of the cooperative, in a statement on Wednesday. “However, since our last base rate increase in 2010, growth in electricity sales has lagged far behind inflation, so an adjustment is necessary.”
The cooperative noted it has experienced a 5 percent increase in electricity sales during the past 12 years, while inflation has cumulatively increased by 37 percent in the same period, as measured by the Consumer Price Index.
The index is “a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services,” according to the U.S. Bureau of Labor Statistics.
The proposed rate increase comes at a time in which the cooperative said it is facing necessary investment in utility infrastructure, operational cost increases, and significant costs associated with developing a Habitat Conservation Plan for endangered species. That combination will reduce annual margins to a level that would no longer be compliant with lender covenants.
“The gap in sales growth versus inflation is no longer sustainable,” Bissell said.
The cooperative pointed out that spread out over a 12-year period since the last hike, the proposed adjustment works out to less than 1 percent per year.
“We’ve worked hard to keep our cost increases at or below the level of inflation,” Bissell said. “Our cost control efforts included restructuring debt, reducing employee head count, and reducing the amount of diesel used and replacing it with fixed-price renewable generation.”
More information about the rate case can be found at the cooperative’s website at www.kiuc.coop/ratecase.
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Wyatt Haupt Jr., editor, can be reached at 808-245-0457 or whaupt@thegardenisland.com.
