LIHU‘E — Kaua‘i was the only island in the state that experienced a rise in its residential electric rate in August even though the price of oil was down early this summer. But the Kaua‘i Island Utility Cooperative can explain.
LIHU‘E — Kaua‘i was the only island in the state that experienced a rise in its residential electric rate in August even though the price of oil was down early this summer.
But the Kaua‘i Island Utility Cooperative can explain.
In August, the rate on Kaua‘i rose from 38.4 cents per kilowatt hour in July to 40 cents, while O‘ahu’s rate went down from 37.5 cents to 34.5 cents. Maui customers’ rate went down from 37.5 cents to 35.4 cents and Hawai‘i Island went down from 41.4 cents to 40.1 cents, according to monthly rates provided to the Public Utility Commission by the utility companies.
Those rates are “the absolute truth. They’re not incorrect,” said Jim Kelly, KIUC spokesman.
But, he said, the rates do not reflect KIUC’s actual progress in reducing electric rates to Kaua‘i customers, and Kaua’i’s rates are compared to the rates of a power company that provides electricity to the rest of the state under very different circumstances.
In defense of KIUC’s progress, Kelly said that Kauai’s rates are still higher than Oahu’s, but they are a lot closer than they used to be.
“O‘ahu energy customers have seen their bills increase nearly 100 percent since 2007, while KIUC customers are paying about 24 percent more,” Kelly said. “At one time, Kaua‘i consumers were paying roughly double O‘ahu’s energy cost. The difference is now down to about 12 percent.”
KIUC’s rate data sheet shows that Kauai’s rate in August was actually lower than Kaua‘i’s rates from January through June this year. In July, the rate dipped to its lowest this year.
Kelly attributed the rate reduction in July to the decreasing price of oil since May and the rate increase in August to the subsequent rise and stabilization of oil in July.
Kelly said that volume of use also affects the rate difference between Kaua‘i and the other islands.
Hawaiian Electric Industries Inc. supplies power to 1.2 million residents on O‘ahu, Maui, Hawai‘i Island, Lana‘i and Moloka‘i through its electric utilities, Hawaiian Electric Company Inc., Hawai‘i Electric Light Company Inc. and Maui Electric Company, Limited, according to the HEI website.
As far as volume goes, Kelly said, “Yes, size does matter. We’re a small island with a much smaller customer base — 30,000 — and the cost of generating and transmitting power is spread among a much smaller number of customers than O‘ahu, Maui and the Big Island, which have much larger populations.”
Kelly said the rates are also based on each utility’s use for the month, different contracts with different suppliers, different fuel sources, the fuel mix content, fuel storage capacities and different business models.
KIUC is an member-owned utility whereas HEI is different, he said.
“We don’t hedge (betting on a future fuel price). We pay the price every month based on actual fuel price. It’s a different pricing strategy from what HECO employs,” Kelly said. “We want to reflect what the actual cost is. Some months, we do better, some months we do worse. We pay different prices based on different contracts that we have.”
KIUC also uses highly refined cleaner fuels that are more expensive, said Kelly.
“We use cleaner fuel because when KIUC built the Kapai‘a plant in 2002 that’s what we agreed to do. We’re all about putting out less greenhouse gases,” he said.
Kelly said HECO burns oil and coal and has a biofuel plant.
• Jane Esaki, business writer, can be reached at 245-3681 (ext 257) or by emailling jesaki@thegardenisland.com.
