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Rep. Thielen Introduces Task Force for “Reasonable Rate of Return” for Electric Utilities

Rep. Cynthia Thielen, R-Kailua

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."

 

Short URL: http://www.hawaiireporter.com/?p=261349

9 Comments for “Rep. Thielen Introduces Task Force for “Reasonable Rate of Return” for Electric Utilities”

  1. Go get em Cynthia. HECO has been getting away with unsubstantiated increases for years. The PUC is an ineffective group that gives HECO a blank check every time they ask for one. How many "interim increases" are we paying for now?

  2. could competition in the electric utilities be a solution? and also how about deregulation?HECO is not ENRON. there is little concern that having more than one company supplying electricity to consumers will cause problems?can we allow consumers to have a choice?can a free market in electricity work without government manipulation?Let's try it.

  3. The Hawaii Legislature is dominated by Democrats, yet it is a Republican who takes the initiative to stand up for the people. "Only in Hawaii"!

  4. The problem I see is that there is no competition here for HECO/HELCO to motivate proper investment practices in their company to truly ensure that Hawaii residents are paying for what is comparable to National Industry Standards. Because there is no competition, the PUC needs to compare their practices to those that are done elsewhere in the nation and make sure HECO's investing/upgrading/repair practices are being done as if they were to have competition in the electric industry. This is where I believe the PUC lacks in their decision process, and goes solely on the word of HECO executives. This is one of the major inadequacies that allow HECO to continue to collect record profits by simply making decision based on returns while passing the expenses to ratepayers.

    If this continues, HECO will continue to do minimal upgrades, find cheaper repair solutions, and continue to ride on the backs of ratepayers.

    • there is no competition because the government does not allow it?and there are a lot of people that own stock in HE and depend on the dividends for additional income.

  5. This is just ignorant nonsense . We are not well served by politicians pandering to public desires for low rates without any basis in reality. We don't need bureaucrats to watch over bureaucrats. The PUC is charged with limiting HECO (and other utilities) to reasonable rates of return and HECO's rates are largely driven by international oil markets that neither we nor HECO can control.

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