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Mahalo for your interest in KIUC's upcoming rate case. On December 28, 2022, KIUC filed a request for a revenue increase with the Hawaii Public Utilities Commission (PUC). It's important to us that our members have comprehensive and current information. Please check back here for regular updates.

KIUC is proposing rates that are designed to collect sufficient revenue for operations while avoiding excessive rate impacts to members. We also seek to simplify bill structure and predictability, and make reasonable progress toward aligning revenue collection with cost causation as assessed in our allocated cost-of-service study.

A base rate is a fixed kilowatt hour (kWh) charge for electricity consumed that is independent of other variables, such as the current price of oil.

Changes are being proposed to other items on a member's bill, such as the monthly customer charge and demand charges (where applicable). Also, Large Power customers (Schedules L and P) will now be combined into one rate class. 

KIUC has requested and received a base rate increase only once since starting operations in 2002. That base rate increase was approved by the Hawaii Public Utilities Commission in 2010. This will be the second base rate increase request in KIUC’s 20-year history.

The base rate as established in the 2010 rate case is $0.34743 per kWh for members in the residential class.

When posting its monthly kWh charge for electricity, KIUC includes an Energy Rate Adjustment Clause – or ERAC – which is the amount KIUC is allowed to adjust rates monthly, primarily based on the current cost of oil. When the cost of oil is low, the ERAC may result in a decrease of the base rate for that month. When the cost of oil is high, the ERAC may result in an increase in the base rate for that month.

KIUC’s rates have stabilized significantly over the past ten years, thanks in great measure to replacing fossil fuel with renewable energy purchased under long-term, fixed price power purchase agreements. KIUC estimates that increasing use of renewables has saved KIUC members more than $56 million since 2010. The first chart below illustrates how rates have stabilized as the percentage of renewables have increased. The second chart estimates the amount of savings achieved each year by displacing diesel with renewable generation. 

rate trends v renewable growth

RE savings compared to oil

With 70% of KIUC’s generation coming from renewables in 2021, the impact of the recent oil price spike has been minimal for members. While electricity rates on Kauai have risen around 10% since early 2021, the rest of the state has experienced increases from 30 – 50%.

One Year 500 kWh Cost Percentage Change

When KIUC began operating as a cooperative in 2002, its rates were the highest in the State of Hawaii: more than 70% higher than Oahu’s rates.

As of May 2022, KIUC had closed that gap and since then has posted the lowest residential rates of any island in the State of Hawaii. This is a remarkable achievement given that Oahu has more than ten times the number of customers as Kauai.

This has been achieved by replacing the volatility of oil pricing with fixed-price renewables. 

Since the last base rate increase in 2010, the Consumer Price Index (CPI) has risen a cumulative total of around 36% in Hawaii. While KIUC has managed to keep its controllable costs below the inflation rate, electricity sales have not kept pace. There is a growing gap between expenses and revenues, given that sales have increased only 5% since 2010.

Inflation, along with escalating costs associated with endangered species compliance and more than $80 million invested in necessary improvements to the grid and IT infrastructure, have created pressure on KIUC’s balance sheet over time.  

As a not-for-profit organization, KIUC must to maintain a comfortable net margin, which is the money left over from sales after subtracting expenses. In the past few years margins have decreased to the point that KIUC is in danger of no longer meeting lender requirements.

KIUC Annual Net Margins

Note that the margins reported in this graph for 2020, 2021 and 2022 include Lost Gross Margins (LGM) KIUC has been allowed to accrue due to a loss in sales from COVID 19. Learn more about LGM here: https://tinyurl.com/3nbwj2td

Some of the major cost items incurred by KIUC since 2010 include:

  • Capital expenditures of $88.8 million, including: IT/Cybersecurity enhancements, new substations to accommodate renewable energy facilities, transmission and distribution system replacements and upgrades, installation of LED streetlights island-wide, tree trimming and disaster recovery from Hurricane Lane in 2018 and the April 2018 flooding event.
  • Habitat Conservation Plan costs totaling $64 million, including minimization measures such as line reconfiguration and installation of bird diverters, and mitigation measures such as predator control fencing and the Save our Shearwaters Program.

Since the last base rate increase, KIUC has managed to keep its controllable costs below inflation rate with the following measures:

  • Reducing staffing levels from 161 full-time employees in 2009 to 134 in 2022.
  • Replacing fossil fuel generation with renewables at an estimated savings of more than $56 million since 2010.
  • Securing a Paycheck Protection Program loan $2.8 million, which was forgiven.
  • Restructuring existing debt, which reduced debt service by approximately $2.7 million in 2020 and will save KIUC $5.5 million annually from 2021 through 2035.

New renewable projects currently in development, such as the West Kauai Energy Project, will further reduce dependence on fossil fuel and stabilize rates.

Like any business, KIUC cost of operation is impacted by inflation. The Consumer Price Index for Hawaii has risen cumulatively 35% since 2010. Although KIUC has been successful containing costs below the rate of inflation, the rise in costs over time coupled with a low sales growth rate has impacted net margins significantly. More information on KIUC’s financial condition can be found in the FAQ titled “Why a Base Rate Increase Now?”.

KIUC will be proposing an increase in base rates and other charges that will equate to a 9.4% increase for each customer class. More detail on the proposed increase will be available once the case is filed with the PUC. A link to that filing will be provided on this webpage. 

Although the rate request will be filed in December 2022, residents likely won’t see an increase until late 2023. The request will follow a procedure outlined by the Hawaii Public Utilities Commission which is detailed and takes months to complete. 

Exhibit 5 from the PUC filing provides a breakdown of the changes being proposed for each customer class. You can also find it here

The process of approving new rates by the Public Utilities Commission will take months to complete. We estimate new rates will take effect no earlier than mid- or late-2023.

You can find current and past rate data on the KIUC website: www.kiuc.coop/rates

KIUC offers services to members so that they can manage their energy usage and reduce their monthly bills. You can review the numerous energy efficiency and rebate programs in the “Energy Wise” section of the KIUC website under the Member Services tab: www.kiuc.coop. Or call us at 808-246-4300 and ask for Energy Services.

KIUC is dedicated to being transparent and will continue to keep residents informed throughout the process. Members are encouraged to sign up for email updates: www.kiuc.coop/stayconnected