Summary Testimony on KIUC's Proposed Rate Hike

August 25, 2009

PUBLIC UTILITIES COMMISSION
465 S. King St, Room 103
Honolulu, HI 96813

Re: Docket 2009-0050: KIUC Rate Hike

Aloha Commissioners,

First, thank you for coming to the island of Kaua'i to received testimony in person from the ratepayers on this matter. This matter is central to the future way of life on Kaua'i.

Recently a study group of concerned citizens and KIUC ratepayers (Kauaians for a Bright Energy Future) formed to thoroughly evaluate the docket on this case. In our group are doctors, lawyers, economists, and acknowledged energy utility experts. At least three of our members reviewed the entire 1300 plus pages of the PUC docket on this case, all KIUC referenced planning documents, and all public KIUC Board Meeting minutes over the period in which KIUC was planning this filing.

Of particular note, I would like to recommend your close attention to the written testimonies you may receive on this matter from Henry Curtis, Walter Lewis, and Ken Stokes. They have each done excellent review, analysis, and evaluation of the entire record on this case.

To summarize some of the key points from them:

1. Of the 7 demands that KIUC makes in this rate case, they fail to show proper due diligence in evaluating the various alternatives that are available to deal with rates, revenue, earnings, and debt service requirements presented in this case. Furthermore, KIUC does not appear to have followed the law on the requirement to shape the ERAC/COPA fuel adjustment into a mechanism to prod the utility into increasing the use of renewable energy.

2. The exact circumstances and magnitude of how KIUC has lost money in 5 of the last 8 months suggests that there is a problem with the way rates are set each month. Only one of those months had a significant loss. The rest of those months suggest KIUC has a management discretionary rate-setting problem, not a regulatory rate case problem. If management had done a better job of setting monthly rates, there would be no perceived 'financial crisis.'

The loss of $3.3 million during a single month (December) seems to have triggered a concern for maintaining the "debt coverage" (which is what TIER atempts to measure), yet this situation has already been turned around. In July, the TIER was back above 1.25, which is the minimum required by KIUC's lenders. As it stands now, in June, July, and August there have been no revenue, earnings, nor TIE performance problems for KIUC. KIUC fails to show proper necessity in this rate case.

3. There is no longer a need to rush through a rate increase, and KIUC can go ahead and finish its study on rate design which was noticeably absent from KIUC's filings in this docket. Of particular note for a new rate design would the prospect of inverted block rates where heavier users are charged higher rates and lesser users are charged lower rates thus fostering energy conservation.

Many ratepayers are concerned because KIUC sees falling or stagnant electricity demand as a problem, yet most experts and KIUC's own Strategic Planning documents acknowledge this is our best short-term solution for dealing with the necessary energy transformation throughout Hawaii in the years ahead. The energy business is changing, and KIUC must change with it. This is a huge opportunity, not a threat. Yet, it must be faced head-on. Asking us to believe that "tweaking" the rates higher will "fix" the problem is simply not credible.

In conclusion, we consider this rate case application to be incomplete and to contain materially false assumptions. We respectfully request that the Commission seriously consider the issues that have been raised by the above referenced testimonies.

[Video of this hearing]

While Wednesday’s public hearing was KIUC members’ best opportunity to voice their opinions in person, the PUC will accept testimony on Docket No. 2009-0050 for 10 days after the meeting, a PUC representative confirmed Wednesday.

Testimony can be e-mailed to hawaii.puc@hawaii.gov or mailed to PUC, 465 South King St., Room 103, Honolulu, HI 96813. Reference Docket No. 2009-0050.