Designed to encourage energy conservation, tiered rates will reward customers with lower electric rates for lower kilowatt-hour (kWh) usage. Customers who use more energy will pay higher rates for the higher increments of energy used.
Tiered rates are now in place for all of the Hawaiian Electric utilities. In January, Maui Electric and Hawaii Electric Light Company implemented tiered rates for their customers.
“To reach our clean energy goals, as a community we need to find ways to reduce our energy use. Tiered rates offer customers a clear pricing incentive to conserve electricity,” said Robbie Alm, Hawaiian Electric executive vice president.
The new rate structure consists of three tiers for electric rates. The amount of electricity a customer uses each month determines how many of the tiers apply. Customers with lower monthly electricity usage will pay lower rates per kilowatt-hour (kWh) than those who use more electricity.
The rate tiers are: up to 350 kWh per month; 351-1200 kWh per month; more than 1200 kWh per month. The majority of customer bills fall into the first and second rate tiers.
The PUC had previously approved the concept of tiered rates for Hawaiian Electric when it issued its final decision in the utility’s 2009 rate case. A PUC decision issued last Friday allows Hawaiian Electric to implement the new rate structure for electric customers on Oahu.
The PUC also approved Hawaiian Electric’s request to allow the total amount of electricity used by qualifying low-income customers to be billed only at the lowest rate tier. This exception will be available to customers who provide a copy of their qualification letter for the federally-funded Low Income Home Energy Assistance Program (LIHEAP).