Hawaiian Electric Co. Inc. has filed a motion with the state Public Utilities Commission to reconsider its disallowance of pension expense recovery in its Dec. 15 interim rate order.
The Hawaiian Electric Industries Inc. subsidiary is seeking to increase the approved revenue requirement by an additional $6 million to reinstate a part of the disallowed expense. "We've read the interim decision very closely and firmly believe that reconsideration should be granted immediately to avoid a bad, and possibly unintended, financial consequence," said CFO Tayne Sekimura in a Dec. 26 statement.
The PUC approved a $38 million interim revenue increase for the utility, which is lower than the $53.7 million HECO negotiated with the consumer advocate. The interim decision is based on an overall rate of return of 7.57%, reflecting a capital structure that includes a 57% common equity and the stipulated return on average common equity for interim purposes of 9.5%.
The regulators lowered the amount due to the aforementioned net pension regulatory asset reduction, as well as the pension contribution amortization and baseline plant additions reductions. The company is not requesting reconsideration for the last two items.
HECO expects an irreversible net write-off of approximately $25 million, or $16 million net of tax, for 2017, if the PUC does not irrevocably restore the pension expense recovery by Jan. 22, 2018. It is also anticipated that Maui Electric Co. Ltd. will no longer be able to recover about $1.7 million, or $1 million net of tax, of pension regulatory assets in its pending rate case under Docket No. 2017-0150, if relief is not granted.
"We need a definitive ruling by the commission by [Jan. 22, 2018] prior to finalizing our 2017 financial statements. We hope the commission will reconsider and amend this limited part of its decision by that time," Sekimura said.
The two write-offs would reduce annual 2017 earnings by about $17 million. "This will be one of the largest one-time losses (write-off) in the company's history," HECO said in its Dec. 22 motion for partial reconsideration.
In case the commission turns down its request by Jan. 22, 2018, HECO is pushing for reconsideration and restoration of the pension expense recovery in the final decision and order. (Hawaii PUC Docket No. 2016-0328)