§269-16 
Regulation of utility rates; ratemaking procedures.  (a)  All rates, fares,
charges, classifications, schedules, rules, and practices made, charged, or
observed by any public utility or by two or more public utilities jointly shall
be just and reasonable and shall be filed with the public utilities
commission.  The rates, fares, classifications, charges, and rules of every
public utility shall be published by the public utility in such manner as the
public utilities commission may require, and copies shall be furnished to any
person on request.



To the extent the
contested case proceedings referred to in chapter 91 are required in any rate
proceeding to ensure fairness and to provide due process to parties that may be
affected by rates approved by the commission, the evidentiary hearings shall be
conducted expeditiously and shall be conducted as a part of the ratemaking
proceeding.



(b)  No rate, fare,
charge, classification, schedule, rule, or practice, other than one established
pursuant to an automatic rate adjustment clause previously approved by the
commission, shall be established, abandoned, modified, or departed from by any
public utility, except after thirty days' notice to the commission as
prescribed in section 269-12(b), and prior approval by the commission for any
increases in rates, fares, or charges.  The commission, in its discretion and
for good cause shown, may allow any rate, fare, charge, classification,
schedule, rule, or practice to be established, abandoned, modified, or departed
from upon notice less than that provided for in section 269-12(b).  A contested
case hearing shall be held in connection with any increase in rates, and the
hearing shall be preceded by a public hearing as prescribed in section
269-12(c), at which the consumers or patrons of the public utility may present
testimony to the commission concerning the increase.  The commission, upon
notice to the public utility, may:



(1)  Suspend the operation of all or any part of the
proposed rate, fare, charge, classification, schedule, rule, or practice or any
proposed abandonment or modification thereof or departure therefrom;



(2)  After a hearing, by order:



(A)  Regulate, fix,
and change all such rates, fares, charges, classifications, schedules, rules,
and practices so that the same shall be just and reasonable;



(B)  Prohibit
rebates and unreasonable discrimination between localities or between users or
consumers under substantially similar conditions;



(C)  Regulate the
manner in which the property of every public utility is operated with reference
to the safety and accommodation of the public;



(D)  Prescribe its
form and method of keeping accounts, books, and records, and its accounting
system;



(E)  Regulate the
return upon its public utility property;



(F)  Regulate the
incurring of indebtedness relating to its public utility business; and



(G)  Regulate its
financial transactions; and



(3)  Do all things that are necessary and in the
exercise of the commission's power and jurisdiction, all of which as so
ordered, regulated, fixed, and changed are just and reasonable, and provide a
fair return on the property of the utility actually used or useful for public
utility purposes.



(c)  The commission
may in its discretion, after public hearing and upon showing by a public
utility of probable entitlement and financial need, authorize temporary
increases in rates, fares, and charges; provided that the commission shall
require by order the public utility to return, in the form of an adjustment to
rates, fares, or charges to be billed in the future, any amounts with interest,
at a rate equal to the rate of return on the public utility's rate base found
to be reasonable by the commission, received by reason of continued operation
that are in excess of the rates, fares, or charges finally determined to be
just and reasonable by the commission.  Interest on any excess shall commence
as of the date that any rate, fare, or charge goes into effect that results in
the excess and shall continue to accrue on the balance of the excess until
returned.



(d)  The commission
shall make every effort to complete its deliberations and issue its decision as
expeditiously as possible and before nine months from the date the public
utility filed its completed application; provided that in carrying out this
mandate, the commission shall require all parties to a proceeding to comply
strictly with procedural time schedules that it establishes.  If a decision is
rendered after the nine-month period, the commission shall report in writing
the reasons therefor to the legislature within thirty days after rendering the
decision.



Notwithstanding
subsection (c), if the commission has not issued its final decision on a public
utility's rate application within the nine-month period stated in this section,
the commission, within one month after the expiration of the nine-month period,
shall render an interim decision allowing the increase in rates, fares and
charges, if any, to which the commission, based on the evidentiary record
before it, believes the public utility is probably entitled.  The commission
may postpone its interim rate decision for thirty days if the commission
considers the evidentiary hearings incomplete.  In the event interim rates are
made effective, the commission shall require by order the public utility to
return, in the form of an adjustment to rates, fares, or charges to be billed
in the future, any amounts with interest, at a rate equal to the rate of return
on the public utility's rate base found to be reasonable by the commission, received
under the interim rates that are in excess of the rates, fares, or charges
finally determined to be just and reasonable by the commission.  Interest on
any excess shall commence as of the date that any rate, fare, or charge goes
into effect that results in the excess and shall continue to accrue on the
balance of the excess until returned.



The nine-month
period in this subsection shall begin only after a completed application has
been filed with the commission and a copy served on the consumer advocate.  The
commission shall establish standards concerning the data required to be set
forth in the application in order for it to be deemed a completed application. 
The consumer advocate may, within twenty-one days after receipt, object to the
sufficiency of any application, and the commission shall hear and determine any
objection within twenty-one days after it is filed.  If the commission finds
that the objections are without merit, the application shall be deemed to have
been completed upon original filing.  If the commission finds the application
to be incomplete, it shall require the applicant to submit an amended
application consistent with its findings, and the nine-month period shall not
commence until the amended application is filed.



(e)  In any case of
two or more organizations, trades, or businesses (whether or not incorporated,
whether or not organized in the State of Hawaii, and whether or not affiliated)
owned or controlled directly or indirectly by the same interests, the
commission may distribute, apportion, or allocate gross income, deductions,
credits, or allowances between or among the organizations, trades, or
businesses, if it determines that the distribution, apportionment, or
allocation is necessary to adequately reflect the income of any such
organizations, trades, or businesses to carry out the regulatory duties imposed
by this section.



(f)  Notwithstanding
any law to the contrary, for public utilities having annual gross revenues of
less than $2,000,000, the commission may make and amend its rules and
procedures to provide the commission with sufficient facts necessary to
determine the reasonableness of the proposed rates without unduly burdening the
utility company and its customers.  In the determination of the reasonableness
of the proposed rates, the commission shall:



(1)  Require the filing of
a standard form application to be developed by the commission.  The standard
form application for general rate increases shall describe the specific facts
that shall be submitted to support a determination of the reasonableness of the
proposed rates, and require the submission of financial information in
conformance with a standard chart of accounts to be approved by the commission,
and other commission guidelines to allow expeditious review of a requested
general rate increase application;



(2)  Hold a public hearing
as prescribed in section 269‑12(c) at which the consumers or patrons of
the public utility may present testimony to the commission concerning the
increase.  The public hearing shall be preceded by proper notice, as prescribed
in section 269‑12; and



(3)  Make every effort to
complete its deliberations and issue a proposed decision and order within six
months from the date the public utility files a completed application with the
commission; provided that all parties to the proceeding strictly comply with
the procedural schedule established by the commission and no person is
permitted to intervene.  If a proposed decision and order is rendered after the
six-month period, the commission shall report in writing the reasons therefor
to the legislature within thirty days after rendering the proposed decision and
order.  Prior to the issuance of the commission's proposed decision and order,
the parties shall not be entitled to a contested case hearing.



If all parties to
the proceeding accept the proposed decision and order, the parties shall not be
entitled to a contested case hearing, and section 269‑15.5 shall not
apply.  If the commission permits a person to intervene, the six‑month period
shall not apply and the commission shall make every effort to complete its
deliberations and issue its decision within the nine‑month period from
the date the public utility's completed application was filed, pursuant to
subsections (b), (c), and (d).



If a party does
not accept the proposed decision and order, either in whole or in part, that
party shall give notice of its objection or nonacceptance within the timeframe
prescribed by the commission in the proposed decision and order, setting forth
the basis for its objection or nonacceptance; provided that the proposed
decision and order shall have no force or effect pending the commission's final
decision.  If notice is filed, the above six‑month period shall not apply
and the commission shall make every effort to complete its deliberations and
issue its decision within the nine‑month period from the date the public
utility's completed application was filed as set forth in subsection (d).  Any
party that does not accept the proposed decision and order under this paragraph
shall be entitled to a contested case hearing; provided that the parties to the
proceeding may waive the contested case hearing.



Public utilities
subject to this subsection shall follow the standard chart of accounts to be
approved by the commission for financial reporting purposes.  The public
utilities shall file a certified copy of the annual financial statements in
addition to an updated chart of accounts used to maintain their financial
records with the commission and consumer advocate within ninety days from the
end of each calendar or fiscal year, as applicable, unless this timeframe is
extended by the commission.  The owner, officer, general partner, or authorized
agent of the utility shall certify that the reports were prepared in accordance
with the standard chart of accounts.



(g)  Any automatic
fuel rate adjustment clause requested by a public utility in an application
filed with the commission shall be designed, as determined in the commission's
discretion, to:



(1)  Fairly share the risk
of fuel cost changes between the public utility and its customers;



(2)  Provide the public
utility with sufficient incentive to reasonably manage or lower its fuel costs
and encourage greater use of renewable energy;



(3)  Allow the public utility
to mitigate the risk of sudden or frequent fuel cost changes that cannot
otherwise reasonably be mitigated through other commercially available means,
such as through fuel hedging contracts;



(4)  Preserve, to the
extent reasonably possible, the public utility's financial integrity; and



(5)  Minimize, to the
extent reasonably possible, the public utility's need to apply for frequent
applications for general rate increases to account for the changes to its fuel
costs. [L 1959, c 239, §1; am L 1962, c 25, §2; Supp, §104-15; am L 1967, c 28,
§1 and c 276, §1; HRS §269-16; am L 1973, c 149, §1(c); am L 1976, c 10, §1; am
L 1979, c 111, §11; am L 1982, c 222, §2; am L 1983, c 98, §2(1), (2); am L
1984, c 289, §1; am L 1988, c 250, §2; am L 1989, c 189, §1; am L 1998, c 195,
§2; am L 2004, c 168, §2; am L 2006, c 162, §2]



 



Attorney General Opinions



 



  Allowances paid by gas and
electric utilities under their promotional programs constituted rebates.  Att.
Gen. Op. 65-18.



  PUC may permit Honolulu Rapid
Transit to charge reduced rates for senior citizens during non-peak hours. 
Att. Gen. Op. 69-30.



  Operation of a fuel oil adjustment
clause is not a "rate increase".  "Rate" is synonymous with
"rate schedule".  Att. Gen. Op. 76-1.



 



Case Notes



 



  May not regulate rates and charges
in interstate commerce.  24 H. 136.



  Appeal to supreme court directly
does not lie from order requiring carrier to relocate tracks.  25 H. 332.



  Hawaiian Telephone, only
Interstate Commerce Commission may fix rates.  26 H. 508.



  Regulation of interisland
service.  32 H. 127.



  Rates for gas.  33 H. 487.



  Interlocutory order not
appealable.  33 H. 697.



  Constitutional.  33 H. 890, aff'd
96 F.2d 412, aff'd 305 U.S. 306.



  Applicant before PUC aggrieved,
when.  44 H. 634, 637, 361 P.2d 390.



  Section was inoperative with
respect to air carrier rates during the 2-year transition period when C.A.B.
jurisdiction over air carriers was continued by §15 of Admission Act.  44 H.
634, 361 P.2d 390.



  Director of regulatory agencies as
protector of consumer's interest is party to proceeding before PUC.  54 H. 663,
513 P.2d 1376.



  To comply with §91-12, commission
must rule on all proposed findings and its findings must be reasonably clear. 
54 H. 663, 513 P.2d 1376.



  Persons aggrieved who were involved
as participants in hearings may appeal to supreme court when PUC staff fails to
do so.  56 H. 260, 535 P.2d 1102.



  Utility's promotional expenditures
should not have been allowed for ratemaking purposes.  56 H. 260, 535 P.2d
1102.



  Tariff rate based partially upon
value of equipment not owned by taxpayer does not properly reflect taxpayer's
gross income.  57 H. 477, 559 P.2d 283.



  Commission must make findings of
fact as required by §91-12 when issuing interim rate increases.  60 H. 166, 590
P.2d 524.



  Granting of interim rate increases
conditioned on a refund provision is a valid exercise of commission's powers. 
60 H. 166, 590 P.2d 524.



  Rehearings by administrative
bodies are at their discretion.  60 H. 166, 590 P.2d 524.



  Charges made by a public utility
are governed by tariff filed with PUC.  60 H. 582, 593 P.2d 375.



  Under "just and
reasonable" standard, it is the result reached and not the method employed
which is controlling.  60 H. 625, 594 P.2d 612; 67 H. 370, 689 P.2d 741; 67 H.
425, 690 P.2d 274.



  No abuse of discretion in
utilizing original cost method of valuating rate base, or in concluding that
telephone company's plant-in-service was used or useful for public utility
purposes.  65 H. 293, 651 P.2d 475.



  Commission did not arbitrarily
limit rate award.  67 H. 370, 689 P.2d 741.



  Rebuttable presumption that a
contribution was made by lot owners, or lessees, for construction of a utility
system arises only if certain factors reveal intent by developer to obtain
double recovery for its capital construction costs; commission erred in
applying rebuttable presumption.  83 H. 132, 925 P.2d 302.



  Under subsection (f) (1997),
direct appeal to supreme court from PUC order lies only when PUC order pertains
to regulation of utility rates or ratemaking procedures; supreme court thus
lacked jurisdiction to hear direct appeal for PUC order pertaining to placement
of transmission line.  85 H. 322, 944 P.2d 1265.



  Under the filed-rate doctrine,
telephone customers' claims failed as a matter of law where customers could not
demonstrate that telephone company's allegedly inadequate disclosures
constituted an unfair or deceptive trade practice because (1) company's tariffs
on file with the public utilities commission disclosed that fees should be assessed
against customers receiving touch calling services; (2) knowledge of these
disclosures contained in the tariff was imputed to the customers, and, thus,
(3) customers could prove neither the injury nor the likelihood of damage that
is required under §480-2 or chapter 481A.  109 H. 69, 123 P.3d 194.