Hawaii’s consumer advocate has reached a settlement with the state’s major electric utility that rejects $60 million in expenditures that Hawaiian Electric Co. was hoping to recover from customers. 

Jeffrey Ono, executive director of the Division of Consumer Advocacy, challenged HECO’s request to recover costs for a biofuel generating station at Campbell Industrial Park and a new consumer information system.

HECO had already paid for the projects, which were approved by state regulators after the utility provided initial cost estimates. But there were significant cost overruns. 

“Ultimately, their costs greatly exceeded the approved amounts,” said Ono. “We had concerns about whether these costs were reasonable or prudently incurred.” 

According to the settlement, HECO will not be allowed to recoup $40 million of the costs that it was initially seeking. The total amount that HECO had originally requested was not immediately available. 

“They have already spent the money. So it’s a question of how much of the total project costs can be put into the ratebase,” Ono told Civil Beat. “So they are getting recovery for a significant portion of the costs of the two projects. What they have agreed to do is write off $40 million, which in my opinion is a significant amount of money.”

As part of the settlement, Hawaii Electric Light Co., HECO’s Big Island subsidiary, will also withdraw its request for a 4.2 percent rate hike in 2013, which would have cost customers $19.8 million. 

Ono said that the requested rate increase included costs such as hiring additional employees and building new transmission lines.

The Hawaii Public Utilities Commission must ultimately approve the settlement. 

“The PUC can’t pick and choose,” said Ono of the negotiated settlement. “The deal falls apart if one of the material terms of this agreement is not approved by the commission.”

HECO released a statement saying that the settlement was in the interest of customers.

“We believe the rate case settlement agreement we reached with the consumer advocate is fair and recognizes how difficult times are for our customers,” wrote HECO spokeswoman Lynne Unemori. “High fuel prices are continuing to affect our customers and hurt our state’s economy.”