Navy electricity rate on Oahu will be cut after flap
By WILLIAM COLE | The Honolulu Star-Advertiser | Published: March 28, 2014
OAHU, Hawaii — About 1,300 Navy and Marine Corps families in privatized housing on Oahu who got a whopping 123 percent increase in their electric bills starting in October will get their rates dialed back to a 56 percent increase beginning Tuesday and continuing until the end of the fiscal year Sept. 30, the Navy announced.
"We are grateful to Navy leadership for mitigating the impact of the electricity rate increase, allowing us to provide better care for our military families," Rear Adm. Rick Williams, commander of Navy Region Hawaii and Naval Surface Group Middle Pacific, said in a news release.
The Navy was mandated by the Pentagon to make up — in one year — tens of millions in electricity undercharges that it racked up between 2009 and 2013.
Not surprisingly, many of the families who had to pay more were unhappy about it.
Military families who rent from housing contractor Forest City Military Communities already saw about 13 percent of their substantial housing allowances automatically go for electricity, water, sewer and gas in 2013.
On top of that, the Navy creates an average electricity bill, and residents whose consumption is more than 110 percent of that average get stuck with the higher rates.
Navy Region Hawaii said about a third of the 4,000 households (representing more than 15,000 residents) who rent from Forest City pay an electric bill. The average bill was $123 a month. Households that stay within the average electricity use don't pay a bill — their electricity costs come out of their housing allowances.
Joshua Burd said on a Forest City Facebook page in February that even though he cut his usage "way back," he still got a $130 bill.
"My (air conditioner) is set at 80 degrees, I don't let anyone use lights in my house until it is so dark it's dangerous to walk, we no longer use hot water for anything unless it's the middle of the day," he said. "I am calling my senator on Monday and seriously considering asking my attorney to review the legality of the way the electric bill is done in housing."
The rate for military residents changed from 26.3 cents per kilowatt-hour in fiscal 2013 to 58.7 cents at the start of the 2014 fiscal year in October, Forest City said.
The new rate announced Tuesday will be 41.8 cents for military residents who get their power through Naval Facilities Engineering Command Hawaii. By comparison, HECO charged 34.7 cents a kilowatt-hour for Oahu residential electricity in February.
Bill Doughty, a spokesman for Navy Region Hawaii, said in an email that a "group of concerned leaders" was responsible for the relief, starting with Adm. Jonathan Greenert, chief of naval operations, and including U.S. Rep. Colleen Hanabusa, Gov. Neil Abercrombie and others who raised the issue with the Defense Department and the Navy Department.
"Many sailors and Navy active duty and civilian leaders throughout the chain of command expressed their concerns," Doughty said.
Navy and Marine Corps families who rent from Forest City under a public-private agreement pay all their housing allowance to the housing company.
In 2013, about 86 percent went to rent, 13 percent to utilities, and 1 percent for renters insurance, Forest City said in a question-and-answer report for residents.
Forest City said the annual electricity rate charged by Naval Facilities Hawaii, and passed along to residents, is established in the federal budget process.
The cost of commercial electricity purchased through Hawaiian Electric Co. increased 68 percent between 2008 and 2012, but billing rates for the Hawaii military customers rose only 18 percent, the housing company said.
Naval Facilities Hawaii electricity losses from 2009 through 2013 totaled $199.2 million, according to the Navy.
"The current increase is due to Department of Defense financial management regulations that require the Navy to recover losses such as the underbilling of electricity," Doughty said.
Naval Facilities said in a fact sheet that the past billing increases, which led to the current shortfall, were based on an "inflation factor," and that the norm is to recover losses two years after the loss is incurred.
But for unexplained reasons the command said it had not recovered those costs.
The big rate increase also applied to federal entities such as the FBI in Kalaeloa and National Oceanic and Atmospheric Administration that receive power through Naval Facilities Hawaii.
Hanabusa got involved on behalf of Penrose/Walsh FBI Honolulu LLC, which built and leases to the FBI its Kalaeloa facility.
In a letter to the Navy, she said the "reasoning behind the increase is to recoup costs that were incurred as a result of failure to keep up with actual energy rate increases."
She added that the rate increase would place an "unsustainable burden" on such facilities.
In a March 21 letter, the Navy said the billing rate for all non-defense federal and private party Naval Facilities customers also would be 41.8 cents, plus applicable surcharges.
The recovery of the electricity bill shortfall now will be spread over two years instead of one, the Navy said.
The military resident rate starting in fiscal 2015 "will likely be slightly higher" than the new 41.8 cent rate, "but we can't predict the exact rate for FY15 at this time," Doughty said.