Monday, December 20, 2010

Looks Like This One Goes into the ‘Trust Us’ File: Consumers Can’t Know Details of New Oil Contract

Trusting others is what we’ll have to do, since a new Tesoro-Hawaiian Electric contract awaiting approval by the Hawaii Public Utilities Commission isn’t available for public inspection.

The case involves Tesoro’s contract to sell low-sulfur fuel oil to Hawaiian Electric Company. According to this morning’s Star-Advertiser, Tesoro is losing money on that contract and wants the PUC to approve a contract revision. From the newspaper:

“Under the current contract, Tesoro is locked into selling fuel oil to HECO at a loss, causing a financial hardship for the company, a Tesoro spokesman said. Both HECO and the state consumer advocate have agreed to the proposed "price structure revision," the details of which were not made public for competitive reasons. The Public Utilities Commission is expected to make a final ruling on the proposal this month.”

What’s In It for Us?

The State Consumer Advocate presumably is protecting consumers’ interests, but we can’t know that for sure because of “competitive reasons.” That’s asking a lot of consumers – to trust everyone working behind closed doors to act in our best interests.

Since most reasonable questions must remain unanswered, we’re left to speculate about the unknown. Here’s one:

How much will electric rates be increased to help out Tesoro?

The state is attempting to transform itself into a green energy economy by increasing our reliance of renewable resources. Getting off oil is Hawaii priority number one, but as HECO burns less oil to satisfy Oahu’s power requirements, Tesoro will sell less to the utility.

Fewer sales translate to a weaker financial picture in most businesses, so can we expect more contract revisions to charge more for the reduced amount of fuel oil Tesoro unloads on HECO down the road?

The utility passes along fuel costs in the electric bill’s fuel adjustment clause, so any increased fuel oil costs will be paid by consumers – the only ones in this scenario who don’t know what’s going on.

That is indeed a lot to ask of consumers for the sake of Tesoro’s profits – to be happy with higher electric bills while being kept in the dark about one of their biggest monthly expenses.

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