HILO, Hawai'i — Big Island consumers who already pay some of the highest electricity rates in the nation would see rates jump by about 10 percent under an increase request that Hawai'i Electric Light Co. plans to file with the state early next year.

HELCO yesterday filed a notice of intent with the state Public Utilities Commission, saying the company will seek higher rates for residential, industrial and commercial users next year to recoup more than $300 million that it spent on two new generators and other improvements to its sprawling Big Island power grid.

HELCO President Warren Lee said the company will also ask for a restructuring of rates to encourage residential users to conserve. He said the new filing will mark a decisive shift toward renewable energy sources.

Despite rapid growth on the Big Island, HELCO plans to rely increasingly on wind, solar, hydroelectric and other renewable sources between now and 2024. Lee said he cannot foresee any situation where HELCO would build another plant that burns fossil fuels.

Lee acknowledged that the rate increase will be a tough sell to the company's 75,000 residential and commercial customers, who saw the cost of electricity rise significantly this year as the world price of oil escalated.

HELCO's last rate hike was in 2000, when the PUC granted a 4.86 percent increase. However, the company's rate structure allows the utility to automatically increase electric bills when the price of fossil fuels increases, as it did this year.

"We don't like the rates going up, but at the same time we've got another constituency, which is our shareholders and investors," Lee said. "I think they're entitled to a reasonable return, and at this point it's been five years since we made a lot of capital investment to improve the system reliability to serve the growing demand.

"It's time to ask the PUC for an increase so investors will get a better return, which is pretty low right now."

Lee noted that historically the company has received only a fraction of the rate increases it has requested from the PUC.

HELCO's announcement drew mixed reviews from Big Island consumers already smarting from higher electric bills this year.

Christine Reed, co-owner of Petroglyph Press Ltd. and the downtown Hilo bookstore Basically Books, said she likes the utility's plan to structure rates to encourage residential consumers to conserve, but said any increase in commercial rates will come out of her business' bottom line.

"It affects what I can take home, and we don't give ourselves raises very often," she said.

About two years ago the bookstore overhauled its lighting system to try to save money, but the bookstore's total electric bill still increased this year as HELCO imposed higher fuel cost adjustments to account for the higher price of oil.

"I just get the bill and figure I don't have much choice but to pay it," Reed said.

State Consumer Advocate John Cole said there are a number of attractive features about tiered rates to encourage consumers to use less power, but said he wants to see HELCO's proposal before passing judgment on the plan.

Cole said his office will scrutinize the investment costs that HELCO is trying to recover, to make sure the expenses were prudent and benefited consumers.

Of the $300 million the company is trying to recoup, about $100 million is the cost of installing two new combustionturbine generators at the Kona plant at Keahole. Those generators began producing power last year.

The statewide average cost of electricity in Hawai'i is far higher than any other state in the nation. Within the state, Big Island consumers now pay higher electric rates than on Maui and O'ahu, but lower rates than on Kaua'i, Moloka'i and Lana'i.

The utility says a typical customer on the Big Island without a solar-power system uses 500 kilowatt-hours per month, and pays $155. By comparison, a typical consumer on Maui uses 600 kilowatt-hours and pays $173 per month; a typical consumer on O'ahu uses 600 kilowatt-hours and pays $119 a month.

About 60,000 of HELCO's customers are residential consumers, and Lee said the company looked for ways to help people reduce their monthly bills despite the rate increase.

"If we can help the consumer, provide solutions to the consumer to help them use less electricity, even if the rates may go up, that will keep the bill the same or even lower the bill," he said. "Again, the whole idea is to help the conservation effort."

For example, the new rate structure that HELCO will propose would divide power consumption into tiers. Consumers who use the least power and stay within the lowest tier would pay the lowest rates. Consumers who use more and move up to a higher tier would pay higher rates for the extra power.

The company will also propose larger subsidies to help more consumers install solar water heaters, and Lee predicted those who do so could see their monthly bills drop despite the planned rate increase.

Reach Kevin Dayton at kdayton@honoluluadvertiser.com.