The docket centers on modifications to General Order No. 9, specifically raising the capital expenditure filing threshold for Hawaii Gas from $500,000 to $2,750,000. The main area of growth identified is the increase in the threshold itself, which directly impacts the process for capital project approvals and reporting requirements for Hawaii Gas.
Areas of Growth Identified:
- Increase in the capital expenditure filing threshold from $500,000 to $2,750,000, excluding customer and third-party contributions
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Key Considerations Related to Each Area:
1. Regulatory Burden and Efficiency:
- Increasing the threshold is intended to reduce the number of regulatory filings for small and routine capital projects, thereby lowering administrative burdens on Hawaii Gas, the Commission, and the Consumer Advocate. Hawaii Gas argues that the current threshold causes delays and higher costs for small projects due to regulatory review requirements
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- Each application for projects under the current threshold requires significant staff and consultant resources (estimated at 12–18 months per application), diverting resources from core operational activities
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2. Scope of Regulatory Review:
- With the higher threshold, fewer projects will be subject to pre-construction regulatory review, shifting more capital project oversight to post-construction rate case proceedings. The Consumer Advocate notes that under the proposed threshold, about 80% of capital expenditures could occur between rate cases without prior Commission review, potentially increasing the workload and scrutiny during rate cases
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3. Impact on Project Timing and Costs:
- Delays in regulatory approvals can expose projects to inflation and higher costs for materials and contractor services. Hawaii Gas contends that the extended approval process raises project costs for both the company and ratepayers
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4. Reporting and Transparency:
- To mitigate concerns about reduced pre-construction oversight, there are recommendations for enhanced reporting on capital projects above the new threshold and periodic capital expenditure budget forecasts to maintain Commission and public visibility over major capital improvements
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5. Regulatory Balance:
- There is a need to balance efficient utility operations (reducing unnecessary regulatory reviews of routine projects) against maintaining sufficient oversight to protect ratepayers and ensure prudent investment in utility infrastructure
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Summary:
The main area of growth is the increased filing threshold for capital projects, with key considerations including regulatory efficiency, oversight scope, impacts on project timing and costs, and the need for continued transparency and reporting to balance regulatory oversight with operational flexibility.