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It can’t be a good sign when a local nonprofit steps in to fund a government agency.

But that’s what’s happening in Hawaii.

The has pledged $200,000 to the Hawaii Public Utilities Commission to fund a study on – a study required by state law.

The pledge is emblematic of how the PUC has struggled with depleted funding and inadequate staffing levels. And it’s no secret that the agency has a reputation of being slow.

Why is this important? Because the quasi-judicial agency regulates a significant portion of the state’s economy. Specifically, 219 utility companies, four water carriers, 679 passenger carriers and 593 property carriers.

Slow rulings can harm the financial health of local companies.

The agency is also taking on a heavier caseload with the state’s transition to renewable energy, without an accompanying increase in resources. Traditionally a rate-setting agency, PUC decisions are taking on greater significance than ever before. From Big Wind to biofuels, the PUC is assuming more of a public policy role – guiding the increasingly divisive road toward a clean energy future.

Is Hawaii’s PUC Really that Slow?

Yes, it’s very slow, according to Civil Beat research comparing Hawaii with other states.

Rulings that take 60 to 90 days to decide in other states, take two to three years in Hawaii, during his gubernatorial campaign.

In essence, his claim appears true.

The that Civil Beat could obtain for average time to resolve rate cases throughout the country had Hawaii coming in second to last, with only Oklahoma worse. Between 1990 and 2003, the average time it took Hawaii’s PUC to process rate cases was 20 months. In Oklahoma, it was 20.5 months.

The average time for processing rate cases in the rest of the states ranged from seven months to 15.8 months.

The median throughout all the states was 9.1 months, and the average was 10 months. Meaning, in Hawaii it was taking twice as long as the national average.

Rate cases are one of a number of types of “dockets” that the utility rules on.

Since 2003, It’s Still Slow

Civil Beat compared Hawaii to other states of similar size and found that they were operating much more efficiently.

Currently, it takes an average of nine months to process rate cases in Oregon, Maine and Rhode Island. In Delaware and Idaho it takes six months.

In some states, such as Maine and Idaho the time limits are governed by statute. For instance, in Idaho the PUC is required to issue a decision in six months, though the PUC can request a 60-day extension, according to Gene Fadness, an executive assistant at the state commission. Asked if the rate cases ever went beyond that time, he said, “No.”

In Hawaii, it’s actually a to process rate cases in nine months as well. For smaller utilities, with revenues totaling less than $2 million, it’s six months. But this hasn’t stopped larger cases from dragging on for three or more years.

Hawaiian Electric filed a rate case in December 2006. It took three years and nine months before there was a final decision and order. An application filed by Maui Electric Co. in September 2009, is still pending a final ruling – almost two years later. Likewise for a rate case filed by Hawaii Electric & Light Co in July 2009. A 2008 rate case by The Gas Co. took 20 months.

For Hawaiian Electric, this “regulatory lag” has caused angst among the company’s analysts, who are rarely remiss in questioning utility executives about when PUC rulings will be issued during quarterly earnings calls.

The PUC is Still in Compliance With State Statute

State law requires that the PUC issue decisions “as expeditiously as possible,” and within nine months. If the PUC doesn’t rule on a case within nine months, then it must issue an interim decision within 30 days – which allows the utility to increase rates while the PUC continues to deliberate on the case. The PUC can also have another 30-day extension, if certain hearings are incomplete.

Once an interim decision is made, as was done in all of the aforementioned rate cases, there is no deadline for a final ruling. If the final order isn’t consistent with the requested rate hike, than the company can end up having to reimburse customers, with interest.

Last year, downgraded Hawaiian Electric’s credit rating to a notch above junk, in part because of “regulatory lag.”

The downgrade could make it significantly harder for the utility – and the state – to meet its goal of 40 percent renewable energy by 2030, according to a recent by .

“Navigant believes that a credit impaired utility is a significant obstacle to the State in a number of ways, including the State’s ability to meet the 40% RPS standard established by law,” according to the report. “A financially weak HECO will not be able to enter into the broad range of [contracts] that will be necessary to guaranty a diverse renewable portfolio.”

The PUC Responds

, chair of the PUC, who was appointed to the commission five months ago, cited several reasons for delays in an email to Civil Beat:

– The PUC is shortstaffed.

– The Consumer Advocate’s office is short-staffed. The Consumer Advocate is an integral arm of the PUC and a party to all of the dockets, but has filed many requests for time extensions.

– Sometimes it’s the fault of the companies, which file poorly developed applications.

– Some of the cases involve circumstances unique to Hawaii, and thus, can take longer.

What Can Be Done

The Public Utilities Commission is embarking on major policy dockets related to energy, but resources are strained.

About half of its staffing positions have remained vacant for four years. It could hire more people, but it would be in violation of federal occupational safety and health regulations, because its office doesn’t have enough space.

The Legislature allocated funding for it to move to the basement of its current building. But another state agency is currently there “with no plans to vacate in the near future,” according to Morita. That space would also require the PUC to split its staff into two locations.

The Legislature didn’t approve funding to relocate their offices to a leased space, even though the PUC’s special fund can “more than support the move on a permanent basis,” wrote Morita. The relocation was approved by the Legislature four years ago.

The PUC has also had its budget continually raided by the general fund. About 60 percent of the fees it collected last fiscal year were transferred to the general fund, and about 50 percent of this year’s revenues are expected to be transferred to the general fund.

This is where the Blue Planet Foundation comes in – its $200,000 pledge aims to assist the PUC in carrying out its duties in the clean energy sector.

Ultimately, Morita said that adequate funding was needed for the PUC, and the state’s related agencies, to carry out the Hawaii’s energy mandates.

“If the Legislature wishes to pursue an aggressive energy agenda like the , serious consideration must be given to fully funding the Energy Division within DBEDT, the Consumer Advocate and the PUC on a long term consistent basis,” Morita wrote. “A substantial investment must be made in Hawaii’s energy infrastructure and only if Hawaii’s policies and decisions are predictable and consistent will we be able to attract the necessary capital.”

Morita also said that the Legislature needed to “seriously consider” whether the PUC really needed to be regulating proper business licensing, insurance requirements, vehicle safety, and proper driver certification and licensing – or whether it should be done by “a more appropriate agency.”

So once again, the PUC waits with bated breath until the next legislative session.