������Ƶ

Editor’s Note: This is part of an ongoing series on the Hawaii Public Utilities Commission as it nears its 100th anniversary.

Your outrageous electric bills in Hawaii are primarily the result of an ineffective regulatory agency, soaring oil prices and a profit-driven utility company.

But state legislators — the folks you and I elect — have played a key role, too.

Despite giving the Public Utilities Commission a potent set of operating laws to fulfill its mission, the Legislature routinely shortchanges the cash-strapped commission when it comes to resources.

But if the commission doesn’t have enough money to defend consumer interests, it isn’t because the funds don’t exist. It is that a lot of the money doesn’t go where it is supposed to.

The problem is mostly due to how those funds flow to — and especially away from — the commission.

The PUC gets its money from a that lawmakers created a century ago, and it has only grown more special since then.

Public utilities pay half of 1 percent of their gross annual profits into the fund.

That may not sound like a lot, but these fees add up fast when one of the companies paying them is , a multi-billion dollar monopoly that passes the costs on to consumers.

The PUC ended its 2012 fiscal year with $19.3 million in revenues (92 percent of which came from HECO).

In 2011, the commission collected $17.2 million in total revenue. And in 2010, it scored $21.8 million.

If the commission were able to use all of this money, it could afford to hire the quality of experts that it needs to more effectively battle HECO’s high-paid team of lawyers and specialists in rate hearings, and we all might benefit from lower electric bills.

But here is where the “special” part begins. The fund was set up to collect all of the money, but then the Legislature takes nearly all of it and places it into the general fund for completely unrelated programs. Legislators then decide how much they want to return to the special fund.

Lawmakers decide the PUC’s functional budget on an annual basis. In the past few years, a more commission-friendly Legislature has upped the commission’s share to roughly half of the special fund money that was collected.

The commission’s take next year is almost $11.3 million, about a quarter-million more than it received in 2012.

But the state has siphoned almost $50 million from the PUC special fund over the past four years.

This does not work like the hurricane relief fund or other emergency funds that caused public controversy when the Legislature raided them for other purposes. The PUC special fund makes it very easy on lawmakers since the transfers are actually required by law, and it has always been that way.

Jeff Mikulina, who heads the non-profit Blue Planet Foundation, told Civil Beat that the result of this fund-raiding is that the commission has always lacked the in-depth expertise and the ability to navigate the transition toward a clean energy economy. It also leaves the commission weak and unable to fully “represent the public in countering the utilities.”

“When they’re essentially strangled, they can’t properly regulate the utility,” Mikulina said.

Ideally, he said, the PUC and the Consumer Advocate, a state-funded office that represents the public’s interest in rate increase disputes, would receive the full allocation of the special fund to develop greater capacity and competency.

House Finance Chairwoman Sylvia Luke and her colleagues recently began scrutinizing special funds. They haven’t yet focused on the PUC special fund, but Luke said it’s still early in the review process. The legislative auditor has identified approximately 250 non-general funds to look at.

“This is an opportunity for us,” the chairwoman said. “In the end, we want to make sure there’s more transparency and accountability.”

Lawmakers are looking at whether the special fund money is being used for its original purpose. (Simply put, a hurricane fund is supposed to help respond to hurricanes, but sometimes it doesn’t. The same goes for other special funds.) And if not, should the money be reallocated or should the special fund be tweaked? Luke said that the Legislature will be tackling such issues over a period of years.

Sen. Sam Slom, who has railed against special funds in general for almost two decades, said that the lack of oversight in how the money is used creates grave problems.

Lowell Kalapa, president of the Tax Foundation of Hawaii, said lawmakers have used the PUC special fund as a “bottomless barrel.”

“It’s a backdoor way to finance the state general fund,” Kalapa said. “The fees are another tax on taxpayers. The question is should we allow them to continue?”