Hawaii Oks PBOP Recovery

Fortnightly Magazine - March 1 1995
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After considering the matter in several proceedings since 1991, the Hawaii Public Utilities Commission (PUC) has decided to permit the state's utilities to include in rates the full cost of switching from cash to accrual accounting for post-retirement benefits other than pensions (PBOPs) under SFAS 106. The PUC rejected proposals to require the utilities to alter certain SFAS 106 financial reporting requirements (em for example, extending the amortization period for recovery of PBOP transition costs from 20 to 40 years. The PUC did require, however, that the utilities choosing SFAS 106 treatment fully fund the accruals using tax advantaged accounts wherever possible. In approving rate recovery for all SFAS 106 costs, the PUC found that the utilities had already implemented a series of health-benefit cost-saving measures to reduce PBOP accruals: 1) health plan second surgical opinion requirements, 2) self-audit measures designed to encourage patients to check for mischarges in hospital bills, 3) inhouse medical service facilities and self-funded insurance arrangements, 4) preferred provider insurance plans, and 5) numerous measures designed to shift health-care costs to program participants by limiting utility responsibility for premium increases. Re Nonpension Postretirement Benefits et al., Docket Nos. 7243 and 7233, Decision and Order No. 13659, Nov. 29, 1994 (Hawaii P.U.C.).


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