Typical O'ahu residents saw their monthly electricity bill cut by an average of $8 during the first half of the year, thanks to lower fuel prices.

But Hawaiian Electric Co. said fuel costs remain volatile and that there's no guarantee that electricity costs won't return to last year's high levels.

According to figures from HECO, the average monthly bill during the first six months of this year was $113.83, down about 6.6 percent from the average $121.87 in the same period last year.

The steepest drop came in January through March, when average monthly bills fell to between $110 and $113 a month.

St. Louis Heights resident Mike Palcic estimated that he's saved several hundred dollars on the electricity bills for his home and his business.

Palcic, owner of MacMouse Club Inc. in Kaka'ako, said the monthly bill for his residence has dropped from $75 to $85 last year to $65 to $75 now.

He said the monthly costs for his business fell from $380 to $400 in 2006 to $300 to $330 today.

"The money I save on electricity, I can spend on beer," said Palcic.

HECO's 292,000 customers pay among the highest electricity rates in the nation.

Last year, electrical costs began to rise after the price of low-sulphur fuel oil, which is used to power HECO's generators, hit a decade-long high of about $61 a barrel.

Since then, the fuel price has fallen to an average of about $52 a barrel.

Fuel costs represent about 45 percent of customers' monthly bills and any increase in the cost of fuel is passed along to the consumer.

RATE HIKE PROPOSED

The lower fuel costs come as HECO has proposed a 7.2 percent rate hike, which could add an average of $7 to the typical monthly bill later this year.

The proposed rate hike, which requires the approval of the state Public Utilities Commission, would be used to pay for a new system operations dispatch center, an outage management system and other projects.

HECO spokeswoman Lynne Unemori cautioned that fuel prices have been volatile and that costs have begun to increase since the first quarter of this year.

HECO said the average monthly electrical bill has increased from $110.88 in March to $119.48 this month.

Waipio resident Detrich Kamakani said he's seen his monthly bills increase over the past few months.

He said his monthly bills initially declined from about $105 in 2006 to about $96 during the first three months of this year.

But Kamakani said higher fuel prices, coupled with the addition of a new air conditioner in his home, increased his monthly bill to about $120 since then.

"When it got cooler this year, the electrical bill went down but it's been rising ever since," he said.

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.