Author Archives: Jennifer Smith

Ranch Won’t Budge on Water

Sunday, June 29th, 2008

By Dispatch Staff

Proposed rate increases for west and central Molokai residents, will not ensure continued water and sewer services from Molokai Properties Limited (MPL). 

In an attempt to buy time until another service provider could be located, the Public Utility Commission (PUC)  took the unprecedented move of suggesting that MPL hike its rates for utility users. However, MPL CEO Peter Nicholas said in a June 23 letter to the PUC, that the proposed 121% increase and 41% increase for two of its three utilities, “will not create the necessary resources” in order for the company to continue services.

The Ranch said it would take a nearly 178% increase in rates just to cover the known operation costs. Based on the Ranch’s numbers, Maunaloa and Kualapu`u residents would be forced to pay $5.15 per 1000 gallons of water verses the current rate of $1.85. Residents’ rates at Kaluakoi would need to jump to $6.04 per 1000 gallons. 

Looking at nearly astronomical figures in an already tough economy, many residents are wondering where the money will come from, and who will take over when the Ranch deserts its utility obligations.

County Perspective on Molokai Water
When Mayor Charmaine Tavares read that the West End water situation was on the Molokai Planning Commission’s (MoPC) June 25 agenda she immediately asked her Director of Communications, Mahina Martin to attend the meeting.

“The mayor is very concerned as is her administration,” said Martin, as she addressed the community at last Wednesday’s meeting. She made the trip from Maui to assure the community that the county is working hard to find a solution to the island’s utility provider issues, and to encourage the community to come to a public meeting hosted by the county on July 8.

MPL continues to assert that the county would be the best authority to take over the utility services. But, Martin said the county lacks the time, resources, and cooperation to take over services by the August pullout. 

Martin said the Ranch has failed to provide important financial and operating information to the county. We “have had no cooperation or returned phone calls,” she said. “To expect the county to expend money in 8-10 weeks-without such important information would be irresponsible.”

“Every county in the state is watching this situation,” Martin said. There are currently varying degrees to which counties provide utility services, but if MPL is allowed to abandon service, it could provide a dangerous precedent for other private owners. “What would happen to the four counties in the state, should private companies walk away?”

Council Member Danny Mateo is preparing for MPL’s potential walkout in August. He has introduced a resolution to the County Council requesting that the county expend funds to hire an outside attorney to represent the county. On June 13, the county also filed a formal legal complaint with the PUC over the Ranch’s proposed shutdown of its utility companies.

Several community members and commissioners also had formal complaints about MPL’s decision. Commissioner Buchanan thanked Martin for coming to the meeting, and said that several residents were aware of the “shenanigans” that have been going on. She said to tell the mayor “we support her” in what she is doing by not letting MPL abandon its responsibilities.

“The PUC is worried about piercing the corporate veil,” said DeGray Vanderbilt, former Molokai Planning Commission Chairman. He said the current requirements have not motivated MPL to take responsibility, for a decision he believes is part of a broader business decision.

“Simply stated, the Ranch knows slow times are coming to the state’s economy and decided to shut down in order to get out from all its major expenses,” Vanderbilt said. “The Ranch’s plan is to wait out the current slow economic times that are being experienced statewide, land bank its multi-million dollar land holdings, and then come back when economic times get better to sell off their land holding at a great value.”

“Our governor should step in and do something for Molokai,” said Ruthie Manu, Molokai resident, agreeing that the mayor is doing the right thing.

Martin said the mayor, Council Member Mateo, and county staff are working overtime to find a resolution that is best for Molokai residents. They hope residents will share their concerns at the July 8 community meeting at 6:30 p.m. at the Mitchell Pauole Center.

Huge Hikes in Water Rates Planned for West Molokai

Wednesday, June 25th, 2008

As resources run low, residents may bare the brunt.

By Jennifer Smith

In the midst of a face-off to see who will have to take over utility services on Molokai, the Hawaii Public Utilities Commission (PUC) has been forced to propose staggeringly high rate increases for West End users. While, the proposed increase is meant to be a short-term fix for a potentially long-term problem, many are left wondering whether or not residents will be able to foot the bill.

The PUC is proposing a 121 percent increase for Wai’ola o Molokai users and a 41 percent increase for Molokai Public Utilities, Inc., users. Both companies provide water utility services to the central and west end of the island. In March, Molokai Properties Limited (MPL), who owns the companies, announced its plans to abandon both subsidiaries in addition to its regulated sewer utility Mosco, Inc.

The PUC hopes the temporary rate increases will offset the utility companies’ losses allowing services to continue until either a public or private provider can take over. But a debate rages on between the PUC, MPL, the state, and Maui County over whose kuleana it is to step in.

MPL Attempts to Defy PUC Order
In a June 5 letter to MPL, the PUC ordered the company to continue providing utility services. However, “the utilities can only do what they have the resources to do,” MPL CEO Peter Nicholas said, in a June 11 letter to the PUC.

MPL advanced its utility companies a total of $580,000 in the 2007 fiscal year, and $566,000 for 11 months of 2008 for operating and capital improvements. After taking into account workers’ wages, tax obligations, and payments for goods and services, Nicholas said the companies cannot afford to continue operations.

MPL runs three additional unregulated utility companies. Because the one water company and two wastewater treatment systems are unregulated the PUC cannot order MPL to continue service, but the Commission has made a formal request.

“We do not agree with you (PUC) that the utilities have a duty to service their customers when they are insolvent and unable to do so,” Nicholas said.

Unprecedented Action
While many wonder why the financially stable MPL is not held accountable, Chairman Abbey Mayer said in the Molokai Action Team’s May meeting that it can be very difficult to hold a parent company responsible for the debts of its subsidiaries. He also noted that it is very difficult to force a private company to continue operating at a loss.

Recognizing MPL’s financial limitations, the PUC had no choice but to, “take the unprecedented step of opening a rate case proceeding to order a temporary rate increase,” according to a June 13 letter from the PUC to Nicholas.

The Commission has also reiterated its request to MPL for a transition plan for continued operation beyond August 2008. Other details requested include financial requirements for the three utilities to remain self-sustaining, a description of all utility assets, and an explanation of why Mosco was included in the utility services to be shut down if it is not operating in the red.

The County’s Role
The Commission cannot compel the Utilities to operate in perpetuity, and is consequently looking to the county as the next best utility provider.

In a June 13 letter, the PUC said it is the county’s responsibility to ensure its citizens have access to basic water and wastewater services, and therefore, “urges the county to act expeditiously to do what is necessary to acquire the water and wastewater systems.”

Meanwhile, the county has filed a formal complaint against MPL. The PUC and the Department of Commerce and Consumer Affairs received the document that alleges that the company’s intention to abandon utility services could potentially violate the law.

The complaint also requests that the Commission order MPL to provide a transition plan, investigate the Utilities’ financial records, and provide obtained information to the public.

Looking Out for Consumers
The Division of Consumer Advocacy (DCA) will act on behalf of the customers to decide if the rate increases are reasonable.

“This is unprecedented,” said Catherine Awakuni, Executive Director of the DCA, during Monday’s Action Team meeting. She said normally the utility would request a rate increase instead of the PUC proposing it.

Akwakuni said she has family on Molokai and therefore, has faces to put to names of customers. When considering who will be able to afford the rate hikes, she said that customers may be put into different rate classes.

West End Viewpoints
The West Molokai Homeowners Association (WMA) members have worked primarily behind the scenes thus far, trying to help people realize the wide-spread effect that the closure of the Utilities would have on the island. But members of the organization officially stepped out last week Monday by publicly voicing their concerns during the MAT meeting.

“We are facing a potential water and sewer crisis, said Paul Mordisini, president of the WMA. “Over 3,300 men, women and children who have homes and properties in Maunaloa, Kualapu`u, Kaluakoi, and part of Kalae” would be effected if there was a water and sewage shut down in August.

“We’re not getting a lot of movement,” Mordisini said, explaining that the issue is nearly halfway through the six month deadline that MPL first gave in March. The WMA prepared a two page chronological list of actions to show what its organization and others have done in the past few months.

Members of the WMA attended the MAT meeting in hopes that the team would contact the state.

“There is much by way of finger pointing, but little by way of coordinated efforts to achieve a common goal-that all Molokai have access to a basic necessity of life – water,” Mordisini said.

“I really feel for the West End Homeowners Association,” said Collette Machado, MAT member and OHA trustee. “I didn’t realize this was getting so complicated.”

Several other MAT members agreed with Machado, but were confused as to whether or not it was the group’s place to get involved. At last month’s MAT meeting, Machado sharply criticized and silenced at least one West Molokai resident who had asked the group for help regarding West End utilities.

MAT member Barbara Kalipi recommended the WMA recruit unaffected community members to help support their cause. “It’s got to be done in the community.”

Voicing Community Concerns
“There is also no guarantee that the ratepayers can afford the increased rates,” according to the PUC.

The county and the PUC will hold forums in July to hear community concerns.

Council Member Danny Mateo and Mayor Charmaine Tavares will host a community meeting on July 8 at 6:30 p.m. at the Mitchell Pauole Center.

“We would like to assure Molokai that the County is doing everything possible to protect the community’s rights to essential needs such as water and sewer service,” said Council Member Mateo, in a press release.

The PUC will be holding a public hearing on the proposed rate increases on July 15 at 10 a.m. at Maunaloa Elementary School. For more information contact Kaiulani Kidani Shinsato, Commission counsel at 586-2020.

If approved, these rate increases would be in effect for a period of six months, unless otherwise ordered by the PUC. There is no rate increase proposed for Mosco, as the company appears to be operating at a profit.