Political

PUC Hears Debate on Proposed Rate Increases

Thursday, July 24th, 2008

By Zalina Alvi

West end water users are holding their breath as the Hawaii Public Utilities Commission (PUC) decides whether or not to raise fees in an effort to keep the water running past the end of August.

While the County of Maui seeks legal action against Molokai Properties Limited (MPL) and its subsidiary utilities (collectively, Utilities), the PUC and the state Division of Consumer Advocacy (DCA) are making plans to move ahead with “unprecedented” increases to water charges.

As the PUC gives itself until mid-August to make a decision, frustration is growing on the island among those who believe MPL is taking advantage of its water users and getting away with it, while the Commission denies a request from the County to subpoena the company’s financial documents.

The PUC’s plan
On June 16, the PUC announced an order to provide temporary rate relief to Molokai Public Utilities (MPU) Inc. and Wai`Ola O Moloka`i. This was in response to MPL’s announcement in late March that the Utilities would be discontinuing service as of Aug. 31 due to suffering “substantial losses.”

The PUC’s order described a plan to apply a 121.53 percent increase across the board for all user charges and fixed charges for Wai`Ola O Moloka`i and a similar 40.96 percent increase for MPU, which are the two water utilities. An increase was not proposed for Mosco Inc., the regulated wastewater utility, because the available financial records show that it turned a profit in 2007.

PUC Chair Carlito Caliboso explained the proposed numbers as the best estimation they could provide based on the “very raw data” of the available 2007 financial records provided by the Utilities, which included information on basic yearly revenue and net losses. The Commission looked at how much each utility made in 2007 and how much they lost, and then suggested an increase that would allow each one to break even.

The PUC has provided a deadline to all the involved parties, as well as the public, to provide any additional information, formal statements and comments by Aug. 7, and plans to deliver a decision and order on the rate increases as they currently stand on Aug. 14 that would last for a period of six months, unless determined otherwise by the Commission.

Caliboso called the plan “an unprecedented step for the commission,” as an increase would usually be initiated by the Utilities and would takes months to process so the DCA could analyze the proposal. The PUC, however, said they had “taken the burden of initiating the case” to keep water running for the health and vitality of everyone living on Molokai.

Differing rate increases
MPL CEO Peter Nicholas, however, wrote in a June 23 letter to the PUC that water users would have to pay more than what the Commission is proposing. He wrote that nothing less than a 178 percent increase for Wai`ola O Moloka`i, a 90 percent increase for MPU and a 19.5 percent increase for Mosco  would be sufficient for them to break even.

The Commission stressed at the hearing that while it appears the Utilities are asking for a larger rate increase, they are actually “very similar numbers.” This is because the PUC is proposing to raise all the fees, which includes the rate per 1,000 gallons plus a fixed monthly charge that depends on the size of your meter. Meanwhile, the Utilities are only asking to increase the rate per 1,000 gallons, while the fixed meter charges would remain the same.

As for the wastewater utility, Mosco Inc., the Utilities and MPL are currently proposing an increase from $44 per month to $52.56. The PUC, however, remained firm in the belief that it did not require any increase at all because Mosco Inc. has not been losing money according to the company’s own numbers, but said they would provide the utilities a chance to justify its request.

The PUC’s understands Mosco’s rate increase as a result of lumping administrative expenses, like employee costs, that are shared with all the utilities onto Mosco. The PUC is currently waiting to be provided with revised numbers based on those expenses being shared with the other utilities.

Mixed feelings
After presenting their order to provide “temporary rate relief” for MPL’s two water utilities, the Commission heard testimonies from representatives of MPL, the Utilities, the DCA, the County, the West Molokai Association (WMA) and a few concerned residents.

Although the cafeteria of Maunaloa Elementary School was packed, the hearing turned out to be mainly a quick reading of statements that debated the Commission’s plan to raise water charges for 1,200 West Molokai residents with no clear compromise among those involved.

In opposition to the proposed rate increases, Jane E. Lovell, deputy corporation counsel on behalf of the county, stated that they have filed a formal complaint against MPL and that they do not support the proposed rate increases because the utilities have provided sparse data that has not been verified by a third party.

Lovell urged the Commission in her testimony to use its subpoena powers to get the missing information from MPL and its Utilities that would allow it to accurately evaluate what rate increases would be truly necessary, if any.

The lack of data provided by MPL and its Utilities has been a hot topic since the announcement to shut down water service. Many have wondered why the PUC has not already subpoenaed the information from the company, especially now that it may be ordering a raise in fees based on what they have admitted is “very raw data.”

The Commission denied a recent request from the County to subpoena the documents and the presence of MPL witnesses, which include CEO Peter Nicholas. The PUC said the public hearing was not the appropriate venue to do so and that there was not enough time to summon the requested witnesses. However, the PUC stated that they would entertain another request to subpoena from the County after the July 15 hearing.

Meanwhile, recent speculation that the company ordered employees in Maunaloa to burn company documents shortly after announcing the plans to shut down are not helping matters for MPL.

In the event that the Commission does impose these rate increases, however, Lovell said the county requests that any funds acquired by MPL and the Utilities stay on Molokai, and “do not go into some back account in Singapore.” It is also requesting that the PUC should commit to making sure the systems continue functioning, as it has not heard that yet.

Meanwhile, Catherine Awakuni, DCA executive director, said during her testimony that the office would prefer more time to consider the fairness of the PUC’s proposal, but “with grave reservations” will not oppose the rate increases due to the urgency of the situation.

That being said, Awakuni recommended that the Commission require the utilities to provide documents, including billing records, for each of the six months of the temporary increase to facilitate an independent assessment.

MPL’s position
Representing the Utilities was MPL employee Sonny Reyes who, on advising the room that Nicholas was unable to attend, went on to read from one of his letters to the Commission. The statement said the Utilities would likely suffer a $179,000 loss considering rising energy and fuel costs, and said Mosco would suffer a $37,000 loss if left to operate alone.

MPL was represented by General Manager, Land and Entitlements General Counsel Daniel Orodenker who simply said he was there as a resource, despite a formal objection to being forced to be present.

The objection is based on the position that MPL is a separate entity to its Utilities. But 30-year Molokai resident DeGray Vanderbilt said MPL and its Utilities are essentially the same company. He pointed out that Nicholas, Orodenker and other MPL officers and directors are listed on all three utility boards, according to the State Business Registration Office.

Public concern
While only a few members of the public chose to testify at the hearing, the feelings that came through loud and clear were one of disappointment from some and skepticism from others.

Some were disappointed that seemingly no agency had yet taken on the responsibility of ensuring the water and wastewater utilities continue to function.

Meanwhile, there was also a sense of skepticism regarding MPL’s actions.

Vanderbilt called the company’s actions a “utility shutdown hoax” and accused MPL of trying to get away with acquiring a rate increase without going through the proper channels, while at the same time holding on to assets that could easily finance the continued operation of its utilities.

He called on the PUC to call the company’s bluff and allow them to walk out on their obligations so that they can be fined by the Commission.

Criticism of MPL’s alleged mismanagement of the systems and its own financial affairs were also discussed, especially by resident Steve Morgan, who argued that MPL has been receiving tax breaks from the county unfairly.

By the end of the meeting, however, none of the involved parties had any response to the public comments and now it rests with the Commission to take the next step come Aug. 14.

The DCA invites comments from the public, and can be reached at consumeradvocate@dcca.hawaii.gov or by phone at 586-2780. The PUC will also be accepting public comments through email at Hawaii.puc@hawaii.gov or by phone at 586-2020.

Elections Begin for `Aha Kiole

Monday, July 21st, 2008

By Zalina Alvi 

The time has come to begin electing council members to the Molokai Pae Moku of the `Aha Kiole Advisory Committee.

When the council members are chosen, the committee will be able to use their collective `ike, or knowledge, to ensure that our natural resources are taken care of for future generations. `Aha Kiole will do so by representing all the local practitioners in Hawaii in advising the Department of Land and Natural Resources (DLNR) and related agencies in managing the state’s natural resources using ancient Hawaiian practices.

Vanda Hanakahi, chair of the statewide `Aha Kiole and representative for Molokai, expressed a hope at the July 17 meeting for a united front from her island’s council, so that it may act as an example for the other islands.

For the next few weeks, Hawaiians who are practitioners of fishing, agriculture and land use methodology based on the ahupua`a system or of local cultural arts, have the opportunity to become the leader of their moku through a democratic process.

How it’s organized
Although the committee chair and leaders of each island were previously appointed by the governor, the representatives of each moku on Molokai – which are Pala`au, Kawela, Halawa, Kaluako’i, and Ko’olau – will now be chosen by popular vote during a series of meetings, starting on Aug. 14 with the Pala’au moku. Each of these leaders will then be able to act on behalf of the ahupua`a in their mokus.

In order to be eligible, Molokai residents must complete a nomination form asking for information on geneology, residency, knowledge and leadership criteria.

The right leader should have learned their expertise through their family, know about the spiritual connection between natural resources and native Hawaiian values and practices, must always serve the common good of the community, must be able to adhere to a code of conduct established by the `Aha Kiole council and based on the traditional Hawaiian value system, and must have the ability to communicate with `ike pono.

Forms are available by emailing hanakahi@sandwichisles.net and are due at the meeting on Aug. 14.

Controversy
While most of the people who attended the July 17 meeting were optimistic about the intentions and future of the `Aha Kiole council, there were some who were concerned about its top-down organization and possible hidden motives.

Caroline and Yama Kaholoa`a Sr., sixth generation Molokai residents, expressed skepticism about the intentions and role of the council in the lives of everyday Molokai homesteaders, in particular.

“This is just another organization coming in to tell us what we can and can’t do,” said Caroline.

During the meeting, Hanakahi assured the crowd that the council will work to represent the interests of all the residents on Molokai through active participation and a democratic election.

“Hawaiian or not, if you live in the community we want you to help,” she said.

Yama, however, also criticized the undemocratic nature of the committee’s formative years, citing the fact that the current island representatives, which include Hanakahi, were appointed by the governor and not by the public. He also expressed concern about the combination of a Western structure and traditional Hawaiian practices and values.

Next steps
Whether you agree with the committee or not, time is running out to put the wheels in motion. The process to form the committee began two years ago, and its sunset date is less than one year away in June 2009.

This past June, DLNR biologist Bill Puleloa was already saying the DLNR was making management decisions without their input. The current timeline requires the `Aha Kiole to submit a report for the next legislative session in early 2009.

Should Molokai Ranch be Responsible for Its Utility Companies?

Monday, July 21st, 2008

The Ranch, also known as Molokai Properties Limited (MPL) has said that if rates are not raised by as much as 178 percent for Wai`ola O Molokai and similar increases for two other utilities, they will abandon water and wastewater operations by Aug. 31.

The question is: should cash-positive Molokai Ranch be financially responsible for its money-losing subsidiary companies? The answer to this question will set a state-wide precedent for other privately owned utilities looking to unload their obligations to the public.

Separate Entity
So far Molokai Ranch has taken the position of passing the buck based on the position that the Ranch is a separate entity to its Utilities.

The Hawaii State Public Utilities Commission (PUC) recently called on Molokai Ranch to testify at last week’s hearing to help determine utility rate increases. In response, Ranch General Manager & General Counsel Daniel Orodenker chastised the PUC for requiring the Ranch to be present.

In a letter to the State he said that PUC did not have “authority to name MPL as a party in the proceeding,” nor the authority to levy any monetary penalties on MPL since it is not a utility company.

The Corporate Veil
Some are characterizing the Ranch’s actions as an attempt to hide behind a “corporate veil”, in which a corporation will shield itself from certain liabilities by placing responsibility on it various subsidiary companies. 

The corporate veil is the most litigated issue in corporate law, according to a study by Vanderbilt University’s Robert Thompson.

Same Company
MPL and each of the Utilities share all of the same directors and officers making it legally difficult to distinguish one company from another. These facts are putting the question of MPL’s responsibility under close scrutiny by the public and Maui County lawmakers.

The PUC insisted Orodencker appear at the July 15 public hearing  to represent the Utilities. This decision is  based on the fact that he is  an officer withing each of the three utility companies, an officer of Molokai Ranch, and an officer of MRL Management, which is an agent for the Utilities and for Molokai Ranch.

In the mean time, the PUC has been notified by MPL that its utility companies are planning to remove all of their respective officers and directors except for MPL CEO Peter Nicholas.

State Proposes Water Limits on Molokai

Friday, July 18th, 2008

Plan to include sustainable yields for all of the island’s water resources.

By Zalina Alvi 

By the end of August, the state may be regulating how much water can be taken out of the island of Molokai and the rest of Hawaii.

A representative of the state Commission on Water Resource Management presented a revised draft of the Water Resource Protection Plan (WRPP) at a meeting of Molokai’s Water Advisory Committee on July 10. The proposed plan analyzes data on current and future water demands in order to put caps on how much water can be taken out without jeopardizing our resources.

The WRPP is one of five parts of the larger Hawaii Water Plan. Maui County, like other counties, will have its own water use and development plans which will include information on Molokai.

The WRPP’s major role is to determine the water limits for the individual county plans when they are finalized and ready to be implemented.

Sustainable Yields
The limits are calculated as sustainable yields for the island as divided up into 16 sections of groundwater resources. Areas such as Kaluakoi and Hoolehua, have the lowest sustainable yield with two million gallons per day, while Wailau has the most with 15 million gallons per day. Seven out of the nine areas on neighboring Lanai have a sustainable yield of zero gallons per day. There is also a section on surface water resources that will be monitored and regulated.

Data Confusion
The WRPP, which has been in the works since 1990, has undergone several revisions based on public comments since it was first developed.

Even so, the general response at the committee’s meeting was one of hesitancy and distrust of data acquired by the commission. One of the major issues questioned functionality and number of gauges used for collecting data from streams on Molokai.

Roy Hardy, regulation branch chief for the commission, assured the meeting’s attendees that the data was sound, but admitted that there have been budget cuts in terms of data collection, which would account for the possible disrepair or absence of gages in local streams.

Share Your Mana’o
The WRPP will have to be approved by the commission on Oahu at the end of August, most likely on or around Aug. 20. The public can send comments in formal letters to the commission by fax at 587-0219 or email at dlnr.cwrm@hawaii.gov.

The full plan be found online at hawaii.gov/dlnr/cwrm or viewed in person at the commission office at the Kalanimoku Building, Room 227, 1151 Punchbowl Street in Honolulu.

Other Plans in the Works
The Water Advisory Council is also working with the county on putting together a section on Molokai for a Maui Water Use and Development Plan (WUDP) that will fall under the WRPP. Anyone wishing to contribute should attend a meeting. Meetings usually take place on the second Thursday of the month. Comments on the WUDP can be sent to Ellen Kraftsow with the Department of Water Supply at ellen.kraftsow@co.maui.hi.us.

Mayor Stands Firm on Water Issue

Friday, July 18th, 2008

By Jennifer Smith 

Mayor Charmaine Tavares set the record straight last Tuesday night by clarifying that it is not the county’s sole responsibility to take over Molokai Ranch’s utility services. The majority of the Molokai community stood behind the mayor, arguing that Molokai Ranch should not be let off the hook, and the governor needs to intercede in the matter.

"We are not going to abandon the Molokai residents,” said the mayor, during a community meeting held on Molokai. Mayor Tavares and Council Member Danny Mateo arranged the meeting in response to questions and concerns about Molokai Ranch’s potential abandonment of utility services in August. 

The Ranch, also known as Molokai Properties Limited (MPL), announced in April its intention to abandon its water and wastewater services on the island. The decision came days after the company closed several of its Molokai-based businesses, and laid-off 120 local workers.

Impending Emergency
“People have to trust that we are not going to let them down,” Mayor Tavares said. “We are not going to wait until the faucets are turned off.”

The Mayor’s Office sent a letter last Tuesday asking the governor to declare Molokai’s utility situation a state of emergency. According to Mayor Tavares the decision would provide the governor with the necessary legal and financial clout to hold Molokai Ranch accountable, while continuing services to residents.

The state, which does not have the physical infrastructure to take over a water system, could then put together a plan to have engineers and experts assess the situation, and then make a call for proposals to find a company to fix the system.

As of last Friday, the governor’s office had held a meeting to discuss the mayor’s request, but had not confirmed a course of action.

The mayor said the county needs to allow due process to take its course, and cannot disclose several of the proposed plans, but in the event of an emergency she said the county would respond immediately by treating the situation as a natural disaster.

The mayor can declare a state of emergency, but she said her declaration only allows access to emergency funds but will not allow her any other enhanced jurisdictional powers. Mayor Tavares and Council Member Mateo expressed their strong frustration at not being able to do more at this time.

The Mayor’s Office has also contacted the Environmental Protection Agency to make it aware of the developing utility situation on Molokai.

Ranch Closes Doors to Information
Mayor Tavares said she doesn’t yet know how much County emergency appropriations would be needed because Molokai Ranch is continuing to deny access to information, records, and facilities of its utility companies.  Public Utilities Commission (PUC) representatives have also reported non-access to the Ranch’s operational and financial information.

The frustration over the lack of information has led the county to fax a letter to MPL’s parent company, Guoco Leisure in Hong Kong. The letter informed the global company of MPL’s unwillingness to cooperate.

Several attendees speculated that the Ranch is intending to profit from a potential emergency situation. Passing on its utility responsibilities could potentially allow MPL to circumvent costly requirements to continue operating its systems.

Last August, the state attorney general ruled that MPL must complete an environmental assessment to receive a renewed permit to continue using the Molokai Irrigation System to transport its water across the island. Then in December 2007, the Hawaii Supreme Court revoked MPL’s permit to use its purchased Well 17. Between legal fees, and time expended, it would reportedly cost MPL millions of dollars to get its systems legally up to code and running.

"I am just appalled" the ranch is sitting back implementing their new business plan, said DeGray Vanderbilt, former chairperson of the Molokai Planning Commission. He said MPL remained cash positive the past three years, but found it advantageous to claim financial hardships in order to abandon its utility obligations.
 
"They want to dump their liabilities and keep their assets,” the mayor said.

Vanderbilt added that such an action would allow MPL to come back in better economic times to sell off its land holdings for a higher profit. "I think it is time to play tough with these guys," he said, suggesting the state fine MPL daily should the company forgo its responsibilities.

MPL claimed in a letter to the PUC that the county needs to take over the system because no private investors have expressed an interest in taking over. However, the mayor said there have been at least two private companies willing to run the systems.

Council Member Mateo authored a resolution in June that would have the county hire lawyers and other specialists in the event that legal action is taken against MPL. The resolution will be heard on July 22 in the policy committee.

Molokai resident Steve Morgan said several of MPL’s business transactions should receive a closer review. He referenced several improprieties regarding tax assessments of property holdings in relation to the charges incurred by private homeowners.

According to the mayor, if the governor does declare a state of emergency, it would give her the jurisdiction to seize MPL’s records, and look into the state of the utility systems.

State Jurisdiction
Because the PUC granted permits for MPL to run its utility companies, the mayor wants the state to continue its oversight of the company while it relinquishes its permit responsibilities.

“Please don’t get tricked into thinking that this is the County of Maui’s responsibility,” Mayor Tavares said. The County Board of Water Supply and the Department of Water Supply codes do not apply because the issue concerns a private water company she said.

Resident Paul Mullen has followed the developing situation closely and said, while the Ranch deserves plenty of the blame, people also need to place some of the responsibility with the PUC. After granting the Ranch the utility permits, he said the Commission allowed the company excessive amounts of deferred maintenance to its systems. In its defense, he acknowledged that it is extremely short staffed and funded.

"We are not pointing fingers," Mayor Tavares said. "We are trying to keep people accountable," she said, while acknowledging that the PUC has a huge responsibility to carry out, with very little staff.

The mayor said concerned residents can write letters to the PUC, the Department of Commerce and Consumer Affairs (DCCA), and the governor’s office.

“We need to have our governor come in here and help us,” Ruth Manu said.

The County Takes a Stand
Several residents came ready to grill the mayor, but quickly changed their tone after hearing the facts. Giving straight answers to tough community questions, the mayor asked the Molokai community in return to unite and “put the responsibility where it belongs.”

“Now that I have heard all of this I know it is the state that should be doing this,” said Richard Glenn, Molokai resident. He said the governor should declare a state of emergency and that the Department of Health (DOH) should be involved in the situation.

Molokai Community Unites
“I believe this community is truly making an effort to come together,” Council Member Mateo said. “We are one island, one people, and we all feel hurt.”

Several of the attendees also marveled at the unity felt in the room. Neighbors who had fought for years over issues such as land development, found a consensus Tuesday night, fighting for the need for affordable water rates, continued services, and accountability for utility companies.

Molokai resident Bill Vogue saw the water utility situation as an "opportunity for the island to pull together like never before."

Molokai Ranch Barring Access to Records

Monday, July 14th, 2008

MPL wants to raise water rates 178%.
Molokai Dispatch Staff

A June 24 Maui County letter to the Public Utilities Commission (PUC) claims that only “sparse information” was provided by Molokai Properties Limited (MPL), also known as Molokai Ranch. It also reads that MPL was “not responsive to each of the PUC’s requests (for information).”

While the threat of MPL’s August water utility pullout looms ever closer County representatives are urging the PUC to “subpoena books, records, accounts, and witness testimony necessary for the PUC and the Consumer Advocate to determine whether rate increases are necessary and justified.”

MPL’s Chief Executive Officer Peter Nicholas recently advised the PUC that unless former ranch employees and other residents were willing pay a significant178% increase in water rates, the MPL was going to walk away from its responsibility of providing service.

Based on the MPL’s demands, Maunaloa and Kualapu`u residents would be forced to pay a staggering $5.15 per 1000 gallons of water verses the current rate of $1.85.

“We don’t know what to expect from Molokai Ranch,” said Catherine Awakuni, Executive Director of the Consumer Advocate Office, at a recent meeting on Molokai. “We don’t know if they are going to be cooperative, uncooperative, if we are going to have to be subpoena... to get the information we need.”

New Council Members Sworn In

Monday, July 14th, 2008

By Zalina Alvi

Community members received a big welcome and mahalo from Lt. Governor James R. “Duke” Aiona Jr. as he officially swore in 21 appointees to several state boards and commissions last Tuesday.

The official ceremony took place at the Office of Hawaiian Affairs conference room and included a warm welcome from Jonah Kaauwai, Deputy Chief of Staff for the Office of the Lieutenant Governor. The Lt. Governor thanked everyone for donating their time and effort to making a difference in the community, and stressed the importance of their continuing involvement.

The councils with new members were the Molokai Irrigation System Water Users and Advisory Board; the Health Planning Council, Tri-Isle Subarea; the Mental Health and Substance Abuse, Maui Service Area Board; the State Council on Mental Health; the Island Burial Council, Island of Molokai; the Legacy Land Conservation Commission; the ‘Aha Kiole Advisory Committee; and the Governor’s Molokai Community Advisory Council.

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.

Aloha from the Governor’s Office

Thursday, June 26th, 2008

Governor discusses possible constiutional convention. 

On November 4, Moloka‘i voters will be able to vote for, against or leave blank their response to the ballot question, “Shall there be a convention to propose a revision of or amendments to the Constitution?” This con con question is arguably one of the most important decisions facing Hawai‘i voters this general election.

Briefly put, a constitutional convention is an organized gathering of publicly elected delegates for the purpose of reviewing and putting forth revisions to our existing state constitution. Any proposed amendments approved by the constitutional delegates would then be voted on for ratification by the public electorate during the next general election.

I believe convening a con con would be beneficial for the entire state by allowing residents an opportunity to be more directly involved in the decisions that govern them. For neighbor island residents, the potential benefits are even greater. We’ve heard the desire for greater local control over neighbor island schools and health facilities. A con con would provide a platform for these desires to be heard and lead to their possible incorporation into our constitution.

The framers of the Hawai‘i State Constitution recognized the need to modify the document as times change. That’s why they included an article that calls for holding a constitutional convention every 10 years, if a majority of the electorate decides to do so. In 1996, Hawai‘i voters cast more “yes” than “no” votes in support of a con con. However, that year the Hawai‘i Supreme Court ruled that blank ballots be counted as “no” votes. Consequently, a con con hasn’t been held in our state since 1978.

To ensure that residents statewide have accurate information on which to base their vote on November 4th, Lt. Governor Aiona recently brought together a bipartisan task force to study the costs of convening a convention. The task force will release its findings in a public report no later than August 1, 2008. Residents can provide their comments to the task force at concon@hawaii.gov.

Our last con con in 1978 helped to establish term limits for the governor and lieutenant governor and create the Judicial Selection Commission and Office of Hawaiian Affairs. The people of Hawai‘i made these important decisions, and now 30 years later have a new opportunity to take a fresh look at how our government operates.

I encourage Moloka‘i residents to learn more about the con con issue on Lieutenant Governor Aiona’s website at www.hawaii.gov/ltgov. As residents, you are most familiar with the challenges and opportunities on Moloka‘i, and therefore in the best position to determine the path to a brighter future.

Mahalo,
Governor Linda Lingle

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.