The Cost of Water

Molokai Irrigation finances detailed.

Homesteaders who showed up at a recent water meeting were hoping hear details about the removal of Molokai Ranch from the Molokai Irrigation System (MIS) this Thursday.

But Duane Okamoto, assistant chairman of Hawaii Department of Agriculture (HDOA), said the department has still not received any further instructions. Steps toward removing Molokai Ranch from the MIS will not be taken until the HDOA is given specific direction from the attorney general’s office.

Instead, financial implications of the Ranch’s removal from the system were examined during Okamoto’s presentation on the finances of the state-run irrigation systems.

According to Okamoto, all but Molokai’s irrigation system is operating at a significant deficit. Okamoto says MIS generates surplus income because $136,500 is contributed annually through a water transfer lease with Molokai Ranch.

The MIS is the only state system which supplies water to a non-agricultural user.

The revenue brought in from the MIS for the fiscal year 2007 was $498,421, providing a $70,000 surplus, which is a 12 percent increase from last year. The MIS saw an overall decrease in expenses and a minimal eight percent increase in electricity costs.

“Clearly, the MIS is the only surplus generator. This has been true historically and this past year, which is largely due to the number of users and the acreage here,” said Okamoto.

Other island’s irrigation systems experienced a 23 percent increase in expenses including a 57 percent increase in electricity costs. Okamoto said the increases were largely attributable to the earthquake on the Big Island last October and the damages done to water sources in Waimea on the Big Island. That system operated at a $77,000 deficit last year where the Waimanalo system operated at an $84,000 deficit.

According to Okamoto, funds generated from the MIS do not stay on Molokai. The income is added to a pot that is used to pay expenses on all of the state’s irrigation systems.

“We have to look at things statewide. If everyone looks out for their own needs, you don’t have the operational flexibility in the sense you do with the systems as a whole,” said Okamoto.

Homesteaders Glenn Teves would like to see Molokai operate its finances separately.

“Molokai is the one who does all the work, generates all the money, and we still need repairs. It benefits everyone else and not us. If we generate the 60 percent [income] then we should get 60 percent [back],” said Teves.

Okamoto countered that having a single State fund allows for quick and easy access to funds during emergencies, such as last years earthquake. If Waimea had been operating from a separate account at that time, residents would have had to wait for water for two weeks – when the government funds finally kicked in.

The general lack of resources for the state irrigation systems is attributed to a sweep made by the State Legislature in 2002. At the time, money was shifted from various state agencies to help cover a $300 million dollar shortfall in the state’s budget. 

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Editors Update: According to the HDOA Public Information Officer, no cuts were made from the irrigation fund, but rather $140,000 was given to the fund by the legislature.

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“Since then we have been operating on a shoestring,” said Okamoto.

Access to the financial records of the MIS and the other state irrigation systems will be made available on the HDOA Web site in the upcoming weeks. Okamoto said he is reluctant to provide numbers without an adequate explanation, in fear of creating confusion within the community. More narrative on the numbers, along with specific details regarding the irrigation special funds and the pooling of revenues can be expected.

Okamoto also pointed out that “while the MIS does generate a surplus, it also pays the lowest water rates of any system,” in the state.

MIS users are currently eligible for two discounts. Molokai Ranch’s lease, provides a 1.5 cent per thousand gallon deduction. There is also a 5 cent reduction per thousand gallons because local users consume more than 850 million gallons annually.

The Ranch’s water use has never been included in the amount accounting for the 850 million gallons discount.

For daily operations, Molokai Ranch requires 1.0 million gallons per day (mgd), which it is not able to do when relying solely on the mountain sources. According to Rex Kamakana, Molokai Ranch’s average daily input to the MIS for the past month was 1.8 mgd. Its outflow was 1.0 mgd.

MIS manager Byron Alcos reported that this month’s average daily inflow was 3.7 mgd, one million gallons more than the average daily outflow. He reports that only two pumps at a time are used within the system.

The Kualapuu Reservoir level is currently at 17 ft., leaving a two ft. cushion before the rainy season begins. If the reservoir should drop to 15 ft, restrictions will have to be enforced.

Neighbor island residents on Maui have been asked to voluntarily reduce water use by 10 percent because of draught. Upcountry non-agricultural users have been under a mandatory 10 percent restriction since June 12.

The MIS board of advisors has changed monthly meetings dates in order to better accommodate homesteaders and farmers. The next meeting will take place on Wednesday, Oct. 17, 2007 at 10 a.m.

The MIS board, HDOA, Molokai Ranch, homesteaders, farmers and members of the public regularly meet once a month to discuss the current state of the island’s water system.