Water in the Works

The Molokai Properties Ltd. filing for permanent rate increase

By Catherine Cluett

For residents of West and Central Molokai, many of whom have been paying water rates for the past six months that have been called outrageous, the end is hardly in sight. The Public Utilities Commission (PUC) approved a temporary six month rate hike of as much as 178% for the water utilities run by Molokai Properties Ltd. (MPL) effectual on September 1, 2008. The six month period was scheduled to end in February, but MPL has been granted a six-month extension while they file for permanent rates, according to Lani Shinsato, legal counsel for the PUC.

On May 30, MPL director Peter Nicholas notified the PUC, citing financial losses, that unless another entity could be found to take over the operation of the water utility services by the end of August, MPL would be forced to terminate water service to about 1200 residents. The PUC granted temporary rate increases for MPL subsidiary utilities Molokai Public Utilities (MPU) and Wai`ola on Aug. 14, 2008, scheduled to terminate on Feb. 28, 2009. By that time, the utilities were required to either find a successor to take over the utilities or file a general rate application with the PUC for permanent water rates.

On Oct. 29, MPL requested “an additional six months, or such time as may be necessary… to obtain Commission approval of general rate increase,” according to an official request letter filed by MPL. The letter adds that a third-party successor to the utility systems has not been found.

“The Utilities do not anticipate any material change in their short-term financial picture,” reads the letter. Shinsato offered no guess for an anticipated permanent water utility rate, but Jane Lovell, Corporation Council for the County of Maui, said she thinks there is a “pretty good chance” the utilities will ask for higher rates. 

According to Shinsato, MPL is now required to file the general rate application by Feb. 14. She says that MPL has been in communication with the PUC and seems to be on track to file by the deadline. Once the application has been filed, its processing should take about six months. In the meantime, consumers will continue to pay the temporary rate increase due to the six month extension.

Processing MPL’s general rate application will involve the input of consumers and lobbying of the Division of Consumer Advocacy, with the PUC making the final rate decision, according to Shinsato. She says the “process would be pretty public.”

Two separate proceedings will take place, one for MPU and one for Wai`ola, Shinsato explains. One public hearing will take place on Molokai for each utility, but in practice, she adds, the hearings will likely take place back to back on the same day to save travel costs for PUC representatives.

Shinsato says she expects the hearings will be set for sometime in April.

She explains the general rate application process is like a court hearing. The utilities are on one side, and the consumer advocate is on the other. The PUC acts like the judge, deciding the final rate.

She says consumers can go to the consumer advocate with suggestions or complaints (call (808) 586-2800 or email consumeradvocate@dcca.hawaii.gov), but can also directly approach the PUC. The PUC can be reached by calling (808) 586-2020. Comments may be submitted during the public hearings, or can be emailed to either party.