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Garden Isle
group buying
Kauai Electric
The co-op is acquiring the
By Anthony Sommer
company from Citizens Utilities
for $270 million
Star-BulletinLIHUE -- A group of Kauai businessmen calling themselves Kauai Island Utility Co-op has purchased the Kauai Electric unit of Citizens Utilities Co. for $270 million, the group announced today.
The state Public Utilities Commission must approve the purchase, a process that is expected to take several months.
Citizens, based in Stamford., Conn., yesterday sold all three of its electric companies for $535 million, including Kauai Electric, as well as companies in Arizona and Vermont. The other two companies went to Cap Rock Energy Corp., which had been bidding on Kauai Electric as well.
Citizens last year announced plans to concentrate on its telecommunications holdings.
The utility co-op is the first formed in Hawaii. Kauai Electric customers will own the company and elect a board of directors.
There are no state laws covering electric co-ops. Alan Oshima, a Honolulu attorney who will represent both the co-op and Citizens before the PUC, said he is taking the position that Kauai Electric should still be regulated like any other utility, but in some states co-ops are not regulated.
The co-op will continue to pay property taxes and the sale should not affect county revenues. The county has given the sale only qualified support, saying it wants to see lower electric rates.
Kauai Electric, with about 30,000 customers, has by far the highest-priced electricity in the United States at about 19 cents per kilowatt hour. The Big Island is a distant second at 17.6 cents per kilowatt hour.
The Kauai co-op is hoping to reduce costs by operating as a nonprofit organization.
It is headed by Gregg Gardiner, publisher of "101 Things to Do," a tourist publication.
Gardiner said the co-op is not promising lower electric rates immediately but long-term savings will be passed on to customers.
Kauai Electric's current management and employees will continue to manage and operate Kauai's electric utility, Gardiner said. He estimated 10 to 14 positions will be added to the payroll to provide administrative support now coming from Citizens Utilities'' central office. Kauai Electric now has about 120 employees.
The co-op will assume a contract with Kauai Power Partners to build a new power plant outside Hanamaulu. That project has been challenged by environmentalists in Circuit Court and a hearing is expected this spring.
The National Rural Utilities Cooperative Finance Corporation, based in Herndon, Va., is providing financing for the acquisition.
Citizens Utilities' stock rose 25 cents to $16.44 in New York Stock Exchange trading today.
Bloomberg News contributed to this report.
