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Kauai co-op lobbying
for loans to buy
electric company

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By Anthony Sommer
Star-Bulletin

LIHUE -- The head of the Kauai business group still eager to buy Kauai Electric Co. from its present owner, Citizens Communications, is in Washington, D.C., this week, lobbying for passage of a bill that would provide $113 million in loans.

Gregg Gardiner said in a telephone interview yesterday that he still believes his group, the Kauai Island Utility Co-op, can negotiate a deal that will be acceptable to the state Public Utilities Commission. But to have any chance, loans from the federal government must be available.

The PUC already has rejected a proposal from the co-op to buy the utility for $270 million. At its last rate case, the regulatory board valued the property at $140 million.

Kauai County, the U.S. Defense Department and the state consumer advocate all opposed the purchase, arguing the co-op was offering to pay too much and putting customers too much at risk for future rate increases. Kauai Electric already has the highest electricity rates in the United States.

Gardiner said his group and Citizens have whittled the figure down considerably and changed some aspects of the proposal. He said he would like to go back to the PUC with a package they might consider more acceptable.

Meanwhile, Kauai County is waiting in the wings. Beth Tokioka, spokeswoman for Mayor Maryanne Kusaka, said the county plans to go ahead with an appraisal of the property, either to use in a future PUC case if the co-op gets another chance or to negotiate a purchase of the electric company by the county.

Tokioka said there have been no discussions with Citizens because the company has not put Kauai Electric back on the sales block.

The bill Gardiner has gone to the capital to support is a supplementary appropriation for the Department of Agriculture that includes $113 million for any non-profit group (including the county) that would buy Kauai Electric. It would allow the federal Rural Utilities Service to loan the money at 5 percent. The balance would come from other federal agencies at a slightly higher rate.

Both the Senate and House versions of the bill have the money in them, but the wording is different. A conference committee meeting is scheduled for tomorrow.

Gardiner said there is a possibility the bill will be stalled while congressmen go home to run their election campaigns. If so, they likely would pass a continuing resolution allowing for spending at its current level, but without the new money for Kauai.

Citizens, which is selling off all its electric and natural gas utilities to concentrate on telecommunications, is required by state law to continue serving Kauai until a buyer acceptable to the PUC can be found. Citizens attorneys repeatedly have refused to discuss the negotiations.