Kauai study could
affect power play

A consultant for the mayor
is expected to address the island's
debate on electricity

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By Anthony Sommer
tsommer@starbulletin.com

LIHUE >> On Aug. 15, Mayor Maryanne Kusaka is expected to release a consultant's report stating Kauai's electric customers would pay lower rates if the county owned Kauai Electric, her office said yesterday.

At the same time, she is expected to announce the county's position on acquisition of Kauai Electric from current owner Citizens Telecommunications of Stamford, Conn.

She appears moving toward recommending purchase through condemnation.

Kauai County has avoided the subject of condemnation since last summer when the Hawaii Public Utilities Commission rejected a deal between the Kauai Island Utility Cooperative and Citizens for a $270 million purchase of Kauai Electric. Kusaka repeatedly has insisted she has not made a decision on the county trying to acquire the utility.

A news release issued by the mayor's office quoted administrative assistant Wally Rezentes Jr. as saying a study by consultant R.W. Beck Inc. of Seattle concludes that Kauai electric rates would drop 4.5 percent if the county paid $185 million for Kauai Electric.

Kauai residents pay 22.3 cents a kilowatt-hour of electricity, second in the state to the Big Island, which has a rate of 22.8 cents. Hawaii's average rate of 16.4 cents a kilowatt-hour is double the national average.

A purchase by the cooperative or an investor-owned utility would not result in lower rates, Rezentes said the study concludes.

Rezentes did not provide any of Beck's figures that led to that conclusion.

Citizens, however, has not offered to sell to the county, and is still negotiating a new deal with the cooperative. Sources said a new agreement appears possible before Aug. 15.

In a closed-door session, the Kauai County Council was briefed by the mayor's office Thursday evening on Beck's study.

Mayoral spokeswoman Beth Tokioka said the Council would have to approve a condemnation attempt because it will have to fund what promises to be a lengthy court battle.

An amendment to the County Charter also may be required, she said.

Gregg Gardiner, chairman of the cooperative, said there is no basis for the $185 million figure used by Rezentes as a selling price.

Gardiner said the cooperative believes it can buy the utility for the "market value," which he said will be higher than $185 million, and guarantee at least a 10-year moratorium on rate increases.