Thursday, August 16, 2001

Kauai County

Kauai faces
lengthy fight to
seize utility,
consultant says

The county is weighing
a condemnation action

By Anthony Sommer

LIHUE >> If Kauai County decides to start a condemnation action to gain control of Kauai Electric it must be prepared to fund a lengthy legal battle, a consultant told the Kauai County Council yesterday.

Nancy Heller Hughes of R.W. Beck, a Seattle engineering firm hired to advise Mayor Maryanne Kusaka, did not put a price tag on a condemnation action.

Hughes said the vast majority end in an out-of-court settlement, but Kauai County should not count on a quick agreement.

A utility condemnation in Las Cruces, N.M., took almost a decade to resolve, she cautioned.

Beck was hired a year ago when the Kauai Island Utility Cooperative had a $270 million purchase agreement with Kauai Electric's owner, Citizens Utilities of Stamford, Conn., pending approval before the Hawaii Public Utilities Commission.

The commission rejected the proposal as too expensive. The cooperative, after major restructuring, is negotiating a new agreement with Citizens. Meanwhile, Kusaka has been edging toward recommending a county takeover of the utility.

The results of Beck's "Feasibility Review" actually were made public by the mayor's office a month ago.

It concluded that $185 million was the break-even price for the cooperative if it wants to avoid rate increases for the next five years. If the county bought the electric company for $185 million rates would be reduced 4.5 percent, the study found.

Gregg Gardiner, who heads the cooperative, was not at yesterday's Council meeting. He said later there still is no deal with Citizens but talks are in progress.

In a quarterly report to its stockholders early this month, Citizens officials predicted the company would receive $215 million for Kauai Electric.

Kauai County

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