Kauai Electric sale still alive

The Council refuses to fully back
the mayor's fight to halt the sale

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By Anthony Sommer
tsommer@starbulletin.com

LIHUE >> The Kauai County Council has again refused to back Mayor Maryanne Kusaka's effort to halt the sale of Kauai Electric Co. to a cooperative formed by a group of Kauai businessmen.

But as it has for more than two years, the Council on Thursday night refused pull the plug on the mayor's campaign. It doled out $40,000, just enough to pay the mayor's attorneys and consultants for an extra 30 days.

Kauai Electric has the highest electric rates of any regulated electric company in the United States, currently about 23 cents per kilowatt hour.

Its owner, Citizens Communications Corp. of Stamford, Conn., has been trying for three years to sell it.

The Kauai Island Utility Co-op has agreed to purchase Kauai Electric for $215 million. The deal is pending approval from the state Public Utilities Commission, which two years ago rejected a sale to the same group for $270 million saying it was too expensive.

The co-op has the backing of almost the entire business community on Kauai. The Council has been placed in the position of either opposing the business leaders in an election year or opposing the mayor, with whom they have had increasingly strained relations.

Kusaka, while repeatedly stating she has not decided whether the county should buy Kauai Electric through condemnation, has for two years given every indication that is what she wants to do.

This week a bill drafted by the mayor's staff was introduced in the Council. If passed by both the Council and the voters, it would establish a county power authority. Earlier this year, at Kusaka's request, the Legislature gave Kauai County authority to issue bonds to purchase Kauai Electric.

Friday  could be a turning point. That is the date each of the three intervenors in the PUC case -- Kauai County, the U.S. Defense Department and the Hawaii consumer advocate -- is scheduled to file "preliminary position papers" with the PUC.

The Defense Department, which two years ago strongly opposed the sale, this time around is expected to express some concerns but not recommend against it.

The consumer advocate is expected to be less critical than it was in the first case.

Only Kauai County is expected to be adamant in its opposition.

"On July 19, we'll find out whether we're in the same boat or another boat from the other intervenors," said Councilman Randall Valenciano, who is a mayoral candidate. "If we're in left field and everyone else is somewhere else, it's important to know that."

Thursday night, Oahu attorney Bill Milks, who was hired by Kusaka to represent Kauai County at the PUC, asked the Council for three things: "some directions on how to proceed," money to continue work after July 19 and reconsideration of a request for a contested case hearing before the PUC that the mayor wants but the Council has refused to fund.

All Milks came away with was the money and then just enough for another month of work.