Alexander & Baldwin Inc. has decided to continue sugar operations at Hawaiian Commercial & Sugar Co. through 2010.

However, A&B said yesterday the fate of its Maui-based subsidiary beyond this year is subject to a favorable outcome in the water cases pending before the state Commission on Water Resource Management, as well as other factors such as HC&S's ability to attain higher sugar production levels.

“;Despite the significant operating losses incurred in both 2008 and 2009, rising sugar prices entering 2010 and forecasted higher sugar production have bought HC&S additional time to prove its viability,”; said HC&S General Manager Chris Benjamin. “;Production is expected to increase primarily as a result of the return to near-normal rainfall levels over the past year. HC&S's financial viability depends largely on improving sugar yields, and water is the single biggest prerequisite to doing so.”;

Benjamin said the current spike in sugar prices, primarily the result of recent shortages in world sugar supplies, will result in improved near-term financial performance, but is unlikely to persist long term and will not be counted on to support HC&S's future viability.

“;We have accelerated our efforts to define a new strategic direction for HC&S, rooted, of course, in farming, but possibly putting greater emphasis on the production of energy,”; Benjamin said.

Besides supplying the electricity for all of its own operating needs, HC&S produces about 7 percent of the electricity consumed by the rest of the island of Maui. This 7 percent represents about 35 percent of the island's renewable energy supply.