Pop quiz. The value of Kaua’i Electric is: a) $158 million; b) $175 million; c) $190 million; d) $215 million; e) $238 million; f) All of the above. Based on information taken from a taxpayer-funded County of Kaua’i appraisal of
Pop quiz.
The value of Kaua’i Electric is:
a) $158 million;
b) $175 million;
c) $190 million;
d) $215 million;
e) $238 million;
f) All of the above.
Based on information taken from a taxpayer-funded County of Kaua’i appraisal of Kaua’i Electric released last week, the values of Kaua’i Electric are $158 million (original cost less depreciation), $175 million (net book value on the company’s books), $190 million (consultant R.W. Beck’s estimated fair market value, also referred to as capitalized income value), and $238 million (replacement cost less depreciation).
The Kaua’i Island Utility Cooperative – a Kaua’i-based group hoping to takeover the electric company – has a deal to purchase Kaua’i Electric for $215 million. So the correct answer is f).
Regarding the various price tags that could be applied to the value of Kaua’i Electric, Mayor Maryanne Kusaka’s Administrative Assistant Wally Rezentes, Sr. said the scenario could be similar to a home with an appraised value of $100,000, an owner who wants $130,000 for the property, and a buyer willing to go as high as $110,000.
Obligatory negotiation ensues, in the case of buying a home, to bring the price to a mutually agreed upon figure and is similar to the continuing negotiations between KIUC and KE parent company Citizens Communications Company.
Mayor Maryanne Kusaka last week released and transmitted to the County Council results of an appraisal of Kaua’i Electric, which according to her office is part of an effort to better determine an appropriate acquisition price for the utility.
In August 2000, the state Public Utilities Commission rejected a proposed sale agreement between Citizens Utilities Company (now Citizens Communications Company), KE’s parent company, and Kaua’i Island Utility Co-op.
The county, the U.S. Department of Defense, and the state consumer advocate all opposed that transaction, which had a price tag of $270 million.
The mayor, writing in county’s latest appraisal, did not rule out the possibility of county support of a new sale agreement between KE and KIUC.
“If the price is reasonable – taking into account our appraisal – and the recommendations of our governance committee are followed, we will be much more likely to support a sale to KIUC,” she said in her recommendations.
The half-inch-thick document includes five specific recommendations regarding the sale to the people of Kaua’i and the County Council, the R.W. Beck fair-market-value assessment, recommendations from Kusaka’s Committee on Governance of an Island Utility, and other items.
The mayor’s recommendations are:
– The county and KIUC follow the substance and spirit of the recommendations that were adopted by the Committee on Governance of an Island Utility;
– The county support KIUC in its application before the state PUC provided that the recommendations outlined in this submittal are, in substance, complied with;
– At the same time, the county continue its pursuit of establishing a county power authority by supporting a charter amendment which would authorize the County Council to establish a power authority, and proposing and supporting the necessary state legislation that would implement the recommendations made by the committee on governance;
– The County Council consider providing the resources necessary to formulate a county-wide energy policy, and provide support of HB 2837, a legislative bill that would allow the state to conduct a statewide energy audit;
– The county legal team decides whether to request a hearing before the state PUC, the hearing would determine whether a rate hearing would be relevant in an acquisition of the assets of an investor-owned utility by a cooperative.
The mayor’s governance committee is comprised of community members who, over an eight-month period last year, studied which ownership models of KE would be most advantageous for Kaua’i Electric’s ratepayers.
The committee unanimously agreed on some form of public ownership either via a cooperative or a county-owned power authority.
“If a sale to KIUC falls through or cannot be supported by the county, we must consider the other means of public ownership recommended by the governance committee – a county-owned power authority,” Kusaka said.
Staff Writer Paul C. Curtis can be reached at mailto:pcurtis@pulitzer.net or 245-3681 (ext. 224).
