County again opposes sale of KE to KIUC

LIHU’E – Mayor Maryanne Kusaka has released an outline used by a special counsel in briefing the Kaua’i County Council on the proposed sale of Kauai Electric to the Kauai Island Utility Co-op (KIUC).

Previously, the mayor’s office had insisted that the special counsel’s briefings should not be made public.

A County Council briefing was held in open session Wednesday during a council committee meeting after Councilmen Kaipo Asing and Gary Hooser refused to attend a closed-door meeting.

The special counsel, Honolulu attorney William Milks, said he gave the same briefing he would have given in an executive session.

Kusaka continues to oppose the purchase of Kauai Electric by KIUC. Milks said the co-op is paying too much and its proposed electrical rates, which are unchanged from the current rates, are too high.

Two years ago, the state Public Utilities Commission rejected a sale proposal for $270 million, saying the price was too high. The new price is $215 million, but the mayor’s office says that figure is still $25 million too high.

In a faxed copy of the brief sent to The Garden Island, Milks said some 350 information requests concerning the sale have been filed by the county over the past two months.

The county is set to release a preliminary position statement on the issue in about two weeks. Milks wrote that future actions could lead to a hearing on the sale.

In the outline, Milks said there are four reasons for holding a hearing where evidence would be brought fourth. They include:

– The purchase price has “little relationship to anything other than its acceptance by Citizens.”

– KIUC’s financial projections were made by investment banker Bill Collet, who is being paid in part with a “success fee.”

– KIUC has “failed to do meaningful ‘due diligence'”.

– KIUC needs to justify its proposed initial rates, and have little justification that “continued use of KE’s rates is appropriate.”

Gregg Gardiner, who heads up the KIUC group, replied to Kaua’i County’s statement on Friday in a statement to The Garden Island.

“The KIUC Board is not surprised with the proposal given by the county’s outside attorney,” he said. “The fact that its hired attorney would present such a strong recommendation before even receiving responses to 82 questions that he asked is very revealing. Those responses were filed today, July 5, in accordance with the procedural schedule ordered by the PUC. It is unfortunate that KIUC and KE have spent a lot of time and money in responding to the numerous questions from the county, only to hear that recommendations have already been put in writing without the county even seeing the responses.”

A petition for approval of the sale is pending before the state Public Utilities Commission. Kaua’i County and the U.S. Defense Department, representing the Navy’s Pacific Missile Range Facility, both major customers and both intervenors in the case, are scheduled to file their position statements on Friday, July 19.

“While we would prefer to have the county’s support, we recognize that other parties who are well-versed in utility regulation and issues are studying our application,” Gardiner said. “We hope that the very complex and thorough regulatory process will result in an approval of our application.”

“KIUC and its many supporters hope that the County will use its resources prudently and not take any further action until it reviews all of the responses to its information requests and sees the preliminary position statements filed by other parties,” he said.

The Associated Press contributed to this report.


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