The state Public Utilities Commission yesterday gave preliminary approval for the sale of Kauai Electric to the Kaua’i Islands Utility Co-op.
The approval kept in play a low-interest, federally guaranteed $215 million loan to back KIUC’s purchase, and caused KE and KIUC officials to exhale audible sighs of relief.
The U.S. Department of Agriculture’s Rural Utilities Service mandated that KIUC receive preliminary approval for the sale from the state Public Utilities Commission by yesterday.
Without the preliminary approval RUS would have probably released the $215 million earmarked for KIUC to other borrowers elsewhere in the United States to make sure the funds would be utilized before the end of the federal government’s fiscal year, which closes on Monday, Sept. 30.
“KIUC recognizes and appreciates the timeliness of the Hawai’i Public Utilities Commission’s order to allow it to maintain access to the low-cost RUS financing opportunity,” said Gregg Gardiner, KIUC chairman.
“We are thrilled with the PUC’s preliminary decision,” Gardiner said. “Thanks to them, we are now one step closer to being able to offer reduced electricity costs, local ownership and local control to the people of Kaua’i.”
Mayor Maryanne Kusaka didn’t share Gardiner’s enthusiasm.
“On one hand, I’m disappointed that the commission did not have the time to review all the information at hand before making this interim order,” said Mayor Maryanne Kusaka.
“This order is all about preserving favorable financing rates, in the event that the sale is approved. It’s important to remember that this is a preliminary order, and it is conditional; it’s not a final decision.”
“I am heartened by the fact that the PUC is giving itself more time to deliberate before making a final decision, and that it has pledged to fully review the issues raised by the county’s position statement before that decision is made,” said Kusaka.
Wallace G. Rezentes, Sr., administrative assistant to Mayor Maryanne Kusaka, said, “we’re still in the same position we were in yesterday,” and the county’s questions of law haven’t been answered. Questions about the county and KIUC appraisals and book values of KE, and other legal issues, also haven’t been answered, he added.
The county’s consultants raised lots of valid concerns about the application, and additional time is needed for the PUC to investigate those issues and concerns in-depth, he said.
The county’s opposition does not necessarily have the concurrence of the County Council, which has yet to take a position regarding the sale.
Council Chair Ron Kouchi sent a letter last week to the PUC stating that the county’s preliminary position statement “did not represent the position of the Kaua’i County Council, as it has not yet taken a position with regard to the proposed KIUC purchase of Kauai Electric.”
The Council plans to conduct further fact-finding, Kouchi wrote, and plans to issue its official position on the sale at its meeting on Thursday, August 8.
Information on what was needed to keep the RUS funding window open is included in a stipulation agreement signed by buyer KIUC, seller KE, and two of three parties intervening in the sale application before the PUC, those intervenors being the state consumer advocate and the U.S. Navy.
“To ensure that these funds can be committed by September 30, 2002 for the purchase of KE assets, RUS has indicated to KIUC that it must receive some preliminary favorable indication from the Commission by July 31, 2002 that the Application will be approved,” the stipulation agreement states.
“Otherwise, RUS will be required to release the municipal rate loan funds currently earmarked for KIUC to other borrowers to make sure that the funds can be utilized.”
The stipulation agreement was signed by the two intervenors in lieu of preliminary position statements due to the PUC by the middle of last month.
The third intervenor, the County of Kaua’i, filed its own preliminary position statement opposing the sale.
The PUC’s order issued Wednesday is likely the final one to bear the signature of Kaua’i native and outgoing PUC commissioner and former commission chair Dennis R. Yamada, a former state legislator.
The order states: “The commission preliminarily approves the application, subject to final commission review of all pleadings and information submitted in this docket, issues raised by the County’s position statement, and the conditions set forth below to ensure that the public interest is protected.”
Those conditions include that the RUS funds still carry a low interest rate; that the PUC’s findings are consistent with representations made in the stipulation in lieu of preliminary position statements; and that the PUC’s findings or results satisfy the requirements of state law.
The order also moves forward deadlines for submission of the three intervening parties’ final position statements, from Thursday, Sept. 12 to Tuesday, Sept. 10.
That will give the commission the time it needs to issue a final decision and order by Tuesday, Sept. 17, if it gives final approval to the sale. That’s the last date that will allow the KIUC to secure the RUS financing before the end of the federal fiscal year.
Staff Writer Paul C. Curtis can be reached at mailto:firstname.lastname@example.org or 245-3681 (ext. 224).