KE rebate would give residential customers about $45 each if Kauai Electric sale is approved

Based on an average monthly bill of around $100, Kauai Electric’s residential customers could receive around $45 each in a one-time rebate if the sale of KE is approved.

Citizens Communications Company, parent company of KE, has agreed to pay $3 million to KE customers, to be prorated among all 30,000 customers based on amounts of electricity used, as part of an agreement signed by the prospective buyer and seller of KE, and two of the three parties granted intervenor status in the sale by the state Public Utilities Commission.

Larger customers would get more money in the one-time rebate, which for a typical residential customer will equate to a savings of around 3.5 percent on electric bills for the entire calendar year 2003.

According to the stipulation agreement, the $3 million from Citizens equates to “an immediate reduction in rates” when combined with later projected rebates for co-op members once Kaua’i Island Utility Co-op becomes owner and operator of KE.

The PUC must approve the sale before it can be finalized, and KE is projecting a sale closing date of Halloween, Thursday, Oct. 31, if PUC approval is won before the end of September, said Alton Miyamoto, KE vice president and general manager.

Miyamoto and KE sent out over 26,000 letters to KE customers informing them of “significant new provisions that add up to millions of dollars in rate relief for Kaua’i’s residents.”

The stipulation in lieu of preliminary position statements signed by the buyer, seller, and intervenors the state consumer advocate and U.S. Navy, lays out several conditions which if met would allow the consumer advocate and Navy to support the sale.

The county, also an intervenor, remains opposed to the sale, and did not sign the stipulation agreement.

The county filed its preliminary position statement recommending the PUC deny the sale, saying the $215 million price negotiated is much higher than the market value of KE, that would-be buyer KIUC is not equipped to own and operate KE, and that the sale would have no benefit to the public, among other arguments.

Miyamoto said that the stipulation agreement like the overall case itself is very complicated and addresses many issues, so KE decided to focus on provisions in the 31-page agreement that address the “targeted number-one concern of consumers:” rates.

Citizens Communications, “in recognition of the financial benefits associated with an early closing,” agreed to put up the $3 million, provided the co-op is able to secure low-interest financing for the purchase of KE from the Rural Utilities Service, part of the U.S. Department of Agriculture, according to the stipulation agreement.

KIUC obtaining the RUS financing for the purchase price was contingent upon the sale obtaining preliminary PUC approval by yesterday, Wednesday, July 31.

The low-interest financing for the sale price, combined with other benefits of nonprofit ownership of the utility, should allow the co-op to begin issuing rebates to rate-payers as early as the second year of co-op ownership, the agreement states.

“Together, the combined total refunds to KIUC’s members are estimated to be $24 million, to be paid out over the next 10 years,” Miyamoto wrote in the letter to customers.

Miyamoto, who has signed an agreement to manage KE for KIUC for three years if the sale is approved, said customer reaction to the letter has been mixed.

Of around two dozen calls KE received regarding the letter, some consumers didn’t like the letter, some liked it, and others expressed some confusion about the letter’s details, he said.

Staff Writer Paul C. Curtis can be reached at mailto:pcurtis@pulitzer.net or 245-3681 (ext. 224).

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