KIUC still dealing with trust issues

LIHU’E — Board members of the Kaua’i Island Utility Cooperative pledge to build trust with the community, provide more information about the co-op’s operations, the travel expenses of its board members, and machinery and equipment purchases.

Board members Ray Paler and Phil Tacbian, a former state legislator for Kaua’i, said their family roots on Kaua’i run deep, and that all of their work is intended to benefit current and future generations of Kauaians.

“We are not purposely doing wrong,” Paler said at a special meeting yesterday at the KIUC headquarters conference room in the Hana Kukui Building in Kukui Grove Village West. “We are trying to do good here.”

Ed Coll, among 30 or so residents who might have been co-op members, said after the meeting that it remains to be seen whether “it (the building of a better relationship between members and residents and the KIUC board) will work.”

The meeting was held to take up leadership issues and an organizational audit by the National Rural Electric Cooperative Association (NRECA), according to the agenda.

NRCEA officials, based in Arlington, Va., represent the national interests of officials of cooperative electric utilities across the nation, and the consumers they serve.

Tacbian said that his family’s history on Kaua’i goes back 100 years, and that his purpose in serving on the board is to help the community.

Board member Peter Yukimura also said he understood the concerns some members had about trust issues with the board, and that he would work to eradicate such suspicions and develop a better rapport with co-op members to build trust.

The board members came under criticism in a recent series of stories in The Garden Island that scrutinized purchases, travel habits, activities of board members and other matters.

The articles also asked why Kauaians are still paying the highest electrical rates in the nation in spite of the sale of Kauai Electric and the takeover of the system by KIUC leaders some three years ago, with approval from members of the state Public Utilities Commission.

Board members, including board Chairman Gregg Gardiner, and Harry A. “Dutch” Achenbach, president and chief executive officer of KIUC, have vehemently dismissed the criticism.

They have asserted that board members and other KIUC leaders have worked diligently and dutifully for the co-op members in the delivery of power to the island.

Still, the issue of trust dominated yesterday’s meeting.

Coll said a veil of secrecy seems to hang over KIUC board members. “The problem is a penchant for secrecy,” he said. “What is the big secret?”

He said KIUC board members cut short his attempts to videotape a previous meeting. Journalists, he said, should have the right to use electronic equipment in covering a meeting.

Board rules related to meetings prevent the use of tape recorders without chair approval beforehand.

“It is this type of secrecy that breeds mistrust,” Coll declared.

Biff Whiting, who also advocated more openness on the part of the board, said it seemed that the board members have ignored concerns raised by co-op members.

That isn’t true, said board member Ron Kouchi, who noted that people are encouraged to come to meetings and to give input.

And the minutes of the KIUC board are posted on the KIUC Web site,, board members said.

Perhaps a starting point to heal the rift between the KIUC directors and members would be the creation of task force that would bring together board members and co-op members to go over issues, and to try to resolve them, said board member Susan Stayton.

Fran Brennan said, however, the criticism that has been heaped on the KIUC board is undeserved, and that the state sunshine law, or the open-meetings law, doesn’t apply to co-ops, only to government agencies.

That is true at this time, said Carol Bain, but because KIUC leaders serve thousands of consumers, it might behoove directors to consider governance by the state’s open-record law.

In his opinion, Ken Taylor said the meeting should have been used to answer more questions members of the public have about KIUC directors’ activities.

In other matters, Lihu’e resident Barbara Elmore asked directors what parts of the news series by The Garden Island were not accurate.

KIUC officials said the series contained half-truths and distortions.

Elmore also questioned why KIUC directors authorized the purchase of a home to be used by chief executive officers.

“I want to know what other organizations on Kaua’i provide new $800,000 homes for their CEO,” she said. “Where in the bylaws does it say one of your missions is to invest in real estate?”

KIUC officials have said the home in Lihu’e will be used by Achenbach and future chief executive officers during the tenure of their contracts.

For the use of the house, Achenbach pays $2,000 a month, including utilities, according to a recent KIUC e-mail sent to The Garden Island.

Elmore also was critical of the travel costs for the board members. “Do you know I can take 12 friends to Las Vegas every month with what you board member spend on travel every month?” she said.

In a past e-mail to The Garden Island, Gardiner said the 2005 budget for travel by board of directors is $50,000, and that the funds are used by directors for business trips to NRECA in Arlington, Va., or for activities related to the organization.

Board members also have used funds to travel to other parts of the nation where co-op systems are located, KIUC officials said. The intent is for KIUC board members to glean valuable information about other co-ops that could help KIUC officials operate in the most efficient way possible, KIUC officials have said.

Training of board members is also mandated by NRECA and KIUC bylaws, and sometimes that means off-island travel.

Kouchi said he was “absolutely” not ashamed about the need to travel to Washington, D.C. in 2004 to talk with lenders for the KIUC purchase.

The visit, he said, has opened the door for plans by KIUC officials to return an additional $3.8 million next month to the KIUC members, provided lenders approve.

In November 2002, KIUC leaders returned $8.9 million in cash to its members, and in March or April 2006, they also expects to return another $3 million or more to the membership.

The reimbursements, if all given, would total about $16 million.

To obtain a rate reduction from members of the state Public Utilities Commission would involve a rate case that would cost between $1 million and $1.5 million, money that would be better spent given back to the members, board members said yesterday.

Board members said KIUC is young and healthy. KIUC will achieve 10 percent equity (about $30 million) in the system, all owned by the membership.

The high rates co-op members have paid are directly attributed to high fuel costs, Gardiner said.

While the price for a barrel of oil in November 2002 was a little less than $30, it could reach $60 a barrel next month, Gardiner said.


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