LIHU‘E — The Kaua‘i Board of Water Supply took a little over an hour Friday morning to approve a proposed 11.2 percent water rate increase for island customers. The decision still has to go before the state Small Business Regulatory
LIHU‘E — The Kaua‘i Board of Water Supply took a little over an hour Friday morning to approve a proposed 11.2 percent water rate increase for island customers.
The decision still has to go before the state Small Business Regulatory Review Board for consideration and public hearing before going back to the board for final approval.
If the proposal goes into effect, the new rates would raise the Water Department revenues annually through 2014, keeping up with critical capital improvement projects to the island’s water system, according to the department’s deputy manager, William Eddy.
“The recommended rate structure provides for cash funding of capital projects in the amounts ranging from $4 million to $7 million per year over the next 5 years,” Eddy said.
Department spokeswoman Faith Shiramizu said Friday in a press release the department has spent more than $100 million on CIP improvements since the 2001 adoption of its Water Plan 2020 — and most of the work was funded through borrowing.
Eddy said the recommended rate would allow for borrowing smaller amounts for recurring pipeline projects. “There are in excess of $500 million of projects yet to be completed.”
The proposed rate structure the department recommended to the board would address six objectives, according to Eddy.
It would provide debt service coverage, covers some costs of service, meet water service needs, address the user-pays principle (user of service carries financial burden), provide sufficient working capital and ensure leak rebates and affordability.
The new rates would allow the department to have a sufficient amount of working capital to cover at least three months of operating costs and establish a reserve fund equivalent to 25 percent of its operating capital.
In trying to convince board members to support the proposal, Eddy said it is the department’s mission to provide safe, sufficient and affordable drinking water by maintaining or replacing an aging system.
“To do that, we must increase rates,” he said. “The alternative is that our system will deteriorate beyond our ability to maintain it properly.”
The best strategy is to put money in the system directly rather than borrowing money. Allowing the debt to increase would only increase the financial burden on the customers, Eddy said.
Discussion
Board member Randall Nishimura said he agreed there is a need for a rate increase, but the proposal presented by the department was higher than what was previously approved by the board’s Finance Committee. Eddy’s response was that the rate increase was revised to reflect the increased need for revenues.
Finance Committee Chair Larry Dill said the 11.2 percent increase proposed by the department was a combination of many factors. The service charge is going up significantly, while the consumption rates will not increase as much. Dill said he would support the increase as the county’s water system needs improvements.
Board member Daryl Kaneshiro said the proposal sounded great, but questioned whether there was a system in place to be able to identify a situation in which the rate increase should be deferred.
Eddy said the system in place is the department’s budget review process, which usually starts in March.
Dill said there had been instances in which a rate increase had been approved, but during the budget process it was deferred.
The amendment for the rate increase squeezed past the board by a 4-3 vote. Chair Roy Oyama and board members Ray McCormick, Clyde Nakaia and Dill voted for the amendment. Kaneshiro and Nishimura voted against it. Board member Michael Dahilig voted “Kanaloa,” which prompted a 10-minute recess to identify the meaning of his vote.
“It means that I’m undecided,” Dahilig said when the meeting was called back to order, adding that “Kanaloa” would be the equivalent of a silent vote.
Deputy county attorney Andrea Suzuki clarified that Dahilig was voting as an abstention, which “works as a ‘no.’”
With the amendment prevailing by a simple majority, the board unanimously voted to approve the entire proposal, which includes the rate increase and a change in the billing schedule.
The department bills bi-monthly but is looking into changing that to monthly starting Jan. 1.
The proposed rates now go to the state Small Business Regulatory Review Board for consideration. Once the review is over, the board will schedule a public hearing on the rates before it makes a final decision.
Rates
The water department charges a user rate and a consumption rate, combined into one bill.
Customers currently pay a monthly user rate of $10 for a 5/8-inch meter (plus $3.20 for the first 1,000 gallons), $14 for a 3/4-inch meter (plus $8 for the first 2,500 gallons), $20 for a 1-inch meter (plus $11.20 for the first 3,500 gallons), $40 for a 1-1/2-inch meter (plus $32 for the first 10,000 gallons), $60 for a 2-inch meter (plus $40 for the first 12,500 gallons), $120 for a 3-inch meter (plus $160 for first 50,000 gallons), $190 for a 4-inch meter (plus $560 for the first 175,000 gallons), $360 for a 6-inch meter (plus $720 for the first 225,000 gallons) and $580 for an 8-inch meter (plus $800 for the first 250,000 gallons).
If the rate increase goes into effect, after four increases — Jan. 1, July 1, July 1, 2013, and July 1, 2014 — the user rates would increase significantly.
On July 1, 2014, customers would be paying monthly user rates of $17.75 for a 5/8-inch meter, $24.75 for a 3/4-inch meter, $36.50 for a 1-inch meter, $65.50 for a 1-1/2-inch meter, $100 for a 2-inch meter, $181 for a 3-inch meter, $297 for a 4-inch meter, $587 for a 6-inch meter and $934 for an 8-inch meter.
The department used to charge in three different blocks of water consumption. Block consumption thresholds vary with the size of each meter.
On Jan. 1, 2010, the department added a fourth block. The department now is proposing adding a fifth block effective Jan. 1. The rates for consumption would also increase annually through July 1, 2014.
The current rate in the first block is $3.20, the second block is $4, the third is $6 and the fourth is $6.25.
If the proposed rates are approved, on July 1, 2014, the new rate for consumption in the first block would be $3.80, the second would be $4.85, the third would be $5.65, the fourth $9.50 and the fifth $10.
Agricultural rates and private fire service charges would also increase under the proposal. But agricultural rates would not increase as much as other rates, and the private fire services — related to automatic fire sprinklers — would not be charged consumption in case of an actual fire verified by the Kaua‘i Fire Department.
The department operates and manages nine separate water systems on the island, according to Shiramizu. The department monitors, operates and maintains 51 wells, 60 tanks, two tunnels, 19 booster pump stations and 75 control-valve stations, and more than 400 miles of pipeline to approximately 20,000 customers.
Go to www.kauaiwater.org for more information.
• Léo Azambuja, staff writer, can be reached at 245-3681 (ext. 252) or lazambuja@ thegardenisland.com.
