LIHU‘E — Most business owners are already doing everything they can to cut back on costs, including reducing their energy consumption, Kaua‘i Chamber of Commerce President Randy Francisco said as he sat in his office with lights off and windows
LIHU‘E — Most business owners are already doing everything they can to cut back on costs, including reducing their energy consumption, Kaua‘i Chamber of Commerce President Randy Francisco said as he sat in his office with lights off and windows open Friday afternoon.
With Kaua‘i Island Utility Cooperative’s proposed general rate hike of 10 percent, many enterprises will be forced to slash costs even further.
Francisco said taking a look at the chamber’s recent electric bill gave him a “reality check.”
“Obviously, everything is going up. The only thing that’s going down is the economy,” he said with a chuckle. “The increase is going to challenge us to ask, ‘Where else can we cut?’”
With a $200,000 electric bill last month alone, the Department of Water will potentially pay some $20,000 more per month with an average increase of around $240,000 per year, DOW Manager and Chief Engineer David Craddick said.
To offset higher costs, the DOW might look at other ways to acquire energy, such as the sun, he said.
Another large energy consumer, the Grand Hyatt Resort and Spa in Po‘ipu, also looked to the sun for alternative energy and had solar panels installed last September.
The resort has taken other measures to reduce energy consumption, such as putting timers and motion sensors on lights, said Diann Hartman, public relations manager for the Hyatt.
“Those little baby steps are really the things that have made significant impact,” she said. “We have taken great strides over the years to reduce energy.”
But, as more members turn to renewable energies, revenue will continue to decline for KIUC, which could ultimately drive the cost of electricity up even higher, said Randy Hee, KIUC president and CEO.
In addition, lower oil prices and a declining visitor industry have recently contributed to KIUC’s slumping revenue, essentially prompting the rate increase, he said in an interview at KIUC’s headquarters Friday in Lihu‘e.
“We’ve been trimming expenses for several years,” he said, when asked whether the co-op was working to internally cut its costs. “We’re putting an eye towards more efficiency.”
For instance, the replacement of utility vehicles is now “scrutinized” and various projects have been delayed.
Though there have been no layoffs, out of some 165 employees, less than half who are non-union have had their salaries frozen, he said.
KIUC is in the process of “studying” employee and retiree compensation packages, he added, which includes a one-third reduction in electricity cost.
“The rate increase is to run the co-op at a level that maintains quality service,” Hee said, adding that there hasn’t been an increase since 1996.
“When a business is in a recession, logically you don’t try to raise prices,” said Brad Parsons of Kauaians for a Brighter Future. “You look for opportunities to cut costs.”
Parsons said there are many other ways KIUC could reduce its internal expenses. For instance, the co-op could quit mailing out hard copies of Currents Magazine, opting to post it online instead. Similarly, he said, KIUC could add direct deposit or credit account patronage refunds instead of mailing out checks.
The main concern is not really the rate increase, he said, “but the fact that there has been no definitive progress in years by KIUC” in moving away from the volatile price of petroleum.
“We don’t believe KIUC deserves one more cent of rate increases until they show definitive progress in diversifying their sources of energy,” he said. “There’s almost no other utility in the U.S. so dependent on liquid petroleum fuel like KIUC is, not even Hawaiian Electric Company or Maui Electric Company. Utility boards and executives elsewhere would be shocked by this and the lack of progress in resolving it.”
Hee said KIUC is currently studying several different avenues for renewable energy like waste recovery or biomass obtained from agricultural products, such as sugarcane. But nothing has been set in stone yet.
“It’s not going to happen overnight,” he said.
For more information on KIUC’s rate increase and status visit www.kiuc.coop.
