Effort to purchase Kaua’i Electric nearing four years’ duration

The owner of Kauai Electric, Citizens Communications of Stamford, Conn., probably never thought it would be so difficult to sell an electric company.

But it will likely be close to four years before the sale of Kauai Electric is finalized, after its parent company announced in 1999 its intent to sell its utility holdings, including Kauai Electric, in favor of telecommunications lines it sees as the utility of the present and future.

Citizens has 2.5 million telecommunications access lines in 24 states.

Both deals Citizens thought it had to sell its electric-company holdings (Kauai Electric and systems in Arizona and Vermont) initially fell through, with would-be buyer Cap Rock Electric failing to secure the financing necessary to purchase the Arizona and Vermont properties last year, and the Hawai’i Public Utilities Commission failing to approve the sale of Kauai Electric to Kaua’i Island Utility Cooperative in late summer 2000.

Here is a brief timeline of Citizens Communications’ ongoing sale of Kaua’i Electric:

– May 1999: Citizens Utilities (the name changed to Citizens Communications in May 2000) announces its intention to sell its utility holdings, including Kaua’i Electric, in order to acquire telecommunications lines across the mainland;

– June 1999: Peter McClaran in an editorial in the monthly Kaua’i Business Report (now owned by The Garden Island’s parent company, Kaua’i Publishing Company) suggested an investigation into possible public ownership of privately held Kaua’i Electric;

– August 1999: The Kaua’i Island Utility Cooperative is formed, and begins negotiating with Citizens Utilities to purchase Kaua’i Electric;

– February 2000: The Kaua’i Island Utility Cooperative learns it is the successful bidder for Kaua’i Electric, with the sale price of $270 million arrived at through something of an auction-like bidding war between the co-op and an unnamed for-profit entity;

– April 2000: Citizens Utilities and Kaua’i Island Utility Cooperative jointly file a transfer application with the state Public Utilities Commission, to transfer ownership of Kaua’i Electric to the co-op;

– August 2000: With county, state and federal entities expressing concern with and opposition to the proposed sale, the state Public Utilities Commission denies the transfer application which if approved would have moved Kaua’i Electric ownership from Citizens Communications to Kaua’i Island Utility Cooperative;

-October 2000: Mayor Maryanne Kusaka assembles a citizens committee to determine the best form of ownership and governance of a publicly held Kaua’i Electric (after eight months, the committee remained evenly split between cooperative and county ownership);

– August 2001: Citizens Communications Chief Executive Officer Rudy J. Graf tells analysts during a conference call to discuss second-quarter earnings that a new application will be filed before the end of the month with the Hawai’i state Public Utilities Commission, transferring ownership of Kaua’i Electric to Kaua’i Island Utility Co-op for $215 million (that turns out to be an announcement seven months premature);

– January 2002: Kusaka asks the state Legislature to approve bills that would exempt a municipally owned utility in Hawai’i from both civil service and state procurement laws, and permit issuance of special purpose revenue bonds to fund county or co-op acquisition of Kaua’i Electric. If the bills pass, the county would propose a charter amendment in the 2002 general election allowing for creation of a power authority (county agency to manage the island’s electric utility if the county government can acquire it);

– February 2002: The County of Kaua’i releases a taxpayer-funded study on the fair-market value of Kaua’i Electric, offering various potential price tags. The county’s figure is $190 million as fair-market value;

– March 2002: Citizens and KIUC jointly announce a definitive agreement to transfer ownership of Kaua’i Electric to the co-op for $215 million, pending regulatory approvals.

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