KIUC wasn’t the answer

Kaua’i Island Utility Company has fallen down and it can’t get up despite Mr.

Love’s suggestion that we raise the dead and “join forces” with them (“Co-op

ownership of KE is still the best answer”, GI,10A, 9-27-00).

Mr. Love only

addresses one finding of the PUC. In addition to the PUC’s finding that the

sales price was too high the PUC also found the KIUC board “did not have the

experience” to run an electric utility. To put it bluntly the current KIUC

board is incompetent. They demonstrated their incompetence when they agreed to

an inflated sales price of $270 million and accepted all environmental

liability (the cleanup alone could cost us more than the $270 million sales

price). They did not do due diligence by doing an assessment of Kauai

Electric’s true value. Instead they spent hundreds of thousands of dollars

waging a media propaganda campaign trying to convince the Kauai ratepayers this

was a good deal.

Mr. Gregg Gardiner insisted at every public meeting when

asked about the high price of $270 million that “this is the market value and

cannot be reduced”. Either Mr. Gardiner’s statement is true or if the sales

price does come down Mr. Gardiner’s statement was false.

Mr. Love’s claim

that there is “no viable alternative” is simply false. Studies have shown that

a matrix of sustainable distributive power producing energy sources are more

robust and economically competitive than KE’s increasingly antiquated

technology.

The switch to sustainable forms of energy production and the

capital investment need not be all or nothing but can be incremental. For

instance according to KE’s own figures each ratepayer could reduce their energy

consumption by up to 40% by installing a solar hot water system (too bad KE’s

“Energy Wise” program has proven to be a program designed to fail). Solar water

heating technology is available now. I have used it for 5 years and only twice

have had to turn on my electric water heater. KE has had many more power

outages during the same time period.

With regard to the “spurious issue” of

board selection and governance, Mr. Love admitted “the public had no say” in

selecting the board. This means that the public was denied a say in the most

important decision they will ever make: whether to purchase KE or not.

Mr.

Love’s statement that “ratepayers will begin selecting directors in two years

and will have had the opportunity to have replaced the entire current board in

six years” is not born out by the KIUC bylaws which were intentionally designed

by the current board of directors to keep themselves in power for as long as

possible. Without going into a micro analysis of the bylaws (I suggest Mr. Love

read them for himself) I will cite but one example from the bylaws which

states: “The incorporating Directors shall have the authority to elect and set

the terms of the initial Board of Directors.” This section of the bylaws allows

the current incorporating board to elect themselves to the initial board and

set the terms, (perhaps for life?).

I agree the county’s plate is already

full which is why I urge the county to establish a system of governance with a

ratepayer elected board to run the electric utility as a business with the

mission of providing affordable, sustainable electric power for Kaua`i. The

county water utility with its own board efficiently provides water at a

reasonable cost and could be used as a model. I think they are doing a fine

job.

Unfortunately the problem was not only with the original bid, but

included:

* the demonstrated incompetence of the KIUC incorporating board

by their failure to practice due diligence,

* their writing of bylaws to

disenfranchise the ratepayer members and vest power in themselves,

* their

expensive propaganda campaign to convince ratepayers to act against their own

best interest by assuming an unreasonable debt burden for 30-plus years,

and last but not least calling themselves a co-op.

As one knowledgeable

critic correctly observed: “you can call a mouse an elephant, but it won’t grow

tusks and it can’t haul a load”. KIUC is not now nor has it ever been a

co-op.

I don’t know about the “we” for whom Mr. Love speaks. Perhaps he is

referring to the Chamber of Commerce who endorsed and supported KIUC’s folly

without reading the fine print. Who’s looking out for the interest of the

public? KIUC? KE? The Chamber of Commerce? I don’t think so.

I appreciate

KIUC’s idea to form an electric co-op, but they did not know what a co-op was,

and I am more than a little leery about “joining forces” with a self-appointed

group of people who have a short but proven track record of proposing a

transaction that according to the Consumer Advocate is “contrary to the public

interest”.

Edward Coll

Lihu’e