Decision on KE sale now in handsof the Public Utilities Commission

Decision on KE sale now in handsof the Public Utilities

Commission

LIHU’E — The state Public Utilities Commission (PUC), a

three-member panel, will decide soon whether or not to approve the $270 million

sale of Kaua’i Electric to the Kaua’i Island Utility Co-op (KIUC).

A

two-member vote either way by the PUC will decide the hotly debated issue. The

KIUC has asked for a quick decision, given potential interest rate fluctuations

which could impact the cost of its fully financed deal.

Friday, the U.S.

Department of Defense (for the U.S. Navy), state Division of Consumer Advocacy

(under the state Department of Commerce and Consumer Affairs) and County of

Kaua’i all filed position papers with the PUC opposing the sale.

Their

positions basically boil down to opposition based on financial issues, with all

three contending the sale price of nearly $100 million over the appraised value

of KE is beneficial only to the seller, KE parent company Citizens

Communications Company (formerly Citizens Utilities Company), of Stamford,

Conn.

Here is a quick look at the players and their positions:

* U.S.

Department of Defense: If the sale is approved, electric rates customers pay

could increase, and KIUC is set to go $290 million into debt with no

equity;

* State consumer advocate: New costs and risks to customers

outweigh modest benefits claimed by KE and KIUC;

* County of Kaua’i:

Proposed sale agreement not vitally needed for short-term or long-term

well-being of power consumers or the island’s economy;

* KIUC: Survey shows

three of four Kauaians favor the sale. Benefits of the sale would be local

control of the utility, stabilized rates, new jobs, federal financial help in

rebuilding the system after natural disasters, and financial savings from not

having to pay federal or state income taxes or shareholders;

* PUC:

Three-member panel meets as determined by chairman, Kaua’i’s Dennis Yamada, an

attorney and former state legislator. The staff typically makes a

recommendation to the PUC, but the final decision is the panel’s, based on all

the written information given it in the case. A public hearing on the case is

an uncertainty at this point. If the PUC or staff have further questions, they

will issue information requests to the buyer and seller, and start their own

discovery process. There is no clear timetable for that process.

* Citizens

Communications: They’ll sell KE to someone, whether it’s KIUC or not;

Current KE customers: Some feel that the KIUC is making a multi-million-dollar

decision that could lead to higher electric rates over the next 30 years

without even consulting them. Others feel that if all KE customers will own the

co-op, then all should vote for board members immediately;

* Current KE

employees: Their positions are protected under the sales agreement before the

PUC.