The utility that provides potable water to the fancy, multi-million-dollar homes in the Launiupoko, Maui, subdivisions sets aside a part of its income every month to pay off more than a million dollars in loans from its owner, Peter Martin. The interest rate on those loans is 8 percent, according to information filed with the Public Utilities Commission.
The PUC has disallowed those loans and instructed the utility to prepare a new rate request that doesn’t include repayment of the loans. Yet month after month, the company’s financial statements show that it is salting away money towards the eventual repayment of the loans.
But that’s not the full range of indebtedness the company has taken on without prior PUC approval. As Environment Hawaiʻi reported last month, the company has also taken on a loan of more than $400,000 from the state Department of Health’s safe drinking water revolving fund.
Documents provided to Environment Hawaiʻi in response to a Uniform Information Practices Act request show that the state is not charging any interest on the loan. What’s more, the loan may be forgiven, up to the full amount of funds loaned.
Or, as the loan documents say, “the total principal forgiveness portion of the loan will not exceed $401,834.46.”
As for the amended rate hike request, in February, the PUC set out a procedural schedule in order to allow it to arrive at a decision within six months of the acceptance of a complete application, as the law requires. In this case, that means the PUC has to decide on the rate hike by June 20.
On March 3, the PUC held a public hearing in Lahaina on the rate hike request. It was described by one attendee as “fairly subdued.”
However, in advance of the hearing, Jeff Anderson, owner of Two Dog Farm in Makila Plantation, submitted testimony noting that the rate case is “closely linked to the outstanding rate case for the sister company, Launiupoko Irrigation Company.” Anderson said his farm supplies fruit – “mostly citrus, but also avocado, mango, breadfruit, guava, dragon fruit, loquat” – to local restaurants. “Any increase in water costs affects the viability of our farm as water is now our biggest recurring cost,” he stated.
His farm is a customer of Launiupoko Irrigation Company as well as Launiupoko Water. “Right now, as I write this, we have no ag water from Launiupoko Irrigation. This happens often. This last summer there were periods where we had no ag water for over a month!… By dramatically increasing the cost for large potable water usage, you would be penalizing small farmers or the unreliable water supply from Launiupoko Irrigation. In fact, it would incentivize Launiupoko Irrigation to cut ag supply even more often to force users to use more potable water at a super high rate… Talk about driving the wrong behavior!”
He concluded by urging that the irrigation company rate case be resolved in a manner that fairly compensates LIC “while providing the assurance of consistently available ag water for farming. Once that is done, a review of this case would be appropriate.”
Forgiveness?
If the revolving fund charges no interest and forgives up to 100 percent of the total amount it lends out, how can it be sustainable?
Judith Hayducsko of the Department of Health Safe Drinking Water Branch replied to our question. The revolving fund program “has many intricacies,” she said. “At this time, there are federal funds available for public water systems that must be distributed as additional subsidies, which we distribute as principal forgiveness dollars. … Launiupoko was one of the [public water systems] who received funding from the program. …
“Staff are very concerned about ensuring the fund is available in future generations. We do take advantage of all federal funds available that can grow our revolving fund. We do model expected disbursements from the fund against repayment dollars to ensure all loans obligated will have funds available when we reimburse the [public water systems].”
— Patricia Tummons
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