Maui Land & Pine Hikes Water Rates, Leading to Complaint With PUC
Kapalua, the resort community on Maui’s west side – dominated by hotels, condos, luxurious second homes inside gated subdivisions, and golf courses – depends on water. And nearly all of that water, potable and non-potable alike, comes through systems owned by the Maui Land and Pineapple Company, Inc. (MLP).
Last September, MLP notified one of its customers, TY Management Corporation, Inc., that it would be increasing the rate that TY would be charged for watering the two golf courses it owns. Initially, the proposed increase was five times what TY had been paying for non-potable irrigation water from streams. In late November, MLP informed TY that it had lowered the proposed increase, which would now be 3.43 times the current rate (going from 49 cents per thousand gallons to $1.68).
In that same letter, MLP’s chief financial officer, Wade Kodama, included a chart showing rate hikes proposed for other customers. Hawaiʻi Water Service, which provides potable water from groundwater sources to Kapalua businesses and residents, would see a rate hike of 81 percent, going from $2.99 per thousand gallons (kg) to $5.42/kg. The Maui County Department of Water Supply would see a similar rate hike ($2.97/kg to $5.42/kg) for well water. For surface water, the rate to the county would increase from 30 cents/kg to $1.75/kg.
On December 11, attorneys for TY wrote to the state Public Utilities Commission, asking the PUC to “take jurisdiction over and begin regulating the potable and non-potable water sales being made by Maul Land & Pineapple Company, Inc. … Furthermore, TY Management requests that the PUC direct Maui Land to promptly file an application with the PUC for a certificate of public convenience and necessity (CPCN) … and direct Maul Land to suspend all increases in its rates for water sales until Maui Land has been issued a CPCN for such services that includes PUC approval of Maui Land’s rates, charges and rules and regulations governing the provision of such services.”
The PUC replied in late January, informing TY that the proper way to move forward was to file with the commission “a formal complaint, informal complaint, or other application or petition for legal relief.”
On March 6, Arsima Muller and Robert Strand, attorneys for TY, filed a formal complaint with the PUC.
Attached to the complaint was the PUC’s own letter to Wailuku Water Company in 2006. WWC, which is corporately descended from a plantation irrigation system, had been selling water to a number of landowners without a CPCN.
“MLP’s non-potable water sales are similar to those of the Wailuku Water Company, over which the PUC has taken jurisdiction and whose application for a CPCN … is currently pending before the PUC,” Muller and Strand wrote. “The commission should, likewise, take jurisdiction over MLP and mandate that it obtain a CPCN and submit its rates, charges and rules and regulations for commission approval.”
MLP and WWC are alike in another respect as well: water distributed by both companies comes from sources that are under the jurisdiction of the state Commission on Water Resource Management. In the case of WWC, the PUC has suspended action until all issues relating to water permits and interim instream flow standards (IIFS) are resolved. In the case of MLP, the Water Commission has barely begun the process of issuing water use permits.
On April 15, the PUC returned the complaint to TY, stating that it did not comply with the commission’s rules concerning notices to other parties, among other things. TY was given until May 16 to submit a corrected complaint.
Meanwhile, Hawaiʻi Water Service filed a notice of intent with the PUC on April 4, stating that it would soon be filing a rate increase request. “The operating costs for the Kapalua Water and Wastewater divisions have increased since their last rate case due to a number of factors, including, but not limited to, capital investment in plant and increases in operating and maintenance expenses,” the letter stated. Hawaiʻi Water Service purchased the utilities from Kapalua Water Company and Kapalua Waste Treatment Company, both wholly owned subsidiaries of MLP.
Update: On April 22, TY filed an amended complaint. The PUC issued an order on April 29 requiring MLP to respond within 20 days of the date MLP was served with the order – so around May 20.
Wailuku Water Rate Case before PUC: Opened in 2008; Suspended Ever Since
Included among the attachments to TY’s letter to the PUC was a notice that the commission had given in 2006 to Wailuku Water Co. Like MLP, Wailuku Water is a legacy of the plantation-era water systems on Maui and, like MLP, Wailuku Water provides water to the owners of the former plantation lands. Again, like MLP, Wailuku Water was charging its customers for the water without benefit of a PUC certificate of public convenience and necessity (CPCN).
In February 2008, Wailuku Water applied for the CPCN but has not – yet – received it. At the time of the PUC’s letter and for years thereafter, Wailuku Water was a party to the state Commission on Water Resource Management’s contested case over interim instream flow standards and rights to waters of Na Wai ʻEha, the four streams of central Maui that fed into the company’s water system. In January 2009, the PUC suspended further action on the docket, stating: “The commission finds suspension reasonable and necessary in this instance because, until the CWRM allocates water to Applicants [Wailuku Water] and approves of Applicants’ usage, the commission will be unable to determine whether Applicants are fit, willing, and able to provide the proposed non-potable water distribution service.”
The Water Commission issued a decision on water permits in 2021 and, in early 2022, WWC asked that the Public Utilities Commission lift the suspension order it had imposed. The suspension effectively prohibited WWC from increasing any rates to its customers so long as it was in place.
WWC argued that the Water Commission’s award of an “existing use permit for system losses” satisfied conditions for removal of the suspension.
However, the 2021 order of the Water Commission had been appealed to the state Supreme Court, which, in June 2024, issued a 134-page decision, remanding certain issues back to the Water Commission.
In August 2024, the PUC asked the parties to provide a status update.
Once more, WWC urged the PUC to lift the suspension, arguing that the conditions for removing it had been met since 2021. “For over fifteen years, Applicant has faithfully continued to operate and maintain the water system to serve its customers, despite the suspension order not permitting Applicant to raise rates or add any new customers. … As a result, Applicant has suffered water delivery system operating losses of approximately $2.85 million through 2021, due in part to the inability to increase rates, and the magnitude of this loss has only grown since then,” wrote Doug Codiga, attorney for WWC.
The rate case is still suspended.
Meanwhile, in January 2022, WWC signed an agreement with Waikapu Properties, LLC, for the sale of its Waikapu Stream distribution system. (Waikapu is one of the four streams of Na Wai Eha.) The following month, WWC sought permission from the PUC to sell the system. Proceeds from the sale would allow WWC to make necessary upgrades to the remaining elements in its distribution system, Codiga argued.
But the PUC has yet to decide on that request, too. One of the complications is the question of whether Waikapu Properties would itself need to obtain a CPCN. WWC insisted that this should not be a problem. “WP’s land ownership and business operations are focused on the entitlement and development of the Waikapu Country Town development,” Codiga said, adding that it had agreed to continue serving the six kuleana properties without charge.
Codiga’s most recent filing in this case was in December 2024. Since then, no further entries have been made to the docket.
— Patricia Tummons
For background, the following reports published in Environment Hawaiʻi may be helpful:
- “Wailuku Water Co. Sells Ditch Water Without Consent of Utilities Commission,” December 2007;
- “Wailuku Companies Seek PUC Approval to Serve Existing, Future Water Users,” November 2008;
- “Bills Seek to Secure Water Resources via Transfers of Lands, Irrigation Ditches,” March 2020;
- “Hui Argues Maui Ditch Owner Flouts Water Allocations for Taro Growers,” October 2021;
- “High Court Finds Water Commission Failed to Justify ‘Status Quo’ Stream Flow Standards,” July 2024.
All articles are available at www.environment-hawaii.org.
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