Written comments from two customers brought to the commission\u2019s attention the problems that this has caused them.<\/p>\n\n\n\n
Barry and Irene McPhee have farmed 13 acres of land for 21 years, they wrote. \u201cToday, and for the past seven years, we have seen our water rates rise dramatically while the water supply has become increasingly unreliable, to the point that we don\u2019t see how we will be able to continue to operate our farm.<\/p>\n\n\n\n
\u201cA great deal of the time, during long periods of drought in West Maui, we receive no irrigation water at all from Launiupoko Irrigation Company and we are forced to use potable water to keep our farm alive. LIC could pump water from their auxiliary supply to the reservoirs; however, they choose not to until the rate increase before this commission is granted\u2026\u201d (LIC has its own rate hike request before the PUC, pending since June 2020.)<\/p>\n\n\n\n
\u201cWe ask the commissioners to please give consideration to Launiupoko utility customers with legitimate agricultural activity. We face being ruined between Launiupoko Irrigation Company not providing reliable Ag water, forcing us to increase potable water usage, and Launiupoko Water Company applying to hugely increase the cost of high-volume potable water usage. Please address this situation.\u201d<\/p>\n\n\n\n
Jeff and Sue Anderson, owners of Two Dog Farm, submitted similar comment, saying they, too, had experienced cutoff of irrigation water and had to supplement it with much more expensive potable water.<\/p>\n\n\n\n
\u201cBy dramatically increasing the cost for large potable water usage, you would be penalizing small farmers for 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 through their jointly owned Launiupoko Water Company.\u201d<\/p>\n\n\n\n
The PUC appears to have taken the farmers\u2019 concerns to heart. In an order issued April 3, the commission on its own amended the statement of issues, adding the question: \u201cShould LWC establish a preferential rate for qualified agricultural activities within the scope of this proceeding or a future proceeding?\u201d<\/p>\n\n\n\n
The order goes over the constitutional protections for agricultural activities and the legislative framework. In 2008, the order notes, the Legislature enacted a law giving the PUC authority to establish preferential rates for customers of potable water companies engaged in agricultural activities. The same law gave the PUC authority to \u201cdevelop appropriate criteria for qualification\u201d of agricultural customers.<\/p>\n\n\n\n
\u201cUpon receipt of a bona fide request for preferential rates for potable water to be used for agricultural activities, and proof that the customer engages in agricultural activities, a public utility shall provide proposed preferential rates for potable water to be used only for qualified agricultural activities to the [Commission] for approval,\u201d according to Hawai\u02bbi Revised Statutes \u00a7 269-26.5, cited in the PUC order. <\/p>\n\n\n\n
\u201cAll such rates \u2026 shall be subsidized by the potable water rates charged to other customers of the public utility if required as determined by the [Commission],\u201d the statute continues. <\/p>\n\n\n\n
Exactly what counts as agricultural activity is described in the law: \u201ca commercial agricultural, silvicultural, or aquacultural facility or pursuit \u2026 including the care and production of livestock and livestock products, poultry and poultry products, apiary products, and plant and animal production for non-food uses\u2026\u201d<\/p>\n\n\n\n
In applying for the rate hike, Glenn Tremble, representing LWC, was asked about establishing preferential rates for agricultural uses. Tremble replied that the company supports such rates, but that the company \u201cbelieves that non-potable water should be the primary source of water for agricultural use.\u201d He went on to list \u201ca number of aspects of the statute that need to be worked through to avoid unintended consequences.\u201d These include questions about what qualifies as agricultural activity, \u201chow much of a subsidy can the utility impose on other customers,\u201d \u201cdoes the request comply with the Commission on Water Resource Management requirements,\u201d the \u201cunintended consequences\u201d of subsidized rates, \u201cas well as a number of other issues.\u201d He suggested that these questions \u201cmay best be done in a rate case post bona fide request, or a separate document.\u201d<\/p>\n\n\n\n
Furthermore, LWC attorney Craig Nakanishi stated in response to information requests from the Consumer Advocate that preferential rates would require verification and allocation of how much water the ag activity should receive, then monitoring compliance. \u201cAll of which presents administrative and operational challenges to LWC,\u201d he said.<\/p>\n\n\n\n
In any event, \u201cLauniupoko area infrastructure was built with a dual distribution water system\u201d and LWC\u2019s system was not designed for irrigation, he claimed.<\/p>\n\n\n\n
But the arguments against preferential ag rates did not prevent the LUC from adding this to the statement of issues.<\/p>\n\n\n\n
The March order notes that the area served by LWC is \u201czoned for agriculture and private land owners must submit farm plans as a requirement of applications for a building permit.\u201d While testimony suggests there are legitimate farms among LWC customers, \u201cmany LWC customers likely do not engage in qualified agricultural activities on their properties, but instead enjoy large luxury residences with pools, water features, and lush landscaping, with any agricultural features being incidental.<\/p>\n\n\n\n
\u201cWhile LWC points to the customers\u2019 ability to draw irrigation water from affiliated utility LIC, there is no legal support for that argument. The Legislature established authority to implement a preferential rate for potable water for agricultural activities, without any reservations or conditions about the availability of non-potable water for the same purposes,\u201d the PUC order states.<\/p>\n\n\n\n
\u201cFurther, LWC cannot rely on directing customers to instead use non-potable water from affiliated utility LIC, especially given that LIC has not provided consistent service to the dual customers of LIC and LWC, and while there is no guarantee that LIC rates will remain more affordable than LWC rates.<\/p>\n\n\n\n
\u201cThus, it is consistent with state policy for LWC to establish a potable water rate structure that promotes the intended land use, i.e., lots that are used for the predominant purpose of commercial farms \u2026 and it is in the public interest for such owners of luxury residences to subsidize qualified agricultural activities as contemplated\u201d by statute.<\/p>\n\n\n\n
The PUC order acknowledges that at this late stage in the process, developing a preferential rate for agriculture \u201cmay be procedurally complicated \u2026 thus setting a preferential water rate \u2026 may need to be the subject of a forthcoming docket. However, in the interest of administrative efficiency, the commission amends the statement of issues governing this proceeding to expressly include consideration of establishing a preferential rate for agricultural activities and accompanying tariff rules in hopes that the parties may be able to reach an agreement within the scope of this proceeding or otherwise agree on initiating a new docket.\u201d<\/p>\n\n\n\n
On April 11, the Division of Consumer Advocacy weighed in with its recommendations on the overall rate hike request.<\/p>\n\n\n\n
With respect to the development of a preferential rate for agricultural uses, the Consumer Advocate\u2019s statement of position reads: \u201cWhile LIC service remains suspended, the Consumer Advocate is open to exploring possible solutions like an LWC preferential agricultural rate. However, the threshold issue of whether to establish such a preferential agricultural rate is unfortunately hard to opine on unless and until a reasonably detailed proposal is provided by LWC.\u201d<\/p>\n\n\n\n
The statement of position included an analysis of the factors that LWC used in arriving at its proposed rate increases. It determined that the water volume rate structure did not encourage conservation, and so recommended modifications to address this. In the case of high-volume water users \u2013 above 40,000 gallons per month \u2013 LWC had proposed charging $2.42 per 1,000 gallons. The Consumer Advocate recommended increasing this to $4.63.<\/p>\n\n\n\n
Included in its position statement is a table showing the consumption of the 60 largest water consumers among LWC\u2019s 375 customers and the percentage by which the usage exceeded the Maui County average. The highest-volume customer used 1,072,170 gallons per month, averaged over three months. That was 5,564 percent above the average demand in Maui County of 18,600 gallons per month. The 60th<\/sup>-ranked customer of LWC consumed 98,769 gallons per month, still 331 percent above the Maui average.<\/p>\n\n\n\n The Consumer Advocate disagrees with LWC\u2019s proposed rate of return, cost of debt, and return on equity. While LWC\u2019s consultant used a utility proxy group of large companies to arrive at its recommended rates, the Consumer Advocate compares LWC to other small utilities in Hawai\u02bbi. The result is a significant lowering of all three rates. Instead of a return on equity of 14 percent that LWC has proposed, the CA recommends 9.35 percent; for debt, 5.33 percent vs. 8 percent; and overall rate of return, 7.34 percent vs. 11 percent.<\/p>\n\n\n\n LWC had proposed an increase of $429,197, or 48.4 percent, in its overall revenue. But after providing its analysis of the utility\u2019s justification for that increase, \u201cthe Consumer Advocate hereby states that \u2026 LWC\u2019s proposed revenue requirement is overstated.\u201d It recommends a number of adjustments that would result in an increase of just $245,800 in total revenues over the current rates.<\/p>\n\n\n\n LWC was to submit its response by May 2. The PUC must issue its final decision by June 20.<\/p>\n\n\n\n \u2014 Patricia Tummons<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" Since December 12, 2023, Launiupoko Water Company, Inc., has been involved in a case before the state Public Utilities Commission, seeking approval for increased rates for its sale of potable water to its customers on agricultural lands in West Maui … Continued<\/a><\/p>\n","protected":false},"author":1,"featured_media":16502,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[21,338,537,28],"tags":[7],"class_list":["post-16487","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-agriculture","category-land-use","category-may-2025","category-water","tag-patricia-tummons"],"_links":{"self":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts\/16487","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=16487"}],"version-history":[{"count":1,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts\/16487\/revisions"}],"predecessor-version":[{"id":16986,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts\/16487\/revisions\/16986"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/media\/16502"}],"wp:attachment":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16487"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16487"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16487"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/environment-hawaii.org\/wp-content\/uploads\/2025\/04\/Image-4-30-25-at-3.23\u202fPM.jpg\")
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