Lanai utilities in hands of Ellison

Lanai’s three regulated utilities are now in the hands of the island’s new owner, software billionaire Larry Ellison, after the Hawaii Public Utilities Commission gave final approval last week to transfer ownership to him.

It was the last piece in the sale of the island to Ellison.

The water, sewer and transportation utilities, wholly owned subsidiaries that were under Castle & Cooke Resorts, have net assets of about $7 million.

Staffing and salaries for those at Manele Water Resources LLC, Lanai Water Co. Inc. and Lanai Transportation Co. Inc. – the entities that were involved in the indirect sale and transfer – are expected to remain the same, according to the commission’s decision and order dated Friday.

The PUC said the buyer is “fit, willing and able to provide the three public utility services.” Those were the same statements the PUC made during the interim approval of the transfer in June.

Rates, terms and conditions of the utility services “will not be detrimentally affected by the indirect sale and transfer,” the decision and order said.

The buyer has also pledged to invest a minimum of $10 million in “improving and upgrading the water and wastewater systems’ assets within the next five years” and does not seek to recoup the costs from its ratepayers.

Current employee arrangements will “not materially change,” and no personnel changes are anticipated other than the addition of two positions for the water and wastewater utilities, according to the decision and order.

In June, Ellison, co-founder and chief executive officer of California-based Oracle Corp., bought most of Lanai from Castle & Cooke Inc. The sale included Lanai’s two luxury resorts managed by Four Seasons, two championship golf courses, residential and commercial buildings and other assets. A sale price was not disclosed, but assessed value of land and properties are in the hundreds of millions of dollars

The PUC set eight conditions in its approval of the indirect sale and transfer transaction, which includes:

* A five-year time limit to invest a minimum of $10 million in water and wastewater utilities and not seek to recover the money from ratepayers.

* The buyer and two of its utilities must work with Maui County’s Department of Water Supply on developing a water conservation plan.

* The buyer and two of its utilities must work with the county water department and state Commission on Water Resource Management on a drought response plan.

Lanai resident and community watchdog Butch Gima of Lana’ians for Sensible Growth said: “We can pretty much live with what (the PUC) ordered.”

Gima said he and the group are “very appreciative” that the PUC allowed them to participate in the utility transfer review process. His group filed a motion to intervene in the case. Instead, Gima’s group was given participant status and was only allowed to address water issues, which was one of its main concerns.

Another group, Life of the Land, filed a motion to intervene, but it was denied because its concern dealt with wind projects, which was not an issue before the commission, the group said.

“We wanted to, I guess, (gain) more visibility about the Lanai Water Advisory Committee,” Gima said, adding that the committee is made up of Lanai residents and groups. Lana’ians for Sensible Growth is also part of the committee.

“We know our water the best. All the people off-island . . . have no clue. They don’t care,” he said.

Former landowner Castle & Cooke participated in discussions with the Lanai Water Advisory Committee up until about a year ago, he said.

Although Gima’s group unsuccessfully sought to have the PUC order Ellison’s group to participate in the Lanai Water Advisory Committee, he remained positive about the transfer and said that his group never opposed it in the first place.

Gima said he appreciated that the PUC set conditions for a water conservation plan and drought response.

Gima said Lana’ians for Sensible Growth maintained that it was important to get involved with the PUC’s decision on the utilities because it was concerned about the “fast track” process that the PUC was going through. He noted that the commission ruled within six days in June to give interim approval to the utilities transfer.

The PUC had said it proceeded quickly to not jeopardize a closing date for the overall purchase and sale of the island.

“We wanted transparency. We wanted to make sure everything was on the up and up,” Gima said.

Gima also had positive words for the new landowner, especially since Lanai native Kurt Matsumoto was tapped in December to oversee all of Ellison’s business operations on the island as chief executive officer of Lanai Resorts LLC.

“He’s done more developing and establishing new and (direct) relationships with the community than Castle (& Cooke) has done in 20 years,” he said of Matsumoto.

* Melissa Tanji can be reached at