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Pukalani wastewater customers declare rate hike ‘outrageous’

Hawaii Water Service is seeking higher rates phased in over 5 years that would more than double its revenues

Pukalani resident Jerry Masaki testifies against sewer rate increases proposed by Hawaii Water Service Co. during a Hawaii Public Utilities Commission hearing Thursday night at Pukalani Elementary School. The Maui News / CHRIS SUGIDONO photo

Pukalani residents universally opposed sewer rate increases proposed by Hawaii Water Service Co., calling them “outrageous” and “unfair” during a Hawaii Public Utilities Commission hearing Thursday night at Pukalani Elementary School.

About 150 people attended the hearing with around 20 testifiers speaking out against the increase. The company is seeking higher rates phased in over five years that would more than double its revenues from nearly 880 residential, business and government customers.

“I think this is outrageous,” Jerry Masaki said. “Many of you folks are on fixed income and may not be able to afford this increase. As a businessman myself, I think this company did a lot of improvements without prior approval or looking at how they’re going to pay for it.”

Many testifiers recalled not paying anything for sewage fees in the 1980s, and only saw gradual increases thereafter. Sewer bills were raised to $32 after the water company took over the Pukalani sewage system in 2008 and installed a $9.6 million wastewater treatment plant.

Owners of the previous system contributed $2.8 million to the new plant, so Hawaii Water Service sought the remaining $6.8 million during its first rate case in 2011. The PUC approved half the money, and the company is now seeking the rest.

About 150 Pukalani residents opposed sewer rate increases proposed by Hawaii Water Service Co. during a Hawaii Public Utilities Commission hearing Thursday night at Pukalani Elementary School. The Maui News / CHRIS SUGIDONO photo

“We’re kind of stuck because we don’t have any other alternative,” Masaki said.

Currently, residential customers pay a monthly sewer fee of $62.17. Under the proposal, fees would decrease in the first year by 11.2 percent to $55.22, but then jump each of the next four years — to $68.12 (up 23.4 percent) in year two, $81.07 (up 19 percent) in year three, $94.06 (up 16 percent) in year four and $101.08 (up 7.5 percent) in year five. (Percentage increases are from the previous year.)

The higher rates would raise an additional $1,275,598 for the company’s operations — a 113.5 percent increase over current revenue of $1,123,833. The rate hike would provide the company with a 7.75 percent rate of return.

Pukalani resident Melissa Apel complained that the water company “already got its raise” in 2011 and is only interested in paying more money to stockholders. She pointed to the county sewer rate that increased about 5 percent last year, and charges residents $30 and up depending on water usage.

“They’re using our money to pay for these stockholders,” Apel said. “They didn’t tell us about this plan. Did anyone get a letter of the plan of what they were going to change?

Tony Carrasco

“These guys don’t need a raise. Not that ridiculous, outrageous amount.”

California Water Service Group, parent company of Hawaii Water Service Co., is the third largest publicly traded water utility in the nation, according to its website. It provides water to nearly 2 million people in six wholly owned subsidiaries in California, Washington state, New Mexico and Hawaii.

The company has paid 288 consecutive quarterly dividends — a streak that amounts to 72 years — and recently increased its shareholder dividend for the 50th year in a row. It also was ranked “Highest in Customer Satisfaction Among Water Utilities in the West” by J.D. Power in its inaugural Water Utility Residential Customer Satisfaction Study, last year.

Resident Jerry Riverstone called the company a “juicy investment,” referring to the company’s share price that has increased from as low as $21 in 2015 to $37 last month. He believes the proposed 7.75 percent rate of return is unjustified and worries that sewage fees will not decrease after the company recoups its investments.

“My concern is that after the end, rather than say, ‘OK cool, we recouped our money, now we’re going to lower your rate again,’ that they’re going to say, ‘Oh, we have to keep it where it is and go higher,’ “ Riverstone said. “I would rather see the rates recoup the minimum we have to and then give us a guarantee that it’s going to go back down.”

Hawaii Water Service General Manager Tony Carrasco gave a brief presentation to residents and commissioners to explain the improvements and reasons for the increase. He said that the old plant was failing, violated state Department of Health requirements and did not treat sewage to acceptable standards

“Our treatment plant is something we really take pride in,” Carrasco told residents.

“We’re more than happy to set up tours and really accommodate you and show you what our plant looks like and what it does.

“We feel it’s part of the community and part of our investment.”

The new system includes a network of sewer and force mains, including two sewage pump stations and a wastewater treatment plant that produces R1-quality effluent. The effluent is discharged into a 2 million-gallon pond and then pumped to irrigate the adjacent Pukalani Country Club golf course.

The company’s recent improvements include two emergency standby generators, a laboratory information management system and human machine interface software. The company’s wastewater service area will include the new Kauhale Lani residential subdivision, which will have 170 residential lots. Construction of the subdivision hasn’t started.

Some residents did acknowledge and appreciate the company’s improvements, which made water cleaner and the service more reliable. However, they still resisted the high rate increases.

“I don’t know why they need more,” resident Donna Clayton said. “I feel like they got a rate increase to cover the wonderful improvements they made — I’m very grateful for that — and I know it’ll take longer for them to get their money back, but I’m OK with that.”

The PUC has until August to make a decision on the company’s proposed increases.

Hawaii Water Service also delivers drinking water to Kaanapali hotels and condominiums, where it came under fire last year for proposed water rate increases. The PUC approved the water rate increases for Kaanapali in September, calling them “reasonable” and the company’s rate of return “fair.”

To view the application, visit the PUC’s online document management system at dms.puc.hawaii.gov/dms and enter 2015-0236 in the Docket Quick Link search box.

For more information on Hawaii Water Service Co., visit www.hawaiiwaterservice.com/grc or call (808) 883-2046.

* Chris Sugidono can be reached at csugidono@mauinews.com.

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