PUC approves sale of Wailuku Water Co. land

The state Public Utilities Commission gave Wailuku Water Co. the green light to sell 4,600 acres to Ting Ranch LLC, the company’s first step in ending its water-distribution services.

The $3.4-million deal includes land mauka of the King Kamehameha Golf Club in Waikapu, the decision and order filed Sept. 22 said. The sale only involves the land and does not include the Waikapu ditch or any other water delivery systems. That way, Ting Ranch doesn’t need to apply to the commission to become a regulated utility.

Wailuku Water, which owns about 13,170 acres of West Maui watershed land and services more than 110 users, is regulated by the PUC as a “quasi-public utility” because it delivers water to multiple users, the decision and order said.

The PUC action will allow Wailuku Water, which has been facing financial issues, to proceed with the land sale and finalize the terms of the agreement, company President Avery Chumbley said Friday, adding that he has been in discussion with ranch manager Duane Ting about the sale.

“Then we’ll work with escrow agents on getting a closing of the transaction,” he said.

It could take a couple weeks to a month for the transaction to be completed with all the deeds recorded.

“The sooner, the better,” Chumbley added.

In 2007, the company filed for a certificate of necessity from the PUC, allowing it to provide nonpotable water through its ditch distribution system and to establish rates for delivery of water. However, the PUC decided to suspend the company’s docket in 2008 while the state Commission on Water Resource Management finalized in-stream flow standards, determined potential users and issued permits as part of a contested case hearing on surface water use permits in the Wailuku, Waihee, Waikapu and Waiehu streams. Wailuku Water, whose predecessor companies include Wailuku Sugar and Wailuku Agribusiness, diverts water from those streams, also known collectively as Na Wai Eha.

As part of the suspension, the company could not take new customers, raise its rates or sell its assets. The company asked the commission in April for permission to sell part of its land to the ranch, citing mounting financial losses.

Wailuku Water lost 35 percent of its revenues due to the closure of Hawaiian Commercial & Sugar Co. in December, and additionally missed out on five to six months of revenue from the county after storm damage in Iao Valley in September 2016. Last year, the company recorded its largest deficit of $459,000 and would have run out of cash in the first quarter of 2018 without the cash infusion from the land sale, the decision and order said.

“Without the commission’s approval of the land sale, WWC does not have any regulatory alternatives to raise sufficient revenues to cover expenses, maintain operations and provide reliable service,” the consumer advocate said in the decision and order.

The consumer advocate added that even with the approval of the land sale Wailuku Water may not be able to remain solvent “unless WWC develops a plan through which it can provide utility service as a going concern.”

Wailuku Water’s plan is to use the proceeds from the sale to continue to operate “pending its potential sale of the remainder of its assets to the County of Maui,” the filing said. The company is proposing to sell its remaining 8,764 acres and water infrastructure to the county for an estimated $9.5 million. Currently, the county pays $250,000 annually for 3 million gallons of water a day from the company, according to Mayor Alan Arakawa’s “Our County” column published in The Maui News on Sept. 15.

The Maui County Council’s Budget and Finance Committee recommended approval of $150,000 earlier this month for an appraisal of the land and infrastructure. Approval of the money will go up for a first reading before the full council Friday.

If the county sale goes through, Wailuku Water “will no longer operate as a provider of water distribution services,” and the company’s former clients would be serviced by the county water department, the decision and order said.

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