Big water rate hikes in Hana take effect

Some face a tenfold increase over the next four years

Water rates are going up tenfold for Hana Water Systems’ north service area users over the next four years from $1.42 to $14.29 per thousand gallon for the first 25,000 gallons following a Public Utilities Commission decision on Oct. 1.

Hana Water south service area users will see their rates go up more than three times from the current $1.42 per thousand gallon to $4.82 on Jan. 1, 2022.

The company said in initial filings in December that it was requesting the rate increase because its current rates don’t and would not in the foreseeable future produce sufficient revenue to allow it to recover incurred operating costs.

The company had a net loss of $181,718 for 2016 and $145,890 for January through October 2017 for its water operations for the north service area. And for the same time periods, its south service area had a net losses of $152,556 and $141,575, the PUC filings said.

The filings say the current rate case is designed primarily to eliminate the operating losses and to provide an opportunity to earn a return for both the north and south operations. The old rates had been in effect for 22 years.

Its north service area consists of 97 customers, most of whom are residents in Hana Agricultural Park. The area includes Hana Airport.

Its south service area consists of 74 customers in and around Hana town and includes Travaasa Hana Hotel, Hasegawa General Store and the post office.

In its decision and order in two dockets, the PUC approved a revenue increase of $197,316, or a 476 percent jump over the current rates, for the north service area, and an increase of $211,510, about 360 percent above current rates, for the south service area.

Revenues prior to the increases for the north service area were about $42,500 and $52,000 for the south service area, PUC filings said.

The first phase of the increase took effect Oct. 1 with rates in the north service area jumping from $1.42 per thousand gallon to $3.99 and from $1.54 per thousand gallon to $2.10 in the south service area for the first 25,000 gallons a month.

The future phased-in rate increases per thousand gallon by year for the north and south service areas for the first 25,000 gallons a month follow:

• Jan. 1. $6.57, $2.78.

• Jan. 1, 2020. $9.14, $3.46.

• Jan. 1, 2021. $11.72, $4.14.

• Jan. 1, 2022. $14.29, $4.82.

About 20 people attended a public hearing in Hana on May 21, and all written comments expressed opposition to and inability to pay the higher rates.

Geneva Crouse, a customer in the north service area, said she lives on her grandfather’s property.

“I will not be able to afford this proposed increase and do not agree with other clarifying charges along with the rules and regulations applicable to provisions of water service,” she said.

Grace Pretre said in written testimony filed with the PUC that he could not “believe that such an outrageous increase would even be considered or allowed. Hana is a place where water is abundant and where many Native Hawaiians reside with their families, often on land that has been passed down through many generations,” said Pretre, a farmer.

“Yes, the price of water has been relatively low for a long time, and perhaps a reasonable increase is understandable, but not the hundreds and thousands of percent that is being proposed,” he said.

Hana Water Systems is a subsidiary of Colorado-based Bio-Logical Capital, which purchased most of Hana Ranch in 2014. In 2016, Hana Water Systems assumed operation, management and maintenance of the water systems after the PUC approved the transfer.

The systems used to be run by Hana Water Co. and Hana Water Resources, which were wholly owned subsidiaries of HRP Hana LLC.

The transfer of the water systems was part of the larger ranch purchase, the PUC has said. An asset purchase agreement for the two water systems totaling $162,000 was forged and approved by the PUC when the transfer was approved.

HRP had said it was not interested in or able to operate the water systems or to make needed repairs and upgrades. Each system lost more than $100,000 in 2012 and 2013, according to unaudited reports filed with the PUC.

* Lee Imada can be reached at leeimada@mauinews.com.

This story published Friday, Oct. 12, 2018, has been corrected.

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