MPL ordered to stay in business

A Department of Health hearings officer has supported earlier orders by the health director that Molokai Properties Ltd. must continue providing water and sewer services in west Molokai.

In findings of fact, conclusions of law and order issued Thursday, Hearings Officer Thomas Rack wrote that it was clear Molokai Properties was the "alter ego" of water companies Molokai Public Utilities and Waiola O Molokai, and wastewater system Mosco. The company had argued the utilities were separate companies and it should not be ordered to subsidize them.

He also found that the announced shutdown of water and sewer service posed an imminent threat to public health, and that the health director had authority to take steps to prevent such a risk.

"It is undisputed the planned cessation of drinking water and wastewater services by MPU, Waiola, Mosco and MPL will cause a substantial public health crisis on Molokai," Rack wrote.

Rack concluded that the Health Department's earlier orders to MPL were justified, and he affirmed the actions.

Those orders, issued July 21, required MPL, MPU and Waiola to continue operating drinking water systems in Kaluakoi-Maunaloa, Kualapuu and Kipu, and a surface water treatment plant at Puu Nana. The department also ordered the company and Mosco to continue to operate the Kaluakoi, Maunaloa and Kualapuu wastewater systems with certified plant operators.

In a third docket, Deputy Health Director Laurence Lau had ordered Maui County to assess what would be needed to provide emergency utility services and prepare to operate the systems if MPL shut them down.

The findings issued Thursday did not support that order. Instead, Rack on Aug. 7 had issued an order for the county to prepare an emergency plan for water and wastewater services in the event of a shutdown.

In a related case, the state Public Utilities Commission on Thursday ordered temporary rate increases intended to provide sufficient revenues to keep the utilities operating.

The private utilities claimed to have lost more than $1.2 million in the past two years, and MPL had argued it should not be responsible for the continuing deficits.

But the three companies share the same office and director as MPL; employees of the utilities have done work for MPL, and vice versa; and the utilities have not held board-of-directors meetings, suggesting a lack of "corporate formalities," Rack wrote.

In addition, MPL pledged its financial backing behind Waiola when applying for a certificate of public convenience and necessity from the Public Utilities Commission in 1993. That suggests MPL knew the utility would not be self-supporting and could operate only with subsidies from the parent company, Rack wrote.

"Arguably, the PUC would not have granted CPCNs if it believed the backer of these utilities could abandon its financial support and allow the utilities to cease operation," he wrote.

Under the earlier orders by the Health Department, the county has to submit an initial assessment of the systems by Monday, and an emergency plan by Aug. 25.

* Ilima Loomis can be reached at iloomis@mauinews.com.