WAILUKU - It could be another three to six months - or longer - before the state determines whether Molokai Properties Ltd. can quit operating its utilities on the Friendly Isle and force some other entity, perhaps Maui County, to take them over.
On Monday, Department of Health Hearings Officer Thomas Rack reasserted orders by the department and himself that call on Maui County to assess what it would take to provide sufficient drinking water "if and when" MPL follows through on its notice that its three utilities will cease operations for 1,200 customers on Aug. 31.
The findings and orders issued by Rack so far do not address a Department of Health order sent to Maui County on July 21 telling the county to prepare to take over the three operations - water companies Molokai Public Utilities and Waiola O Molokai and wastewater system Mosco.
The county steadfastly maintains that the state has no legal authority to make a public entity assume operations of utilities just because the company is losing money.
When asked if the state has those powers, Department of Health spokesman Kurt Tsue said state officials cannot comment on the matter since it remains in litigation. Either the county or company can still appeal the hearings officer's decisions to state Circuit Court.
Rack has ordered the county to come up with an emergency plan by Monday and recommended that it consult with the Federal Emergency Management Agency.
Two other Department of Health orders from last month, which Rack endorsed last week, command MPL to continue operations for three months.
"No more amended orders are expected until after the 90 days and discussions with (Health Director Chiyome) Fukino and all the involved parties are complete," Tsue said. "It all depends on what comes out of the discussions, assessment and emergency plan processes."
But Maui County spokeswoman Mahina Martin said that recent decisions do not specifically name the county as the party responsible for taking over the utilities. The hearing officer, state Public Utilities Commission and the state Department of the Attorney General have taken county rate payers off the hook and placed the onus on the company, she said.
"If the orders don't say it, we shouldn't assume it, and I don't think anyone else should," Martin said.
Maui County Corporation Counsel Brian Moto also noted that Monday's filing deleted language in previous orders, which stated that the county's Department of Water Supply and Department of Environmental Management have access to the expertise and equipment to run the west Molokai water and sewage treatment plants.
Moto further said that nowhere in the law does the Department of Health or Public Utilities Commission have the power to compel a county to run a private utility. However, that authority could change if the governor ever declared a state of emergency.
The county has fought the forced takeover, saying it would be costly. It also would set a precedent for developers that just want out of the utilities once they've sold all their units and the facilities have aged, county officials have said.
"Both the PUC and DOH seem to be in agreement with each other that the ranch will need to continue to run its utilities," Martin said.
On Thursday, the state Public Utilities Commission made its own rulings on the Molokai utilities. The PUC granted large rate hikes for MPL customers for at least six months with the expectation that the company would continue to operate the utilities. MPL has said it can no longer afford to subsidize two of the three utilities, which lost $1.2 million over the past two years.
"MPU, Waiola, Mosco and MPL have indicated that these utilities would continue to operate provided the utilities incurred no losses," Rack wrote in his findings of fact and conclusions of law from Monday.
If the company were to shutter its utilities, it could face PUC fines of up to $25,000 a day as well as potential civil and criminal sanctions if a public health crisis ensued.
But MPL worked with the PUC to set the the rate increases. Beginning Sept. 1, Molokai Public Utilities rates will go from $3.18 per 1,000 gallons to $6.04 per 1,000 gallons. Waiola O Molokai Inc. rates will go from $1.85 per 1,000 gallons to $5.15 per 1,000 gallons. The PUC did not increase Mosco wastewater rates, saying the utility had not shown it was operating with a deficit.
The PUC also said that if a buyer or another operator isn't found in six months, the utilities must submit applications for general rate increases to finance continued utility operations.
Martin said that is further proof that the company will be compelled to stay in the utility business for the long term.
A PUC legal representative did not return messages Tuesday seeking comment.
On Tuesday, Molokai activist Walter Ritte Jr. announced a public meeting for tonight to discuss what he called unprecedented and unrealistic utility rate increases. The forum begins at 6 p.m. at the Mitchell Pauole Community Center in Kaunakakai.
Ritte is a leader of the Save Laau group that opposed a MPL plan to develop 600 acres on west Molokai as a luxury residential project district in exchange for granting more than 50,000 acres as a land trust or with protective easements.
On the state's moves to prevent the MPL utility companies from shutting down, he accused Gov. Linda Lingle, the PUC and Department of Commerce and Consumer Affairs of folding under MPL's threats. He also charged that the company is endangering public and environmental health in retaliation for community opposition to the Laau Point project.
"We will not accept the PUC's decision without a fight," Ritte said in an e-mail.
* Chris Hamilton can be reached at chamilton@mauinews.com.
