The Public Utilities Commission has suspended the application of Wailuku Water Distribution Co. to become a public utility until the state Commission on Water Resource Management decides who gets how much water from Na Wai Eha.
In the meantime, the commission ordered Wailuku Water not to sell assets, sign up new customers or change water rates.
Isaac Moriwake, an attorney for Earthjustice representing petitioners demanding that the water commission establish instream flow standards in the watershed, said the PUC's action was "very significant." Among other issues, it represents "a concrete step" to block Wailuku Water from signing contracts purporting to give access to water from the stream diversions that his clients are challenging.
The Office of Hawaiian Affairs, one of the petitioners represented by Earthjustice, said that the order "protects Na Wai Eha kuleana users and others who depend on the streams from arbitrary action by an unregulated public utility."
OHA and Hui O Na Wai Eha are seeking to make the water commission establish permanent stream flow standards for the Waihee, Waiehu, Iao and Waikapu streams, all now diverted for up to 60 million gallons a day by the century-old plantation irrigation system.
The state Water Code requires the water commission to provide adequate water in streams for stream life, including native oopu, opae and hihiwai, balanced against uses by stream-side landowners, Native Hawaiians, recreational and scenic benefits and economic users.
Any decision on permanent stream flows will reduce the amount of water that can be taken by the plantation system that leaves the streams dry below the intakes.
The PUC order admitted that the water commission's action probably won't be settled for "many years," but neither does the PUC "intend for a suspension period to continue indefinitely."
But a water commission decision could come this year. This would begin to give various claimants some idea of how much, if any, water they will get. Appeals are certain, and the PUC noted that the battle over Waiahole Ditch water on Oahu has not been settled although it has been 15 years since the water commission first acted there.
However, in the meantime, various water commission orders regarding Waiahole water have been maintained while under appeal.
Wailuku Water, the successor to Wailuku Sugar Co., did not want to apply to be a public water utility. A petition to set instream flow standards forced the issue, and, in February 2008, Wailuku Water applied for a certificate of public convenience and necessity to operate a nonpotable water system.
A public hearing was held in May, and seven groups of intervenors turned it into a contested case.
One of the intervenors, Hawaiian Commercial & Sugar Co., which gets water from the Wailuku Water ditch system, contended that the PUC could not consider an application until the applicant could show access to water. Since the water commission has not allocated water, or even determined what geographical area Na Wai Eha water could serve, HC&S suggested the PUC process was premature.
In November, the PUC asked the parties for comments, and while opinions were divided, the PUC decided that it should wait on the water commission.
However, it also agreed it "should maintain the status quo and place conditions on (Wailuku Water) during the suspension period so that (Wailuku Water and its successors) are not allowed to continue 'business as usual' and avoid commission oversight during the suspension period."
Among those making that argument was Maui Tomorrow.
Its executive director, Irene Bowie, said, "We applaud the PUC for not allowing just 'business as usual' by WWC, while deferring to the water commission regarding the fundamental question whether WWC should be diverting Na Wai Eha streams at all."
Developer Mike Atherton, also an intervenor, who has purchased many acres of Wailuku Water real estate including Maui Tropical Plantation, had been negotiating a lease for much of Wailuku Water's remaining assets, which are 13,000 acres of watershed and its ditch system. The PUC order forestalls that. Atherton and his partners are after 4,620 acres in Waikapu, including portions of the ditch system.
The county Department of Water Supply is also interested in acquiring the watershed and is also an intervenor. The County Council has appropriated money for consultant advice on valuing and possibly acquiring the watershed through condemnation. Although he was negotiating with Atherton, Wailuku Water President Avery Chumbley has maintained that the county should buy the watershed.
Transfer of the water system to public ownership would be welcome to Earthjustice, but Moriwake said he thought that if that came up, the PUC would no longer be involved.
The important thing, he said, is that the order interferes with Wailuku Water's attempt to transfer its assets to another company, Wailuku Water Distribution. Moriwake calls this a sham company, and the transfer involving annual lease payments to Wailuku Water Co., escalating through the years, as a way for the landowner to establish a new, higher valuation of its property in order to justify higher water rates.
At the May hearing, Chumbley said Wailuku Water is losing around $500,000 a year.
* Harry Eagar can be reached at heagar@mauinews.com.
