Pukalani water company floats big rate hikes

Officials want to more than double revenue to allow a ‘fair rate of return’ on investment

Hawaii Water Service Co. is seeking sewer rate increases phased in over five years that would more than double its revenues from nearly 880 residential, business and government customers in Pukalani.

In an application submitted Dec. 9 to the Hawaii Public Utilities Commission, the company is requesting higher rates to raise an additional $1,275,598 for its operations — a 113.5 percent increase over current revenue of $1,123,833.

If approved, the rate hike would provide the company with a 7.75 percent rate of return.

“Applicant’s current rates do not now and will not in the foreseeable future produce sufficient revenues to allow it to earn a fair rate of return on its prudently incurred investment,” the filing says.

Earlier this month, company officials held a workshop with about 40 Pukalani customers at the Mayor Hannibal Tavares Community Center. They discussed the general rate case process and their system improvements, but they declined to provide details of their requested increases.

The water company has been managing the Upcountry wastewater system since 2008. At that time, it installed a $9.6 million wastewater treatment plant.

The company’s filing for a sewer rate increase says that its Pukalani residential customer base includes single- and multifamily dwellings — with 775 single-family customers and 90 units in three multifamily complexes. The company also has 14 commercial customers that include two shopping centers, a park, a pool, a county community center and two schools.

The company’s wastewater service area will include the new Kauhale Lani residential subdivision, which will have 170 residential lots. Construction of the subdivision hasn’t started.

The Pukalani sewage system includes a network of sewer and force mains, including two sewage pump stations and a wastewater treatment plant that produces R1-quality effluent, according to the company. The effluent is discharged into a 2-million-gallon pond and then pumped to irrigate the adjacent Pukalani Country Club golf course.

The company’s recent improvements include two emergency standby generators, a laboratory information management system and human machine interface software.

“These capital improvements are necessary and important to meet the current needs of (the company’s) customers,” the company says.

Owners of the previous system contributed $2.8 million to the new plant, so Hawaii Water Service sought the remaining $6.8 million during its rate case in 2011. The PUC approved half the money, and the company is now seeking the rest.

Hawaii Water Service reached an agreement with the state consumer advocate to approve additional annual revenues of about $300,000 in 2014, an increase of $200,000 in 2015 and a bump of $200,000 in 2016, according to financial documents. The rates for 2016 took effect in February.

The company is asking the PUC to approve higher rates phased in over five years.

Currently, residential customers pay a monthly sewer fee of $62.17. Under the proposal, that would decrease in the first year by 11.2 percent to $55.22, but then climb each of the next four years — to $68.12 (up 23.4 percent) in year two, $81.07 (up 19 percent) in year three, $94.06 (up 16 percent) in year four and $101.08 (up 7.5 percent) in year five. (Percentage increases are from the previous year.)

Commercial customers would see rate increases as well. They would pay a range of monthly fees, depending on meter sizes, ranging from $16.20 for 5/8ths and 3/4ths meters to $274.05 for the largest meters from 3 to 6 inches. Now, commercial customers are not charged monthly fees for meter sizes.

The rate proposal calls for wastewater fees to drop from $758 per month to zero for schools. Public parks fees would increase over five years from the current $172.31 per month to $215.39 (up 25 percent) in year one, $258.47 (up 20 percent) in year two, $301.54 (up 16.7 percent) in year three, $344.62 (up 14.3 percent) in year four and $367.89 (up 6.8 percent) in year five.

The company asked the PUC to schedule a public hearing on the proposed sewage rate increases.

Hawaii Water Service also delivers drinking water to Kaanapali hotels and condominiums, where it came under fire earlier this year for proposed water rate increases. The PUC approved the water rate increases for Kaanapali in September, calling them “reasonable” and the company’s rate of return “fair.”

Hawaii Water Service serves about 4,300 connections in Pukalani and Kaanapali on Maui and in Waikoloa, the north Kona Coast and the Kohala Coast on the Big Island. It is a wholly owned subsidiary of California Water Service Group.

For more information, call (808) 893-2046 or visit www.hawaiiwaterservice.com.

* Brian Perry can be reached at bperry@mauinews.com.

COMMENTS