Posted on: Saturday, November 2, 2002

Kaua'i Electric sale complete

By Jan TenBruggencate
Advertiser Kaua'i Bureau

PUHI, Kaua'i — The purchase of Kaua'i Electric by a local cooperative closed early yesterday, essentially functioning as a new industry for the island — pumping millions of dollars each year back into the local economy instead of sending it to the Mainland.

The Kaua'i Island Utility Co-op expects to avoid

an electricity rate hike that former owner Citizens Com-munications had promised, and it also expects to return excess capital back to

the ratepayers in the form of annual payments, said Gregg Gardiner, the co-op's chairman.

Additionally, Citizens Utilities is committed to returning to customers a one-time payment of $3 million within a year of yesterday's closing.

One big factor in keeping the utility's costs down is that the cooperative was able to arrange low-cost federal Rural Utilities Service financing for its

$215 million purchase. Another is that co-ops avoid the federal taxes paid by a for-profit corporation.

Some of the annual savings will be used to pay down debt and thus increase equity in the system; some will be paid directly back to ratepayers in amounts proportional to their power use.

"Over the next 10 years, we expect that ratepayers will see over $26 million in rate relief — money returned to their pocketbooks — while the co-op, which will be 100 percent owned and controlled by the people it serves, will build up a solid financial cushion," said Atlon Miyamoto, president and chief executive officer of the firm.

All ratepayers, no matter how much power they use or whether they are corporate or individual customers, become members of the cooperative with a single vote at elections for directors.

Ratepayers can opt out, but by doing so they would fail to receive payments of excess cash.

Reach Jan TenBruggencate at jant@honoluluadvertiser.com or (808) 245-3074.