Many Moloka'i residents and businesses would see their water bills more than double for six months under a proposal by the Public Utilities Commission.

The state's utility regulatory agency has scheduled a public hearing on Moloka'i July 15 to consider the idea and how it would affect interested parties, including residents and utility operator Molokai Ranch, which has threatened to halt the water service because it is losing money.

The PUC anticipates that the proposed rate hike would be a hardship for some residents, especially considering that Molokai Ranch, the largest employer on an island with already high unemployment, recently began laying off more than 120 employees as part of shutting down ranching and resort operations.

But the agency is suggesting the temporary water rate increase as a way to force Molokai Ranch to continue providing service to roughly 1,200 customers beyond Aug. 31.

Ronald Rapanot Sr., a retired Maui Electric Co. worker who was born and raised on Moloka'i, said residents shouldn't have to choose between paying dramatically more for water or having the taps go dry.

"We're on a fixed income," he said. "That would hurt a lot."

Rapanot, who lives in Kala'e, said he pays around $40 every two months for water. "Every little thing you raise — it's going to affect big time the people who live here," he said.

Gasoline on Moloka'i already is dramatically higher than in the rest of the state at nearly $5 a gallon. Moloka'i's unemployment rate was 5.1 percent in April, compared with 3.3 percent for the state, according to the latest figures available, which don't include ranch layoffs.

Under the PUC proposal, water rates would rise 121.5 percent for customers of Molokai Ranch affiliate Wai'ola O Molokai, which provides water to residential, commercial and agricultural users in Maunaloa, Kualapu'u, Kipu, Manawainui and the Molokai Industrial Park.

Water rates would rise 41 percent for customers of ranch affiliate Molokai Public Utilities, which services Maui County parks in west Moloka'i and subdivisions such as Ke Nani Kai, Paniolo Hale Condominiums, Kaluakoi Villas, Kaluakoi Resort and Papohaku Ranchlands.

The PUC said the increases would generate enough revenue for the utilities to financially break even, and allow Molokai Ranch to continue service for six months while state and county officials work on arranging a takeover of the water utilities.

Molokai Ranch wastewater affiliate Mosco doesn't lose money, so its rates would not be increased.

According to the PUC, Molokai Ranch on March 24 told the agency it intended to transfer the responsibility for providing utility within six months to a private or public entity, but was unsuccessful in negotiating for Maui County or any private entity to assume the service.

Molokai Ranch said in a letter to the PUC that its utilities collectively lost around $580,000 in each of the past two fiscal years — a deficit that the ranch was willing to fund only while it had other business operations that needed water.

The company added that the government has a duty to provide citizens with essential services such as water when the private sector is unable to do so, and said it would cease utility service Aug. 31.

The PUC has acknowledged that as a practical matter, it can't compel Molokai Ranch to operate the utilities forever and has urged Maui County officials to acquire the water and wastewater systems.

Maui Mayor Charmaine Tavares has said the county can't take over Molokai Ranch water and wastewater utilities on such short notice and that it's not fair to dump the expense of operations on taxpayers.

The PUC rate meeting is slated to begin at 10 a.m. July 15 at Maunaloa Elementary School. The state Division of Consumer Advocacy and Molokai Ranch are expected to testify on the proposal. The public also is invited to testify.