By NANEA KALANI - Staff Writer | The Maui News | www.mauinews.com 26 June 2012
The Hawaii Public Utilities Commission has given interim approval to allowing Larry Ellison, the anticipated soon-to-be-owner of most of Lanai, to take over ownership of the island’s three regulated utilities.
The commission ruled within six days of Castle & Cooke Inc.’s request to transfer ownership of the island’s water, sewer and transportation utilities to Ellison, the billionaire co-founder of software firm Oracle Corp.
Castle & Cooke said it needed the commission’s interim approval by today to meet a scheduled closing date for the overall sale of the island’s assets, set for Wednesday.
In issuing its interim approval, the PUC said it finds the buyer “fit, willing and able to provide the three public utility services.”
At least two environmental and community groups have stepped in to intervene in the transfer of ownership request.
In its request to the PUC, David Murdock’s privately held Castle & Cooke disclosed that it had reached an agreement to sell more than 88,000 acres of land on Lanai, or about 98 percent of the island, to Ellison.
The sale includes the island’s two luxury resorts managed by Four Seasons, two golf courses and other assets. Murdock will, however, retain the rights to develop a proposed wind farm on Lanai following the sale.
“The scope of the commission’s proceeding is limited to the indirect sale and transfer of the three Lanai-based public utilities,” the PUC wrote in its decision Monday. “The commission chooses to proceed with its interim action today, so as not to jeopardize the June 27, 2012, closing date for the overall purchase and sale transaction, subject to the commission’s right to ultimately disapprove the indirect transfer and sale of the three public utilities.”
The PUC said that it will continue an ongoing investigation of the request, including a thorough review of the current and future operations of the three utilities – Lanai Water Co., Manele Water Resources and Lanai Transportation Co. – before issuing a final decision.
It gave no timeline on when a final decision is expected.
The PUC noted in its interim decision that because the sale will be “debt free,” no financing or borrowing costs are expected to be passed on to customers.
Castle & Cooke’s request said it’s logical from “the big picture, common sense point of view” to sell the supporting utilities along with the hotels, land, residential developments and other assets.
“Splitting up ownership of the sources of water from the water utility operations could jeopardize operations and negatively impact residents,” the company said. “Thus, it is important that these transfers occur at the same time.”
The net assets of the three utilities – wholly-owned subsidiaries under Castle & Cooke Resorts – total about $7 million.
Ellison has committed to invest $10 million in the utilities over the next five years “as a good faith showing of commitment,” according to a letter filed with the PUC by the attorneys for Castle & Cooke, Ellison and the state’s Consumer Advocate.
On Monday, environmental and community groups Lana’ians for Sensible Growth and Life of the Land filed motions with the PUC to intervene in the case.
“The unprecedented speed with which (Castle & Cooke Resorts) is seeking to transfer Lanai utilities to an otherwise unknown entity, coupled with a complete lack of transparency at the community level, caused Lana’ians for Sensible Growth to take this step,” Butch Gima, president of the group, said in a statement.
“Lana’ians for Sensible Growth strongly believes the community should be a party to any such attempted transfer,” the group said in its motion. “Lana’ians for Sensible Growth has the right to participate in this docket because we represent a group of residents, Native Hawaiians, taxpayers, voters and visitors that have a vested interest in preserving the health of Lanai’s watershed and aquifer, a sound and efficient water extraction and delivery system, and wastewater system. It has been our mission to watch over Lanai’s water resources and water delivery system for the past 20 years. . . . Neither the Consumer Advocate nor seller, the only two parties in this docket, can adequately represent the public’s interest as can Lana’ians for Sensible Growth.”
The Consumer Advocate said in a separate PUC filing that it would not object to an expedited interim approval in light of Ellison’s planned $10 million investment in the utilities.
“With all due respect to the Consumer Advocate, it cannot begin to understand the detailed needs of Lanai’s water/wastewater system, and a ‘good faith’ commitment at this point is little more than a wish and a promise,” Lana’ians for Sensible Growth said in its motion.
Life of the Land also took issue with the PUC and Consumer Advocate’s fast-tracking of Castle & Cooke’s request.
“This was filed at the PUC on June 19, and on June 21 the Consumer Advocate gave preliminary support for interim approval. For them to move in two days is remarkably fast because they are a notoriously slow-moving entity. I find that totally bizarre,” said Henry Curtis, Life of the Land’s vice president for consumer issues.
Curtis said that within that two-day window, the Consumer Advocate filed three requests with the PUC asking for time delays on unrelated cases.
“Our concerns are with the fast-tracking of this and how the docket relates to Big Wind,” Curtis said.
Big Wind refers to plans dating back to 2008 for wind farms sited on Molokai and/or Lanai to feed into Oahu’s electric grid via an undersea cable as part of the state’s Hawaii Clean Energy Initiative.
Hawaiian Electric Co. reached a deal with Castle & Cooke to build a 200-megawatt wind farm on Lanai, but a deal with First Wind for a similar sized wind farm on Molokai fell apart after the company failed to secure land rights.
The PUC last year required HECO to seek new bids for at least 200 megawatts of renewable energy to make up for the loss. Qualifying projects can be sited on any island that can reach Oahu by undersea cable.
Castle & Cooke’s planned Lanai wind farm has divided residents on the small island that produced pineapple until Murdock shut down production and turned to tourism and residential development projects.
Curtis said that being allowed to intervene would give them access to confidential information and be a formal party in the proceedings.
Life of the Land’s motion to intervene notes that the overall sale of Lanai runs counter to the organization’s interests, including “full accountability and transparency regarding environmental and cultural threats regarding the proposed Lanai wind farm.”
URL to article: https://www.wind-watch.org/news/2012/06/27/puc-grants-interim-ok-clears-way-for-sale/