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Hawaiian Beaches Water rate hike request draws fire

December 13, 2013 - 8:29am

PAHOA — About 100 people attended a state Public Utilities Commission hearing Wednesday night at Keonepoko Elementary School on a request by Hawaiian Beaches Water Co. to raise its rates, and all but one testifier gave commissioners and the private water company an earful.

Kate Drago, president of Hawaiian Beaches Water, testified that the company is “seeking a net revenue increase of $270,748, or an approximate 37 percent increase over present revenue rates.” The company supplies about 1,100 customers.

“The proposed change in rates, if approved by the commission, will allow us to better serve all customers and the Hawaiian Beaches community. It will also assist us in ensuring a system that is both safe and reliable,” she said.

Drago said “a revenue increase is needed to help us keep pace with rising operating costs, a significant decline in customer usage since the last rate case was filed in 2009, and to recover expenses incurred for additional capital improvements that were necessary since the 2009 rate case.”

Those improvements include a new office building and warehouse, a backup generator and the installation of a well with a 330,000-gallon storage tank and related electrical and piping facilities.

Jeffrey Ono, executive director of the state’s Division of Consumer Advocacy said his office is “taking an independent look” at the application but “has not completed its analysis” of request, so could not make a recommendation to PUC.

Drago wrote in a Nov. 20 letter to customers that at present rates, the company projects an operating loss of $87,823 in 2014. The proposal would raise the fixed monthly service charge for those with a 5/8-inch pipe from $30 a month to $41.43, a 38.1 percent increase. Those with a one-inch pipe would pay $45.20, a 50.1 percent increase. The monthly water consumption charge per 1,000 gallons would go up from $4.22 to $5.79, a 37 percent hike.

After Drago and Ono spoke, the fireworks began.

Mary Cabatbat took the microphone and turned toward the audience, drawing an admonition from chairwoman Hermina Morita to address the commissioners.

“I’ll try my best to look at you but I came to speak to them,” Cabatbat said.

“This is about the second or third time they’ve raised the rates since this woman took over the company. … Miller and Lieb (who supplied water to Hawaiian Beaches until 2007) was far more gracious than these people,” she said, adding that the company provides “no maintenance whatsover, none personally.”

Cabatbat told the audience they should file “a class action lawsuit to get your rights back.”

Richard Gorman called the proposed increase “not fair.”

“What’s the next (increase) going to be? $100 for two people?” he said.

Mandy Kaniaupio said that the Lalakea Street home owned by her father, Miles Kajiyama, burned down Nov. 29.

“My reason for being here is the fire company ran out of water,” she said. “If there’s a rate increase, I would like to see more fire hydrants.”

“According to the fire company, they could have partially saved his house if they hadn’t run out of water,” she said.

She said there is only one hydrant to serve the entire subdivision base.

Mark Prescott, the water company’s vice president and Drago’s brother, confirmed there is only one hydrant for HWBC’s 1,100 customers, but said that was also the case when Miller and Lieb supplied water to the subdivision.

Ross Watson said it makes no sense to raise rates during a bad economy.

“We gonna have to cut off the water and make catchment. We cannot afford it,” he said. “These guys are jacking these prices so high, us guys can do nothing.”

Rothman Spencer Dicey said “the cost of living is high” and “the wages are low.”

“Why are we, as customers, asked to finance a new office and warehouse? The company is treating the customers as its own personal piggy bank,” she said. “Water for profit is a terrible idea.”

Don Vallance urged those in attendance “don’t be deluded.”

“This meeting is a waste of time,” he said. “The PUC was established to protect us from monopolies and they’re not doing their job. We’re paying their salaries. We should fire them.”

Vallance predicted that the rate hike would be approved and another would soon follow.

“The next one is electronic meters so they can lay off their staff and make a profit,” he said.

Bruce Darny, a disabled Army veteran of the Vietnam War asked: “Who does the audits on all this paperwork that was submitted to see if the things were actually done or needed?”

“The investigation is just beginning,” Morita replied.

Darny noted that the reasons the company gave for the increase didn’t include “public safety … putting fire hydrants in.”

“We just had a house burn because there was no water pressure, no fire hydrants,” he said.

“How good is the stewardship, the management of this company?” Neil Bell asked. “Personally, I’ve never heard a company ask its customers to pay for a new office. … When the office is paid for, do we get a reduction?”

Denyse Temple asked if the company “had a drop in the people using the water, why did we need new wells?”

Only one individual, Kevin Bachman, spoke in favor of the increase.

“There has been some steady improvement,” he said. “There has been some additional wells added and this is one of the only places I’ve seen where there is a backup generator.

“I know there isn’t a storm here every day but if there is one, they’re ready.”

He said the company deserves “some consideration.”

“People are getting clean water and water that has been tested for less than $2 a day,” he said.

Email John Burnett at