PUC told Punaluu Water & Sanitation lacks funds beyond Feb. 28; owner plans temporary rate filing to avert service loss

Commissioner Naomi Kauai of the Public Utilities Commission opened a virtual status conference to receive updates on Punaluu Water and Sanitation (PWS), and counsel for PWS told the commissioners the utility lacks the funds to operate beyond Feb. 28, 2025 and intends to file a temporary rate increase application “sometime next week” to cover immediate operating costs.

The case matters because a loss or reduction of water and wastewater service could affect fire suppression, public health and nearshore waters for Punaluu customers and visitors. The Commission said it seeks information to confirm whether PWS can continue operations and, if not, what steps would ensure uninterrupted service.

PWS counsel Will Yamamoto said PWS temporarily paused a general rate case filed June 28, 2024, because of financial difficulty paying vendors, consultants and counsel. Yamamoto told the commission that Big Island Water and Sanitation (the current operator) notified PWS on or about Jan. 6 that it would cease operations after Feb. 28 unless past-due fees, and ongoing monthly and repair costs, were paid. Yamamoto summarized the operator’s condition as requiring payment of past-due amounts plus about "$7,000 a month plus tax" to continue operating and perform repairs, and said PWS plans to file a temporary rate application to cover only the expenses that are "absolutely necessary to keep the lights on" until a general rate case or a change in ownership could be completed.

Chuck Loy, PWS’s rate consultant, described the scope of a temporary rate application: "We're excluding those items" such as depreciation, return on rate base and related taxes, and the application will focus on immediate operating costs.

Commissioners asked whether PWS can continue service while a temporary rate increase proceeds through the typical notice and hearing process. A commissioner noted the 21-day notice timeline that starts after filing and cautioned counsel to confirm whether the owner will fund operations during that interval. Yamamoto said PWS is "doing both" — preparing a temporary filing and seeking potential buyers — and that the utility has contacted two large Hawaii water operators about a possible acquisition or operational assistance. He represented that PWS is not intending to abandon service and would continue operations "subject to" its financing limits while seeking short-term financing or a buyer.

The Consumer Advocate (executive director Michelangelo and staff) said it has been in contact with customers and the AOAO (association of owners) and remains concerned about system deficiencies and public-safety risks. The advocate recommended expedited sharing of the operator agreement and a clear list of the operator’s "bare bones" expenses so the advocate can vet the temporary request quickly.

Customers and stakeholders who spoke during the public comment period described safety and environmental worries. Ron Ebert, a Punaluu customer and firefighter, said local fire response depends on water from the system and urged the Commission not to let service end. Jeff Silva, president of the AOAO at Colony 1 and a licensed distribution and treatment operator, said it was "pretty surprising that the water consumers get essentially 20 days notice of a possible discontinuance of water service" and raised concerns about public-health, fire-suppression and wastewater-treatment risks. Max Phillips, Hawaii director and staff attorney for the Center for Biological Diversity, said past engineering reports and a 2006 draft environmental impact statement found the wastewater plant "old and obsolete" and warned that increasing development would require a new treatment plant and a supplemental environmental review.

Alan Fukumizu, who identified himself as the company that currently operates the system for PWS, was present to answer technical questions; the Commission asked PWS to provide the written communications or agreement with Big Island Water and Sanitation showing the conditions for continued operations and to include that documentation with any temporary-rate filing. Yamamoto agreed to provide a copy of the operator communication as part of the filing.

The Commission closed the status conference by saying it will issue further procedural guidance and a notice or order describing next steps. Parties were told how to submit additional comments to the docket and encouraged to continue dialogues between PWS, the consumer advocate and affected customers while the utility prepares its temporary rate application.