Discounted water for agricultural producers is also part of the company’s proposal.

The Lanai Water Co. is seeking a rate increase that would add $76.78 to the average customer’s monthly bill, which now is $18.75.

Maui County

The company, which serves 1,500 customers, proposes to raise rates gradually over five years, a measure intended to mitigate “rate shock.”

If approved by the state Public Utilities Commission, the typical monthly water bill for a Lanai resident would climb to $25.65 in the first phase, with subsequent tiers proposed at $36.45, $51.02 and finally, $95.53.

The utility, which is currently operating at a loss of $2 million a year, has not had a water rate increase since 1994. The company said in its 500-page PUC application that the revenue boost would simply cover losses from operating expenses.

The islandwide water company is owned by billionaire tech magnate Larry Ellison, who purchased 98% of the tiny island northwest of Maui for $300 million in 2012. 

Lanai homes overlooking future housing development.
The Hawaii Public Utilities Commission will vet whether the proposal considers whether Lanai customers can bear the water bill increase, which would be rolled out gradually over five years. (Cory Lum/Civil Beat/2022)

Ellison also owns a third of the housing, the island’s only newspaper and gas station, a grocery store, a movie theater and twin luxury resorts operated by Four Seasons. All of these assets are managed by Pulama Lanai, the company that oversees Ellison’s monopoly stake in the 140-square-mile island with a population of roughly 3,000 residents.

In recent years the water utility has seen significant increases in usage as building developments have added demand to the relatively small system. 

In 2019, for example, water usage skyrocketed partly due to persistent drought conditions but also because of the construction and reopening of the Four Seasons Hotel Lanai at Koele.

New developments, including the 150-unit Hokuao Housing Project, are expected to further increase water usage on the arid island. 

Today the island’s potable water system uses an average of 1.5 million gallons of water daily, with the typical household accounting for about 235 gallons, according to the utility’s PUC application. There are 1,505 connections to the drinking water system, 51 connections to the brackish water system and two connections to the recycled water system.

Pulama Lanai Hokuao affordable housing units.
Larry Ellison is privately funding the construction of the first affordable housing units on Lanai in 30 years, but developments are also driving water demand. (Cory Lum/Civil Beat/2022)

Potential Water Discounts For Farmers

There are several other significant requests baked into the proposed water rate hike.

In addition to higher rates for drinking water, the utility is seeking a 50% rate hike for non-potable water to cover an operating loss of about $150,000 a year. The current non-potable rates were established in 2009.

The water company also wants to introduce a new, discounted potable water rate for farmers. Non-farmers would subsidize this lower rate, which would be available only to commercial agricultural growers.

The utility also wants the PUC to green light a request to allow the company to charge a new service fee for bounced or returned checks. And it’s seeking the right to disconnect a customer’s water access within 30 days of a bad check.

The water company did not return a request for comment. Pulama Lanai declined to comment for this story.

The PUC has a mid-August deadline to approve or deny the Lanai Water Co.’s application. If the commission doesn’t meet this deadline, it can approve interim rates while continuing its review.

The Consumer Advocate is currently vetting the utility’s application for a rate increase on several measures, including whether residents on Lanai can bear the proposed price increases. This discovery process of questions from the Consumer Advocate and responses from the utility can last several rounds. When it’s finished, the commission will review all materials and make a decision.

Civil Beat’s coverage of Maui County is supported in part by grants from the Nuestro Futuro Foundation and the Fred Baldwin Memorial Foundation.

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