Officials at the Kaua‘i Island Utility Cooperative got word this week their $32.9-million federal loan to purchase a power plant at the Lihue Energy Service Center had been approved. The loan, from the U.S. Department of Agriculture’s Rural Utilities Service
Officials at the Kaua‘i Island Utility Cooperative got word this week their $32.9-million federal loan to purchase a power plant at the Lihue Energy Service Center had been approved.
The loan, from the U.S. Department of Agriculture’s Rural Utilities Service (RUS), required approval of leaders in the federal agencies, and had been contingent on members of the state Public Utilities Commission approving the sale of the power plant from Kauai Power Partners to KIUC, said Alton Miyamoto, KIUC president and chief executive officer.
Until the KIUC-RUS loan agreements are actually signed, there is no way of knowing what the interest rate or monthly payment will be, he said.
KIUC officials purchased the power plant for around $40 million using a loan from the private, nonprofit National Rural Utilities Cooperative Finance Corporation (CFC).
The $32,960,000 federal RUS loan, which will carry a substantially lower interest rate than the CFC loan, will replace around 80 percent of the CFC loan amount, Miyamoto explained.
“This basically is good news because it gives KIUC the lowest-interest money” to fund a majority of the sale price, he said.
KIUC will still have to make payments on around $8 million of the higher-interest CFC loan.
Still, depending on the final interest rate locked in on the RUS loan, KIUC and its members will be saving between $2 million and $3 million a year compared to what it would have cost members to continue paying Kauai Power Partners for power under a power-purchase agreement in effect before KIUC leaders bought the power plant last year.
The efficient, naphtha-burning plant at LESC is capable of cranking out 26.4 megawatts of power, or nearly half of the island’s electrical needs.
The Kauai Power Partners plant, along Maalo Road in Kapaia on the way to Wailua Falls, was completed in September 2002.
The KIUC loan approval was one of six announced this week for electric utilities from Kaua‘i to Georgia.
Associate Editor Paul C. Curtis may be reached at 245-3681 (ext. 224) or mailto:pcurtis@pulitzer.net.
