The front page article in the Oct. 21 issue of TGI (“Co-op could still get federal funds to buy KE”) is another instance of efforts by the Kaua’i Island Utility Cooperative (KIUC) to move toward credibility in its now dormant
The front page article in the Oct. 21 issue of TGI (“Co-op could still get
federal funds to buy KE”) is another instance of efforts by the Kaua’i Island
Utility Cooperative (KIUC) to move toward credibility in its now dormant
program to acquire Kaua’i Electric.
In February of this year, KIUC
contracted to buy KE for $270 million, and its application to the state Public
Utilities Commission for approval of this purchase disclosed that it had
commitments from the National Rural Utilities Cooperative Finance Corporation
(CFC) for all of its financing requirements. The CFC financing rates, according
to the application, would have been 8.75 percent. The application also stated
that KIUC “is applying” for financing from Rural Utilities Service (RUS) for a
portion of its financing needs, seeking “hardship” rates of 5 percent. The RUS
financing was never obtained.
KIUC has acknowledged that it has no
agreement with Citizens Communications for the purchase of KE and there are no
“hardship” funds from RUS now available to any party.
However, Gregg
Gardiner, KIUC’s chairman, is not inclined to let facts interfere with what he
wants to do. In a style reminiscent of his claims while promoting the $270
million purchase, he claims that “money is available to finance the whole
thing” and that there is some RUS “hardship money available.”
Let’s bring
this balloon down to earth. There is no deal with Citizens, so no one knows
what “the whole thing” may be. At present, RUS has no funds to offer “hardship”
financing and KIUC has no commitment that it could get such funds, even with
the “strong support” Gardiner claims KIUC has in Congress.
Similarly,
despite Gardiner’s statement that “we have 100 percent financing,” KIUC has no
commitment it could obtain adequate funds under the RUS guaranteed loan
program.
Indeed, if KIUC were eligible for RUS 100 percent financing at
around 6 percent, why did it seek to use CFC borrowings at 8.75 percent for the
$270 million purchase deal? Was this over $8 million dollar annual differential
in interest costs intended to drive up rates for Kaua’i consumers?
It
appears that although Mr. Gardiner has acknowledged that KIUC can make no deal
with Citizens without county approval, he is still trying to stir the pot.
WALTER LEWIS
Princeville
