Kauaʻi Island Utility Cooperative applied to Hawaiʻi Public Utilities Commission seeking approval to use deferred accounting treatment for costs and other financial impacts associated with Hurricane Lowell.
The application does not seek recovery of costs from members. Instead, it would allow the utility cooperative to establish a regulatory asset to separately track and preserve eligible hurricane-related costs and financial impacts resulting from lost gross margins/sales impacts and increased bad expense for future cost recovery consideration in a later proceeding.
Hurricane Lowell passed Sept. 7-8 immediately west of Kauaʻi, bringing heavy rainfall, flooding, storm surge and wind gusts exceeding 90 miles per hour in some areas.
The storm caused extensive damage to Kauaʻi Island Utility Cooperative’s about 1,500 miles of transmission and distribution infrastructure, including utility poles, power lines, substations and related equipment.
About 33,000 of the co-op’s 36,000 member accounts were without power after the storm.
More than 98% of members had service restored as of Thursday.
The preliminary estimate of Hurricane Lowell-related costs is $40 million to $50 million, although the final amount will not be known for some time.
Restoration work remains underway and costs for materials, labor, contractors, mutual aid and other assistance are still being accumulated. Kauaʻi Island Utility Cooperative also could receive insurance proceeds and potential federal disaster assistance that could offset some of those costs.
Kauaʻi Island Utility Cooperative is allowed to seek reimbursement of up to 75% of eligible costs from Federal Emergency Management Agency in the event a presidentially declared disaster for Kauaʻi is issued. Any FEMA reimbursements or insurance proceeds received for hurricane damage also would reduce the amount of the regulatory asset.
“This request is about protecting the financial health of our member-owned cooperative while Kauaʻi continues to recover from an extraordinary disaster,” said Kauaʻi Island Utility Cooperative President and Chief Executive Officer David Bissell. “Rather than seeking an immediate rate increase at a time when many of our members are dealing with their own hurricane-related losses, we are asking for the ability to appropriately account for these extraordinary costs now and address potential recovery of those costs later, when we have a much clearer picture of the overall financial impact.”
The cooperative asked the Public Utilities Commission, if possible, to act by Oct. 30 on the application.
Any future proposal by Kauaʻi Island Utility Cooperative to recover amounts recorded in the regulatory asset would require a separate application request and further commission review and approval if this application is approved.
