News Release – NR09-09 – August 13, 2009

Posted on Aug 13, 2009 in 2009 News Releases, News-Releases

HONOLULU – Due to the current and projected state of the economy and the deteriorating budget situation, the Hawai`i Department of Agriculture will no longer provide discounted water rates to users of the Moloka`i Irrigation System (MIS).  For the past three years, MIS water users have benefitted from the lowest irrigation water rates of all the irrigation systems in the state, mainly due to the revenue generated by the pipeline transmission rental agreement with Moloka`i Properties Limited (MPL).  Since water usage has dropped dramatically, revenues have also dropped for the irrigation system which places its solvency in jeopardy.

HDOA has struggled with the decision to end the discount, realizing the effect that higher costs have on businesses.  However, after analyses of the financial data and projected revenues and expenses for fiscal year 2010, the termination of the discount is necessary for the continued operations of the MIS.

Notices have been sent to the 255 (#) water users regarding their irrigation water bills.

HDOA has been in discussions with the Moloka`i Irrigation System Water Users Advisory Board (MISWUAB) to determine if there are other measures that may mitigate the termination of the discounts.

A combination of factors led to this necessary action.  There was a significant drop in water usage over the past year. In fiscal year 2008, MIS users consumed 1,084,573,000 gallons.  In fiscal year 2009, water use was 840,407,000 gallons, a drop of 22.5 percent.  The drop is partly due to water restrictions placed on non-Homestead users due to drought conditions.  In addition, consumption by Hawaiian Homestead water users, who were not subject to water restrictions, also dropped by more than 14 percent.  The result was a decrease in revenue for the MIS of more than $44,000. 

In addition, the 2009 Legislature, recognizing the State’s difficult economic situation, decreased the annual appropriation to the Irrigation System Revolving Fund from $425,000 to $361,135. These funds are necessary to keep the basic irrigation water delivery rate (including MIS) for the State-run systems at 45 cents per thousand gallons.  (MIS discounted rate was 33.5 cents) Previously, the MIS was able to break even or show a slight surplus and did not rely on this supplement.  However, due to the drop in usage, increase in energy prices, and other factors, the MIS is projected to run a deficit this fiscal year even at the basic rate. 

Furthermore, delinquency amounts grew by $41,134 in the past 12-month period. If the delinquent accounts were paid in full, it would be enough to cover projected MIS deficits for the next two to three years.

HDOA has made a commitment to the MISWUAB through the Roadmap to Improvement Process and to the Legislative Auditor to continue to make needed repairs and maintenance to the aging system and acquire needed equipment, which will add to the operating costs.   In addition, electricity costs are expected to increase. The current projection, which includes the MIS water rates at the same level as all other systems, still results in a deficit of more than $57,000 for the year.

HDOA will continue to pursue ideas to generate grant revenue that may be used to offset the rates. HDOA is hopeful that through these discussions, a solution can be found continue water service at the lowest possible rate.

Information on the MIS, including financial analysis and policies and informational operations, is available on the HDOA website at: