HomeMy WebLinkAbout2024-05-03 Diane Ware SU From: Diane Ware
To: WPCtestimonv
Subject: May 6,2024 agenda item 1
Date: Friday,May 3,2024 2:13:03 PM
Attachments: 4-Agua Engineering Report 2020 vl.pdf
Dear Chair and board members,
Please disregard an email comment from me earlier today that was inadvertently sent.
I live in the moku of Ka'u and Punalu'u is my kai of choice.I rarely visit there anymore due to the overcrowded
human visitor numbers and depressing conditions for the wildlife.
I support the commission's acceptance of all 3 contested cases emphasizing the outdated and deteriorated condition
of the water and sanitation systems as detailed in the Aqua Engineering(included below)report from July 13,2020.
These conditions would trigger a new EIS.All 3 contested cases reference the deteriorating conditions of the
WWTP which endanger the environment and human/wildlife species.
Article XI,Section 9 of the Hawaii Constitution(1978), states: "Each person has the right to a clean and healthful
environment,as defined by laws relating to environmental quality,including control of pollution and conservation,
protection and enhancement of natural resources.Any person may enforce this right...through appropriate legal
action".
Also please consider that the EPA has been sent the Aqua Engineering report and have responded that the HDOH
will be doing a site inspection as well as region 9 EPA per John Tinger.The commission should consider PUC
Docket 2018-0408 which includes the Aqua Engineering report on the conditions and life expectancy of the
system's useful lifespan which is zero.
Paramount to development in these Hawaiian islands is Native Hawaiian rights and Public Trust Doctrine
protecting our natural resources.
Malama pono and mahalo for the opportunity to comment,
Diane Ware
808-967-8642
P.O. Box 698
99-7815 Kapoha
Volcano HI 96785
Yamamoto,'#Caliboso
A LIMITED LIABILITY LAW COMPANY
July 13, 2020
Via E-File
The Honorable Public Utilities Commission
of the State of Hawaii
Kekuanao'a Building, First Floor
465 South King Street
Honolulu, Hawaii 96813
Re: Docket No. 2018-0408: C & A Punalu'u, LLC's Submission of Its' Plant
Capacity Analysis and Its' Financial Plan Pursuant to Decision and Order No.
36473, filed August 15, 2019
Dear Commissioners:
In accordance with Order No. 36473,' C&A Punalu'u, LLC ("Buyer") respectfully submits
to the State of Hawaii Public Utilities Commission ("Commission") its Plant Capacity
Analysis, attached as Exhibit A, and its Financial Plan, attached as Exhibit B.
The Commission ordered that the Buyer's Plant Capacity Analysis and Financial Plan be
filed with the Commission within sixty (60) calendar days from the closing date of the sale
and transfer of 100% of the membership interests in Punalu'u Water and Sanitation, LLC,
from S M Investment Partners to Buyer.2
As noted in the letter filed with the Commission on May 20, 2020, the closing of the above-
referenced transaction occurred on May 13, 2020.3 Sixty calendar days from May 13,
2020 is July 12, 2020, which falls on a Sunday. Accordingly, pursuant to Hawaii
Administrative Rules § 16-601-22, when a deadline falls on a weekend or holiday, the
time period runs until the end of the next day that is not a weekend or holiday. Therefore,
the Plant Capacity Analysis and Financial Plan are due on or before Monday, July 13,
2020, and are timely filed.
Buyer notes that its Financial Plan and Plant Capacity Analysis are based on information
available at this time. Given that the Buyer only acquired the utility less than two months
ago and in light of the current COVID-19 pandemic, travel restrictions, and quarantine
requirements, Buyer reserves the right to update this information should new or additional
information become available.
See Order No. 36473, issued on August 15, 2019 at 67-68.
2 Order No. 36473 at 67.
3 See Docket No. 2018-0408, Letter From: W. Yamamoto To: Commission Re: Docket No. 2018-0408 -
Applicants' Written Notice of Change in Ownership of Punalu'u Water and Sanitation, LLC Pursuant to
Decision and Order No. 36473, filed May 20, 2020.
1100 Alakea Street I suite 3100 1 Honolulu, Hawaii 96813 1 Phone (808) 540-4500 1 Fax (808) 540-4530
www.ychawaii.com
The Honorable Public Utilities Commission
of the State of Hawaii
July 13, 2020
Page 2 of 2
Sincerely yours,
Wil K. Yamamoto
for
YAMAMOTO CALIBOSO
A Limited Liability Law Company
Enclosure(s)
cc: Docket No. 2018-0408 Certificate of Service List
{4839-8542-8674}
�,.,, A Q t...#tom, E I. V G 1 1 'V F F R.S
,5ti f�1Pl.t)YkSE OWNED COMPANY
Punalu'u Water & Wastewater
Operations & Infrastructure
July 1, 2020
Table of Contents
1. Introduction
2. Description of Potable Water System Operation
3. Description of Potable Water System Infrastructure
4. Potable Water System Capacity
5. Description of Wastewater System Operation
6. Description of Wastewater System Infrastructure
7. Wastewater System Capacity
8. Equipment Listing, Remaining Useful life and Replacement Cost Spreadsheet
9. Capital Improvements for years 1 -3
Exhibit A
Page 1 of 12
4j6,�...,, AQUA ENGINEERS
,6ti LUPLOYEE OWNED COMPANY
1. Introduction
On September 1, 1999 Aqua Engineers Inc. signed its first contract with Punalu'u Water and
Sanitation Corporation to provide operation and maintenance services for their potable water and
wastewater systems.
Over the next 21 years Aqua Engineers Inc. operated the Punalu'u Water and Wastewater systems
within the State of Hawaii, Department of Health guidelines as supported by ownership.
The scope of this report will focus on providing ownership an up to date description of operations,
infrastructure and meet the Public Utility Commissions request for the following information.
• A plant capacity analysis study of the water and wastewater facilities which shall, at a
minimum:
u (A) include an assessment of the remaining useful service lives to ensure that the
existing plant capacities are sufficient to meet current customer needs;and
u (B) be used to verify the existing system maps to ensure that Buyer has a verified
map of all water and wastewater facilities and infrastructure used to service
existing customers;and
• Projected capital improvements for the water and wastewater utility operations,including
Buyer's anticipated use of the amounts referenced in Paragraph No. 2.1(c)of the Amended
and Restated Purchase and Sale Agreement,filed under confidential seal.
2. Description of Potable Water System Operation
Punalu'u Water System is rated by the State of Hawaii, Safe Drinking Water Branch as a class 1
distribution system. System ID is PWS 114. System provides potable water to the Sea Mountain
Resort, 75 individual condominiums located at the Colony One Complex, fourteen single family
residences and the County of Hawaii, Black Sands Beach Park. Punalu'u water system also serves the
Sea Mountain at Punalu'u golf course which has four irrigation ponds for storage.
The source of water is two groundwater wells registered with the State of Hawaii, Commission on
Water Resource Management. Well A "USE" is listed as municipal and Well B "USE" is listed as
irrigation. Wells are located on the Makai side of Mamalahoa Hwy and Alahaki Road intersection.
Daily flow readings are provided by the 12"flow tube.
Both wells pump via a 16" ductile iron pipe to the 1-million-gallon concrete storage tank located at
the top of Alahaki Road. Tank elevation is 305 feet above sea level.
From the storage tank, water gravity feeds the distribution and fire protection systems.
2 1 P a g e
Exhibit A
Page 2 of 12
41 , AQUA ENGINEERS
,5ti LUPLOYET7 OWNED CONVI%NN'
Punalu'u Water System disinfection is accomplished with the addition of sodium hypochlorite.
Sodium Hypochlorite is purchased in 300-gallon totes,transferred into a 55-gallon drum,and injected
and into the water system when Well A is in operation. Chlorine residual is checked and recorded
three times per week at the one-million-gallon storage tank. On the first Tuesday of every month
water samples are drawn at a Department of Health designated sample point and submitted to the
State of Hawaii, Hilo Laboratory for analysis. Each sample is analyzed for Total Coliform bacteria.
Chlorine residual is tested at the time of sampling. Every year water samples are collected and
analyzed for disinfection By-products. The current sampling schedule requires testing for Lead and
Copper every three years and Radiological samples collected every nine years.
Consumer Confidence Reports are filed each year in June with the State of Hawaii,Safe Drinking Water
Branch and distributed to all Punalu'u Water System customers.
Ninole Pump station is provided backup power by a 250 KW Kohler diesel generator.
3. Potable Water System Infrastructure
Ninole Well A(8-0831-002)
Total Depth —172 feet, casing is 18-inches, Solid Casing—to 117 feet, Perforated casing to 147 feet,
it is a public municipal well drilled in 1969. Well is operational. The existing pump was replaced in
2011 and the motor in 2018. 100-amp breaker was upgraded to a 300 am breaker in 2019. Pump
control valve is 8" and operational. Well starts and stops using a timer that is set to pump for 3
hours per day from 7:00am— 10:00am. Well was flow tested in 2011 and registered a pumping rate
of 730 gallons per minute.
Ninole Well B(8-0831-003)
Total Depth —172 feet, casing is 18-inches, Solid Casing—to 112 feet, Perforated casing to 147 feet.
Well was drilled in 1971. Well B designated use is currently listed as golf course irrigation well. Well
B is not operational; Well B has been offline for 5 years plus.
12 Inch Flow Tube
Meter does not work, daily and monthly flows are calculated and reported by multiplying pump run
time hours (RTH) X 730 (GPM) gallons per minute.
One Million Gallon Concrete Storage Tank
Tank is constructed of concrete and reinforced steel. Tank is 20 feet tall and has a diameter of 92
feet. There is a ladder mounted on the side of the tank to provide access to the top where there is
an entrance hatch and access to the float control. Tank is not fenced in and there is no gate at the
start of access dirt road. Located at the tank site are abandoned golf course booster pumps. Tank
is leaking form the bottom from two locations,
31Page
Exhibit A
Page 3 of 12
„ ..,,, A.QUA ENGINEERS
,6ti LUPLOYEE OWNED C0%i1,,%NN'
Emergency Power Generation
Punalu'u potable water pump station is designed with an 250kw emergency power generator for
power outages, generator is not operational and un-reparable.
Fire Protection
Fire protection is provided by seventeen Clow fire hydrants with three outlets on each hydrant. Six
of the seventeen hydrants do not work. To meet fire flow requirements, it is always important to
operate the 1-million-gallon tank at a level not lower than 15 feet.
Distribution System Vales
Distribution system has an estimated 7,920 feet of 12” pipe. Distribution system has twenty-one
water meters that are read one time per month. Twenty-one in line valves, of which six are frozen
and need to be replaced, system pressure of 140 at the lowest point.
4. Potable Water System Capacity
The largest user of potable water is the golf course. With the golf course closed all of 2019, we can
see that commercial water consumption decreased by 44,073,030 gallons from year 2018 to 2019.
During the same period residential consumption remained relatively consistent.
Based on the 2018 and 2019 consumption and pumping numbers as presented in the table below it
is reasonable to assume that if Well A was to continue to produce at a rate of 730 gallons per
minute with no other commercial/ residential additions, and the golf course closed the existing
potable water system should have capacity to meet the needs of the existing customers for the next
three years.
It is important to note,that with only one well operational there is no system redundancy. Should
well A go down for an extended period of time the ability to meet fire protection and daily potable
water demands would be compromised.
Account (Meter) Classification 2018 2019
Commercial Water Sold 73,272,728 29,199,698
Residential Water Sold 13,398,712 16,308,502
Total Gallons of Water Sold 86,671,440 45,508,200
Average Water Sold Per Day 237,456 124,680
Total Water Pumped 87,616,000 45,509,000
Average Well Run Time Per Day in Hours 5.48 2.85
4 Page
Exhibit A
Page 4 of 12
4j6,�...,, AQUA ENGINEERS
,6ti LUPLOYEE OWNED COMPANY
5. Wastewater System Operation
Punalu'u wastewater operations is divided into three parts, collections, pump station and the
Punalu'u Wastewater Treatment Facility. Collection system starts at the top of Alahiki Road serving
the single-family residences, golf course operations building,tennis courts and the Colony One
Condominium. Collections system does serve the County of Hawaii, Black Sands Beach Park, the
Visitor Center, or the resident located across the visitor center.
Collection system feeds the Ninole wastewater pump station located at the corner of Ninole Loop
Road and Golf Course Road, at an elevation of 36 feet above sea level. Station has two ITT Marlow
self-priming solids handling pumps. Both pumps do not work. Station uses a float system to start
and stop. Currently station wet well is pumped with a 7.5 HP effluent pump, pumping
approximately four hours per day at 40 gallons per minute.
Ninole pump station pumps to Punalu'u Wastewater Treatment plant which is classified as a Grade 2
Facility by the Hawaii Department of Health, Wastewater Branch. Treatment facility is currently
approved for a capacity of 20,000 gallons per day. With no new sewer connections allowed until
facility is upgraded or rerated. Department of Health mandated monthly effluent grab samples are
taken and shipped to FQ Labs in Oahu for analysis of Biochemical Oxygen Demand (BOD) and total
suspended solids (TSS).
6. Wastewater System Infrastructure
Collections& Force Main
Collections system consist of twenty-two manholes, 4,500 feet of six-inch gravity line made of Terra
Cota clay pipe. Force main is an estimated 3,100 feet long and is also made of six-inch Terra Cota
clay pipe. It is unknown if the force main from the Black Sands pump station was properly plugged
when the station was abandoned after the 1965 tsunami.
Ninole Pump Station
Has two ITT Marlow Series Trash Hog pumps. Model number is 4DTH24EL-EB Impeller diameter 9.65
with electric 10.5 Hp motors, 3 Ph, 1700 rpm. Both motors work and both pumps do not work.
Pump#1, suction line located in the wet well has holes in it and unable to hold suction for pumping.
Pump#2 suction line has holes in it, the pumps seals, bearings are burnt, and the impeller is worn.
51Page
Exhibit A
Page 5 of 12
4j �,...,, AQUA ENGINEERS
,6ti LUPLOYEE OWNED COMPANY
Black Sands Pump Station
It is Aqua Engineers Inc. understanding that the Black Sands wastewater pump station was damaged
and abandoned after the 1975 tsunami. We never received plans or were informed if the gravity or
force main lines was properly plugged when the statin was taken offline.
Punalu'u Wastewater Treatment Plant
In 2007 Punalu'u treatment facility made many changes in its operation due to the need to cut cost.
Facility was downgraded from its design capacity of 100,000 gallons per day to 20,000 gallons per
day. Also, in 2007 the facilities sludge disposal was changed from sludge sand drying beds to
effluent rapid infiltration disposal beds. Disinfection was also stopped in 2007 as the plant was
downgraded from R-2 to disposal beds,this eliminated the use of the chlorine.
One of the results of this Department of Health approved action was the need for a sludge bagger
for sludge removal. This unit was installed in early 2008, on average our staff removes 180 pounds
of dried sludge (Three 60# Bags) every two weeks from the facility. Sludge is hauled to Hilo and
disposed of in a trash bin.
Treatment Plants influent and effluent meters do not work. Both Return Activated Sludge (RAS)
pumps do not work, facility backup power generator does not work,and the clarifier baffles are
filled with holes making proper separation of floating solids by the scraper impossible at times.
Clarifier scrapper motor needs to be replaced.
Disposal beds are scrapped once per year to help with rapid infiltration.
7. Wastewater System Capacity
A request to downgrade the existing treatment plant capacity from 100,000 to 20,000 was
submitted in April of 2017 to the Hawaii Department of Health and was approved.
In 2018 daily influent flow averaged 7,199 gallons, in 2019, 7,866 gallons and so far in 2020 influent
flows are averaging 7,345 gallons pe day. Highest average influent flow was recorded in December
of 2019 at 10,757 gallons per day. Lowest average influent flow recorded in February 2020 at 4,866
gallons per day.
Based on the Department of Health approved Treatment Plant capacity of 20,000 gallons per day,
and the daily averages over the past two plus years as show in the table below it is reasonable to say
that the wastewater treatment facility does have the capacity to meet existing customer needs.
61Page
Exhibit A
Page 6 of 12
,,..,,, A.QUA ENGINEERS
,6ti LUPLOYEE OWNED COMPANY
Total Gallons Per
Year Month Gallons ❑a
2020 May 273,840 8,834
April 256,200 8,540
March 272,580 8,793
February 141,120 4,866
January 172,620 5,568
2019 December 333,480 10,757
November 196,980 6,566
October 209,160 6,747
September 214,620 7,154
August 314,160 10,134
July 323,820 10,446
June 193,280 6,443
May 193,200 6,232
April 185,640 6,188
March 234,360 7,560
February 226,380 7,806
January 246120 7,939
2018 December 221,340 7,140
November 222,600 7,420
October 215,880 6,964
September 166,320 5,544
Au ust 205,800 6,638
July 162,540 5,243
June 162,960 5,432
May 166,740 5,379
April 241,500 8,050
March 293,580 9,470
February 274,260 9 795
January 294,000 9,484
7 Page
Exhibit A
Page 7 of 12
,,..,,, A.QUA ENGINEERS
,6ti LUPLOYEE OWNED COMPANY
B. Equipment Listing, Remaining Useful life and Replacement Cost Spreadsheet
a. WWTP Listing
Effective Remaining
Equipment Description Service Life Useful Life
Mechanical Aerator 59 9
Mechanical Aerator Motor 10 7
Tank Railings 54 4
Aeration Tank 75 25
Building 30 -
Doors 10
Lab Counter/Cabinets 20
Eye Wash Station 8
Air Conditioner 7
Sample Fridge 7
Genrator 30
A TS 30
MCC Cntrl Pnl#1 30
MCC Cntrl Pnl#2 30
MCC Cntrl Pnl#3 30
Hot Water heater 7
Internal 11Ov circuit panel 30
Mssion SCADA 20 -
Tank Railings 54 4
Tank Grating 10 -
Weirs/Baffles 8 3
Effluent Pumps 20 -
Effluent Pump Valves 25
RAS Pump Valves 25
RAS Pumps 20
Scum Pump 15
Effluent Flow meter 15 -
Gravity Collections Rpe 75 25
Manholes 75 25
Percolation Sumps 15
Influent Flow meter 15
Barminuter 31
Bypass Screen 31
Plant Lighting 10 -
Rant Fence/Gate 54 4
Pavement 70 20
8 Page
Exhibit A
Page 8 of 12
4j �,...,, AQUA ENGINEERS
,6ti LUPLOYEE OWNED COMPANY
b. Pumpstation Listing
Effective Remaining
Equipment Description Service Life Service Life
Pumps 15
Motors 10
Control Panel 15
Portable Generator 7
Housing 20
Alarm Sys/Level Control 20 -
Complete Replacement 56 20
c. Water System Listing
Effective Remaining
Equipment Description Service Life Service Life
Building 56 20
Building Doors 10 -
Chlorine metering pump 15 2
Eye Wash Station 40 4
Fencing 39 3
Fence Gate 20 -
MCC Panel main 39 3
Generator 30 -
Generator ATS 30
Well Pump 30
Well Pump Valves/Piping 25
Flow meter 20
Pressure Sensor 6
Chlorine Booster Pump 15
Tank 30 -
Tank Ladder/Railing 46 10
Grating 10 -
Tank Access Cover 41 5
Sample Point Piping 10 -
Fire Hydrants 35
Water Meters 19 -
16"Distribution Piping 86 50
12"Distribution Piping 1 86 1 50
12" Isolation Valves 12 total 86 50
9 Page
Exhibit A
Page 9 of 12
,..,, AQL IA. ENGINEERS
NLD COMPANY
9. Capital Improvements for years 1—3
Ownership will be processing new entitlements over the next 3 years, and the planned
improvements and repairs being planned will need to be consistent with such entitlements.
Potable Water System Justification
Upgrade wiring and install soft Existing well motor does not have soft starters. This
starter for 100 horsepower motor for creates a higher amperage demand charge during
Well A. daily start-ups. Not having soft starters also shortens
the useful life of motor.
Replace 21 water meters with Badger Replacing the meters will improve accuracy in the
M25 positive displacement meters monthly meter reading consumption report.
Replace motor control center and Building contains high voltage, Replacement will
chlorine pump room doors and provide security from trespassers, rodents, and the
ventilation louvers. weather. Doors are beyond repair.
Replace chain link fencing as needed Provide security for facility.
and replace entrance gate
Install SCADA monitoring system at SCADA system will provide 24-hour monitoring of the
million-gallon tank and potable well tank height and provide a more efficient pumping
site. operation.
Replace existing 16" x 12"flow tube Meter does not work; daily pumping totals are
and totalizer. calculated by multiplying the run time hours by the
estimated pumping rate of 730 gallons per minute.
Increase reported pumping accuracy.
Wastewater System Justification
Install effluent meter at treatment Effluent flow meters are required by the Department
plant. of Health at all wastewater treatment facilities.
Install SCADA monitoring system at SCADA system will provide 24 hours monitoring of wet
wastewater pump station. well height and alarms for high and low levels.
Replace pump at wastewater pump Existing Pump is failing. New pump will be able to
station with a new 7.5 hp Barnes pump more waste in less time which will decrease the
grinder pump. Replace wiring in daily run time.This will result in lower electrical cost
panel as needed to provide for water and lessens the chance of a wastewater spill.
seal alarms.
10
Exhibit A
Page 10 of 12
,j6,�., AQUA. ENGINEERS
A', 1 •'. (il 1.�. r)Ak1,Lll r'f aVVI't tti S'
Ownership will be processing new entitlements over the next 3 years, and the planned
improvements and repairs being planned will need to be consistent with such entitlements.
Potable Water System Justification
Replace inoperable backup power Backup power generation will assure the potable water
generator and upgrade transfer system and the fire protection is functional during
switch at pump station extended periods of no grid power.
Repair 1-million-gallon concrete Concrete tank is leaking form the bottom from two
tank locations. It needs to be determined if it is more cost
efficient to repair the tank from the outside or take the
tank offline and refurbish from the inside.
Replace 5hp chlorine booster Pump is past its useful life. Booster Pump is critical to the
pump successful disinfection of the potable water system.
Should pump fail daily injection of sodium hypochlorite to
meet DOH disinfection requirements would stop.
Replace 8" pump control valve for Existing valve is past a its useful life. Pump Control Valve
Well A is used to control water flow from the deep well to the
system during the start and stop process. Should valve
fail, well would be inoperable until replaced.
Well B Well B is inoperable. Replace well casing, pump motor,
control valve, install soft starter, install heater coils for
motor, replace 100 amp breaker, replace run time hour
meters, update wiring as needed in MCC panel and run
water quality test as required by Department of Health.
Wastewater System Justification
Replace portable backup power Backup power generator will be used to power up
generator for wastewater pump wastewater pump station during extended periods of no
station power. This will prevent wastewater spills.
Camera collections system to Line is 50 years old and has never been flushed or CCTV
confirm condition of line. for cracks, root intrusion or blockage. System is estimated
at 4,500 feet long.
11 �
Exhibit A
Page 11 of 12
,,..,,, A.QUA ENGINEERS
,6ti LUPLOYEE OWNED C0%i1,,%NN'
Ownership will be processing new entitlements over the next 3 years, and the planned
improvements and repairs being planned will need to be consistent with such entitlements.
Potable Water System Justification
Repair or replace fire hydrants as Replace damaged fire hydrants and repairvalves as
needed. needed.
Replace distribution system Replace broken 12-inch system gate valves
broken gate valves
Wastewater System Justification
Replace wastewater treatment Based on the condition of the existing facility It would be
facility more cost efficient to replace the treatment plant with
newer technology that is eco-friendly and would be built
on a smaller footprint.
121Page
Exhibit A
Page 12 of 12
C & A Punalu'u, LLC
Financial Plan as of July 13, 2020
Punalu'u Water & Sanitation, LLC Financial Plan as of July 13, 2020
The following financial plan is based on information available at this time. Given that C & A
Punalu'u, LLC ("C & A Punalu'u") only acquired the utility less than two months ago and in light
of the current COVID-19 pandemic, travel restrictions, and quarantine requirements, C & A
Punalu'u reserves the right to update this information should new or additional information
become available.
1. Operating Projections
Currently, the sole revenue source for Punalu'u Water & Sanitation, LLC ("PWS") is the
potable water sold to the PWS' twenty residential and commercial customers in the
Punalu'u area. The water consumption for those customers has remained relatively
consistent in past years. Without seeking any rate increase,the projected revenue for the
next consecutive two years is approximately $36,000 per year. PWS anticipates an
increase of 25% in revenue during the third year if the Black Sand Beach development is
able to proceed, and the projected revenue for the third year would be approximately
$45,000.00.
The operating expenses of Punalu'u Water & Sanitation, LLC mainly fall in two line items,
service fees paid to Aqua Engineers, Inc. ("Aqua Engineers"), which operates and
maintains the potable water and wastewater systems for Punalu'u Water & Sanitation,
LLC, and electricity payments to Hawaii Electric Light Company. The newly signed service
contract with Aqua Engineers is $86,199 per year, including taxes. Aqua Engineers is
expecting a 2% yearly increase on its service fees. If there is no significant increase of
water consumption by customers, the PWS' electricity usage will remain consistent as
electricity is primarily used to power a pump to pump water. PWS projects $5,000 in
monthly expenses for its utility bills with a 1% increase in the the second year and a 10%
increase starting the third year. PWS has prepared a budget plan for operating PWS and
is expecting a total operating loss of around $380,000.
Following the recommendation of Aqua Engineers, PWS has also budgeted $120,000 for
facility and equipment improvements over the next three years. This budget amount is
based on the PWS and Aqua Engineers' best estimates and is subjectto change depending
on whether there are changes in circumstances and if there is a need to increase the plant
capacity during the next three years.
Exhibit B
Page 1 of 4
C & A Punalu'u, LLC
Financial Plan as of July 13, 2020
Punalu'u Water and Sanitation LLC Pro Forma
3 Year Operating Projections
Year 1 Year 2 Year 3
Revenue
Revenue Water Sates $36,000.00 $36,000.00 $45,000.00
Total Revenue $36,000.00 $36,000.00 $45,000.00
Expenses
Insurance $800.00 $800.00 $800.00
Third Party Consultant-Aqua Engineering $86,199.00 $87,923.00 $89,681.00
Repair $7,000.00 $7,210.00 $7,426.00
Utilities S61,000.00 $61,610.00 $67,771.DO
PUC Fees&Taxes $1,600.00 $1,600.00 $2,000.00
Professional Service Fee $1,500.00 $1,500.00 $1,500.00
Total Expenses $158,099.00 $160,643.00 $169,178.00
Project Net Income ($122,099.00) ($124,643.00) ($124,178.00)
Capital improvement
Facility Improvement $20,000.00 $30,000.00 $70,000.00
Project Net Cash Flow ($142,099.00) ($154,643.00) ($194,178.00)
Assumptions:
1.No new customer accounts are opened in 3 years
2.No rate increase in 3 years
3.No significant usage increase for electricity
4.Capital improvement is budgeted base on the company's best estimation and is subject to change.
2. Fund Source
PWS is unable to generate enough revenue to support its daily operations under current
water consumption revenue unless new or additional revenue sources are developed.
Over a relatively long period, PWS will greatly depend on its C & A Punalu'u's financial
contributions as its main source of funds. C & A Punalu'u has reserved $520,000, which
includes a $120,000 credit that C&A Punalu'u saved from the land acquisition from Seller,
to contribute to PWS over the initial three years. These funds will help to support PWS'
operations and help PWS to provide services to its existing customers until such time a
rate increase becomes necessary.
Sources and Usages of Cash
Sources of Cash Usages of Cash
Year 1 Year 2 Year 3 Total Year 1 Year 2 Year3 Total
Revenue from Operation $36,000.DO $36,OD0.OD $45,ODD.00 $117,000.00 Operating Cost $158,D99.D0 $160,643.00 $169,179.00 $487,920.OD
Owner's Contribution Capital Improvement $20,DN.DD $30,ODD.00 $70,000.00 $120,ODD.DD
Additional Cash $130,D00.00 $130,000.00 $140,ODD.OD $400,000.00 Fund Reserved $7,901.D0 $5,357.00 $15,822.00 $29,080.DD
Money Saved from guy's credits $20,000.DO $30,D00.DD $70,ODD.00 $120,000.00
Total $186,000.00$196,000.00$255,000.00$637,000.00 Total $186,000.00 $196,000.00 $255,000.00 $637,000.00
Exhibit B
Page 2 of 4
C & A Punalu'u, LLC
Financial Plan as of July 13, 2020
3. Financial Goals
PWS'financial goal is to reach a break-even point in five years assuming the development
commences by year 3 and there are new or additional customers. PWS is optimistic
regarding its financial goals and is projecting revenue increases after year three, based
on the following assumptions:
1. A significant increase of water consumption with the development of Black Sand
Beach. New or additional accounts will eventually help PWS generate more revenue
to cover its operating costs.
2. Potential customers that may buy a large amount of potable waterfrom PWS. During
the three-year window, PWS plans to actively explore business opportunities that
can help PWS expand its commercial customer base and revenue sources.
3. PWS anticipates needing funds to expand/replace its current water system and
equipment beyond year 3 when there is a need to increase plant capacity,which PWS
may seek a rate increase for.
Punalu'u Water and Sanitation LLC Pro Forma
5 Year Operating Projections
Year 1 Year 2 Year 3 Year 4 Year 5
Revenue
Revenue Water Sales From local residence/commerical customers $36,000.00 $36,000.00 $45,000.00 $67,500.00 $84,375.00
Revenue Water Sales From Joint Venture $120,000.00 $140,000.00
Total Revenue $36,000.00 $36,000.00 $45,000.00 $187,500.00 $224,375.00
Expenses
Insurance $800.00 $800.00 $800.00 $800.00 $800.00
Third PartyConsultant-Aqua Engineering $86,199,00 $87,923.00 $89,681.00 $91,475.00 $93,305.00
Repair $7,000,00 $7,210.00 $7,426.30 $7,649M $7,878.56
Utilities $61,000,00 $61,610.00 $67,771.00 $77,936.65 $93,523.98
PUC Fees&Takes $1,600.00 $1,600.00 $2,000.00 $7,750.00 $9,225.00
Professional Service Fee $1,500,00 $1,500.00 $1,500.00 $1,500.60 $1,506.06
Total Expenses $158,0".00 $160,643.00 $169,178.30 $187,110.74 $206,232.54
Project Net Income j$122,099.00) (51.24,643.00) ($124,178.30) $389.26 $18,142.46
Capital improvement
Facility Improvement $20,000,00 $30,000.00 $70,000.00 $200,000.00 $300,000.00
Project Net Cash Flow j$142,099.00) ($154,643.00) ($194,178.30) ($199,610.74) ($281,857.541'
4. Water and Wastewater Rate Increase
A moderate rate increase after May 2023 is under consideration. PWS is not currently
able to provide a detailed plan regarding the future rate increase due to limited
information and uncertainties regarding future expansion and operations. An
updated financial plan can be provided after PWS has more information. PWS' goal
Exhibit B
Page 3 of 4
C & A Punalu'u, LLC
Financial Plan as of July 13, 2020
is to break even and make a reasonable rate of return, and a future rate increase may
be needed to facilitate this and make PWS' operations and services sustainable.
Exhibit B
Page 4 of 4
BEFORE THE PUBLIC UTILITIES COMMISSION
OF THE STATE OF HAWAII
In the Application of }
}
PUNALU'U WATER AND SANITATION, LLC, } DOCKET NO. 2018-0408
S M INVESTMENT PARTNERS, AND )
C & A PUNALU'U, LLC )
for (1) A Certificate of Public Convenience and }
Necessity for Punalu'u Water and Sanitation, }
LLC to Provide Water and Wastewater }
Services to Sea Mountain at Punalu'u, Ka'u )
District, Island of Hawaii; (2) Approval of )
Proposed Initial Tariffs, Including Rates, )
Charges, Map, and Rules; and (3) Approval of }
the Proposed Change of Control of Punalu'u }
Water and Sanitation, LLC. }
CERTIFICATE OF SERVICE
I hereby certify that on this date copies of the foregoing document, together with
this Certificate of Service, were duly served on the following parties as set forth below..
Parties U.S. Mail Hand E-Mail
Deliver
Dean Nishina ❑ ❑
Executive Director
Department of Commerce and Consumer Affairs
Division of Consumer Advocacy
dnishina@dcca.hawaii.gov
consumeradvocate@dcca.hawaii.gov
dca@dcca.hawaii.gov
{4839-8542-8674}
DATED: Honolulu, Hawaii, July 13, 2020.
Wil K. Yamamoto
YAMAMOTO CALIBOSO
A Limited Liability Law Company
Counsel for C&A Punalu'u, LLC
{4839-8542-8674} 2
FILED
2020 J 1j 1 13 AM 10:53
PUBLIC: UTILITIES
COWAISSION
The foregoing document was electronically filed with the State of Hawaii Public Utilities
Commission's Document Management System (DMS).