Equity Management Plan
KIUC developed an Equity Management Plan in 2004 as part of a
process to determine the optimum mix between:
-
equity retained by the cooperative to build financial
stability and,
-
equity returned to members in the form of patronage capital
refunds or other mechanisms to address the high cost of electricity on Kauai.
The initial product of an ongoing process, the 2004 Equity
Management Plan (EMP) has been developed to provide a
comprehensive overview and discussion of the financial planning
for KIUC. It includes a discussion of the history,
regulatory issues, and lender requirements that impact KIUC's
financial policies and resulting projected financial
performance.
The 2004 Equity Management reflects implementing the following
activities, the compilation of which provides a financial
performance that addresses the objectives of KIUC's principal
constituencies.
Strategic Initiatives KIUC will continue energy
conservation programs and other strategic directions as
expressed by members through Focus Groups and surveys.
Patronage Capital Refunds KIUC is assumed to
continue to pay 25% of the prior year's margins in patronage
capital refunds through 2010.
Revised Depreciation Accrual Rates KIUC is assumed
to implement the revised depreciation accrual rates from the
depreciation study as of June 30, 2005.
Elimination of Lost Gross Margin Collections KIUC
is assumed to eliminate the Lost Gross Margin ("LGM") component
of the RCA surcharge beginning as of June 30, 2005.
Renewable Energy and Efficiently Investments KIUC
is assumed to invest $18.0 million by 2012 in renewable
generation and an additional $21.0 million to improve the
efficiency of the existing generation units.
Debt Prepayment KIUC is assumed to prepay RUS debt
through 2012 by as much as $21.0 million.
