The state has told Molokai Ranch that it cannot end water and sewage services in west Moloka'i until another provider is found.

Molokai Ranch owns about one-third of the island and serves about 1,200 utility customers there.

The company announced in March that it was shutting down its operation and laying off more than 120 employees, a severe economic blow to the Friendly Island's economy.

Molokai Ranch had written the Public Utilities Commission in May to say that it intended to terminate utility services by the end of August unless another operator was found to take over from the Wai'ola O Molokai, Molokai Public Utilities, and Mosco utility companies.

The PUC in a June 5 letter to Molokai Properties Ltd. chief executive Peter Nicholas said that utilities have "a duty to provide service to their customers" and couldn't shut down without commission approval.

It said "another public or private entity" must be found to provide the utility services.

The PUC directed the utilities to provide the commission with a transition plan and other information by Thursday.

Ending services without the PUC's approval could result in "investigatory action by the commission and penalties as authorized by law," the PUC letter said.

Company officials could not be reached for comment yesterday.

In a related letter, Catherine Awakuni, executive director of the state Division of Consumer Advocacy, had urged the PUC not to allow the company to shut down utility service in August.

Maui Mayor Charmaine Tavares released a statement thanking Gov. Linda Lingle for having her departments take action on the situation.

"For the past several weeks, my administration has been deeply concerned about the company's decision to terminate essential water and sewer service for parts of Moloka'i," she said on Friday. "I appreciate the intervention now being provided by the PUC and DCCA and look to them to enforce the law to its fullest extent."

Tavares had asked for the state's assistance in the situation.