Hearings on Young Brothers rate hikes set

The TS Golden Bear anchors off Lahaina while a Young Brothers tug and barge passes in the Lahaina Roadsteads earlier this month. The state Public Utilities Commission will be holding hearings July 10-12 in Maui County on Young Brothers request to raise shipping rates an overall 11.05 percent. -- The Maui News / MATTHEW THAYER photo

Young Brothers is requesting an overall 11.05 percent increase in its shipping rates, which will vary by cargo class, due to hikes in wages and benefits for its workers and a projected loss of $7.8 million before taxes this year, interisland shipping company officials said in filings with the Hawaii Public Utilities Commission.

The proposal follows the company’s previous request for a 13.3 percent increase filed in December, which was rejected by the commission in January. In its decision, the commission explained that the application was incomplete and directed the shipper — which makes port calls at Kahului, Kaunakakai and Lanai’s Kaumalapau harbors in Maui County — to submit supplemental information regarding tax issues identified by the state Department of Commerce and Consumer Affairs.

Young Brothers refiled its application in March. It seeks an 11.05 percent general increase in shipping rates that would bump up company revenues by $7.8 million. The company expects to have total revenues of $78.8 million in 2018, according to its application.

The commission will be holding public meetings next month on Maui, Molokai and Lanai to gather public testimony as it considers its final decision. The meetings schedule follows:

• Molokai, 4:30 p.m. July 10 at the Kulana ‘Oiwi Office of Hawaiian Affairs Conference Room in Kaunakakai.

• Maui, 5:30 p.m. July 11 at the Velma McWayne Santos Community Center in Wailuku.

• Lanai, 4:30 p.m. July 12 at Lanai Senior Center in Lanai City.

Young Brothers President Joseph Boivin said in a letter to commissioners in April that the company’s financial condition “has accelerated its need for rate relief” and that the shipper has been unable to garner significant cost recovery since 2014, when a 2.21 percent rate increase went into effect.

Union wages have increased by $6.3 million and pension, health and other benefits have risen $5.1 million over the past four years, he said.

Boivin said the company also has lost nearly 40 percent in cargo volume from interstate shipper Matson — equal to approximately $1.9 million in annual interstate general freight revenues.

The company, which is the sole carrier of shipped goods between Honolulu and the Neighbor Islands, is not proposing a uniform “across the board” rate increase for all cargo categories, according to its application. Rate increases will vary from 5 percent to 17 percent, depending on the cargo type. Cargo destination will not affect the rates.

The DCCA’s Consumer Advocate opposed the company’s original request last year in large part because the shipper did not factor in the recent federal tax overhaul benefiting businesses, according to published reports. The Tax Cuts and Jobs Act, enacted at the end of last year, decreases the federal corporate tax rate from 35 percent to 21 percent. Dean Nishina, executive director of the Consumer Advocate Division, said in a letter to the PUC that the tax benefits should be reflected in the company’s business projections.

The state agency has not yet offered a position on Young Brothers’ latest proposal but has requested more information.

In May 2017, the PUC approved a 0.1 percent increase that was projected to add $88,000 to Young Brothers’ interisland revenue. The company had originally sought a 4.4 percent increase, while the Consumer Advocate recommended a 5.9 percent decrease, according to published reports.

Written comments may be mailed to the PUC at 465 S. King St., Room 103, Honolulu 96813. Comments also may be emailed to puc.comments@ hawaii.gov.

To review Young Brothers’ application, visit dms.puc. hawaii.gov/dms/. Search for docket number 2017-0363.

For more information, call the PUC’s Maui District Office at 987-8182 or the Consumer Advocate at (808) 586-2800.

* Chris Sugidono can be reached at csugidono@mauinews.com.

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