Young Broth­ers seeks 47% rate hike

PUC re­quest is lat­est at­tempt by ship­ping com­pany to curb losses

The Maui News - - Front Page - By KEHAULANI CERIZO Staff Writer

Em­bat­tled Young Broth­ers asked the state Pub­lic Util­i­ties Com­mis­sion this week for an emer­gency rate in­crease of about $30 mil­lion — a 47 per­cent gen­eral rate hike — to buoy in­ter­is­land cargo trans­port for the rest of the year.

The re­quest from the state’s sole reg­u­lated in­ter­is­land ocean cargo trans­porta­tion com­pany is the lat­est in a string of mea­sures, in­clud­ing a re­duced sail­ing sched­ule to Hilo and Maui County, aimed to stem more than $25 mil­lion in pro­jected losses for the year.

De­spite strug­gling fi­nan­cially for some time, Young Broth­ers has said its cur­rent losses are be­ing ex­ac­er­bated by the pan­demic and its Seattle-based par­ent com­pany’s de­ci­sion to stop cov­er­ing op­er­at­ing short­falls af­ter May 31.

State Rep. Lynn DeCoite, though, said she has yet to see tax fil­ings that show a rate in­crease is war­ranted.

“I would like to see what the tax fil­ings look like and at least get a call back,” said DeCoite, whose district of East Maui, Molokai and Lanai in­cludes ar­eas more re­liant on ship­ments from the car­rier.

Be­sides re­duc­ing its sail­ing sched­ule, Young Broth­ers said in its PUC fil­ing that it has re­duced gate hours for non­barge days in all ma­jor ports, in­sti­tuted a hir­ing freeze and salary cuts for se­nior lead­er­ship, sus­pended nonessen­tial travel, elim­i­nated dis­cre­tionary ex­penses and de­ferred nonessen­tial main­te­nance and re­lated ac­tiv­i­ties.

But the ship­per also noted in its fil­ings that la­bor costs have risen since 2017, not due to an in­crease in work­ers, but due to col­lec­tive bar­gain­ing agree­ments.

“As with the em­ploy­ees cov­ered un­der col­lec­tive bar­gain­ing con­tracts cov­er­ing the state’s gov­ern­men­tal ser­vices, the union con­tracts pro­vided for an­nual raises that were deemed rea­son­able at the time of the ne­go­ti­a­tions,” the PUC fil­ing said.

“Cer­tainly, no one could have pre­dicted that in 2020, there would be a se­vere down­turn in the state’s econ­omy due to the COVID-19 pan­demic.”

Young Broth­ers re­quested in 2019 that the PUC al­low it to in­crease its rates to off­set ris­ing op­er­at­ing costs and pre-pan­demic es­ti­mated losses of about $13 mil­lion.

The emer­gency re­quest, filed Tues­day, would ac­cel­er­ate the process and tem­po­rar­ily au­tho­rize an in­crease in rev­enue of about $30 mil­lion — the amount the com­pany has es­ti­mated it needs to break even for the year, ac­cord­ing to a news re­lease.

The pro­posal would equate to a 47 per­cent gen­eral rate hike, Young Broth­ers told The Maui News on Thurs­day. How­ever, any ap­proved in­crease would be capped at 34 per­cent, and the “rate de­sign is in progress and will vary based on ser­vice,” it added.

“We know our cus­tomers and small busi­nesses across Hawaii are strug­gling to cope with the un­prece­dented chal­lenges brought on by COVID19,” Jay Ana, Young Broth­ers pres­i­dent, said in the news re­lease. “That’s why we pur­sued all avail­able av­enues of re­lief be­fore mak­ing the dif­fi­cult de­ci­sion to ac­cel­er­ate our re­quest for higher rates, but this re­quest is vi­tal for Young Broth­ers to stay in busi­ness and con­tinue con­nect­ing our is­land economies.”

The com­pany asked in May for $25 mil­lion in CARES Act funds from the state Leg­is­la­ture to sus­tain oper­a­tions through 2020. Those funds have not been pro­vided, Young Broth­ers said in the news re­lease.

Mean­while, a cou­ple pro­pos­als to as­sist Young Broth­ers ap­pear to have failed in the Leg­is­la­ture.

How­ever, Se­nate Res­o­lu­tion 125, ap­proved Wed­nes­day, asks the state Depart­ment of Trans­porta­tion to pro­vide fi­nan­cial help to wa­ter car­ri­ers for main­tain­ing routes and lines of ser­vices. It calls for the DOT and the coun­ties to ad­dress, on or be­fore Sept. 30, the im­pacts of the pan­demic and to help off­set the cost of in­ter­is­land ser­vice by pro­vid­ing a com­bined to­tal of at least $15 mil­lion in aid to a wa­ter car­rier.

It also seeks to es­tab­lish a work­ing group that pro­vides so­lu­tions for un­in­ter­rupted wa­ter car­rier ser­vice.

Young Broth­ers said the res­o­lu­tion does not pro­vide the im­me­di­ate in­fu­sion of emer­gency fund­ing needed to sup­port oper­a­tions and cur­rent ser­vice lev­els.

“Young Broth­ers ap­pre­ci­ates the state Se­nate’s res­o­lu­tion and recog­ni­tion of our fi­nan­cial chal­lenges, and while those con­ver­sa­tions are on­go­ing, we must pur­sue emer­gency rate re­lief so that we can con­tinue pro­vid­ing the ser­vice our is­land com­mu­ni­ties de­pend on,” the re­lease said.

Kehaulani Cerizo can be reached at kcer­izo@mauinews.com.

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