Commission investigating rate hike request

State regulators said they plan to host public hearings in July as part of an investigation of Young Brothers Ltd.’s application to increase interisland shipping rates by roughly 4 percent.

On Thursday the Public Utilities Commission opened an investigation into the shipping company’s application to raise rates. The increase would generate an additional $3.14 million in revenue for Young Brothers.

The PUC said the state Consumer Advocate’s concerns about the lack of detail in the application warranted a suspension of decision about the possible rate increase and an investigation instead of an outright denial. The suspension of decision could last up to six months.

“With respect to the Consumer Advocate’s concerns as to certain information omitted … such concerns go toward the weight and sufficiency of the evidence presented thus far in the application, which in turn support the commission’s suspension and investigation of Young Brothers’ application,” the PUC said.

The Consumer Advocate said Young Brothers did not provide a summary of the expenses by island or by month for the necessary periods. The Consumer Advocate also said Young Brothers did not provide the necessary information regarding the distribution of money among the carrier’s affiliated companies.

In the application on April 12, Young Brothers said shared services expenses between it and its corporate parent, higher labor costs from the latest bargaining agreements with employee unions, as well as the higher cost of dry-docking its vessels led to higher operating costs.

Young Brothers said the rate increase is based on an intrastate rate of return of 10.25 percent. The company said the rate relief is due to cargo volume forecasts and increased operating expenses. It requested that its revenue increase be effective 45 days after filing its application.

The company has said it needs the increase to cover rising operating expenses “in the face of only fairly muted projected cargo volume growth.”

Young Bros.’ cargo volume has been showing incremental increases with gains of 1.1 percent in 2015, 0.5 percent in 2014 and 1.5 percent in 2013.

The regulated shipping company tracks cargo volumes using a standard unit measurement called “container/platform equivalents,” or CPEs, carried on the company’s fleet of barges. Young Brothers uses the CPE measurement so it can compare cargo volumes across different sizes of containers.

For the first quarter, the volume of interisland cargo totaled 31,512 CPEs, compared with 31,309 CPEs in the first three months of 2015.

The PUC said it will issue a separate notice for the public meetings dates and locations regarding the application. In the order, the PUC also said Young Brothers must notify the public of the upcoming meetings.

While the dates for meetings have not been determined, the public can mail in comments on Young Brothers’ request to increase rates. Written comments can be sent to the Public Utilities Commission, 465 S. King St. No. 103, Honolulu, HI 96813; or emailed to Hawaii.PUC@hawaii.gov. The comments must reference Docket No. 2016-0014, include the author’s name and the entity or organization that the author represents.