Young Brothers official tells PUC WICCI would help ‘break the cycle’; urges external funding for ag discounts

Chris Nakagawa, the Young Brothers witness who identified himself as lead for strategic initiatives and regulatory affairs, told the Public Utilities Commission that a recommendation from the SR‑125 water‑carrier working group — the creation of a water‑carrier inflation/cost index (WICCI) — would be a useful mechanism to reduce the company’s need to seek emergency temporary rates and to “break the cycle” of recurring financial distress.

Nakagawa also said Young Brothers views many gratis and employee‑shipment discounts as “below the line” items that are not recovered through tariffed regulated revenues and that agricultural discounts have been internally subsidized by other ratepayers; he told commissioners the working group recommended that those subsidies instead be funded externally.

Why this matters: Whether tariff discounts for agricultural products and other gratis handling are subsidized by regulated ratepayers or funded through external sources bears directly on rate design and on how much regulated customers must pay.

What Nakagawa told the commission - Breaking the cycle: Nakagawa defined “breaking the cycle” as reaching a sustainable financial position that lets Young Brothers continue safe, reliable service without repeatedly seeking emergency rate increases. He said WICCI, a mechanism recommended by the SR‑125 working group, would be one tool toward that stability but not a cure‑all. “If the utility is financially stable and able to provide safe, reliable services… I would say yes. It would be a success in breaking the cycle,” Nakagawa said. - WICCI and the record: Nakagawa said the SR‑125 working group’s final report and its WICCI recommendation are not binding on the PUC but are a collaboratively developed, multi‑stakeholder product the company considers persuasive and helpful to the regulatory record. - Gratis and employee shipments: Nakagawa explained that employee and gratis shipments are currently administered on a periodic, limited basis and, under company practice, are recorded “below the line” and not treated as regulated revenues. In a written discovery response read into the record he summarized that practice: “In other words, these shipments are not charged to rate payers or instead recorded below the line.” - Agricultural discounts and subsidies: The company provided a tabulation in discovery showing island agricultural product discounts have foregone revenue in recent years in the low‑millions (Young Brothers’ filing lists approximately $2.5 million in foregone agricultural discounts for a recent year). Nakagawa said Young Brothers and the SR‑125 working group view agricultural subsidies as candidates for external funding rather than internal tariff subsidies paid by other regulated customers.

Selected quotations - “The goal cannot be for YB to completely refrain from seeking rate increases,” Nakagawa said, explaining that WICCI and other steps form part of a broader approach to financial stability. - “In other words, these shipments are not charged to rate payers or instead recorded below the line,” Nakagawa read from the company’s discovery response describing gratis/employee shipments.

Policy and next steps Nakagawa noted the legislature and state agencies participated in the SR‑125 working group, and he said the group’s report and recommendations are being considered in ongoing policy discussions. He said Young Brothers expects that any changes to how agricultural discounts are funded would likely come through statute or other policies outside the PUC’s immediate rate docket.

Ending Nakagawa’s testimony positioned WICCI and external subsidy mechanisms as tools to reduce volatility in the company’s revenue path and to limit the need for emergency rate requests. He urged policymakers and the PUC to consider the multi‑stakeholder working group’s recommendations as the docket proceeds.