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Lawmakers Hear Competing Views on Automatic Rate Adjustments for Young Brothers
Summary
Witnesses and regulators debated SB2694 SD2, which would authorize automatic inflation‑linked adjustments for water carriers. Young Brothers and its supporters said the mechanism would prevent large, disruptive rate shocks; consumer advocates and business groups urged cost‑control, transparency and further PUC review.
The House Committee on Transportation spent the bulk of its March 24 hearing on SB2694 SD2, a measure that would authorize the Public Utilities Commission to adopt an automatic adjustment mechanism (sometimes called WICI or “wiki”) for water carriers.
Young Brothers representatives told the committee the mechanism is intended to avoid the cycle of long regulatory lag followed by large catch‑up increases. “Annual WICI adjustments help keep rates aligned with real costs, support sustainable operations, and keep our local supply chain strong,” said David Veltry, associate general counsel for Young Brothers, summarizing the company’s position.
Opponents said automatic adjustments would shift the burden from the carrier to ratepayers and reduce incentives for internal cost control. Mickey Knox of the Division of Consumer Advocacy urged the committee to prioritize implementation of Young Brothers’ required business plan and other cost‑control measures rather than enabling routine automatic increases. The Maui Chamber and several island businesses warned that higher shipping costs would amplify the state’s cost‑of‑living pressures and could harm local manufacturing and food costs.
Young Brothers’ finance director, Ashley Kishimoto, said the company’s less‑than‑container‑load (LCL) service has been loss‑making: “LCL has lost over $25 million in a year,” she said, describing the labor intensity of packing and palletizing small shipments.
The Public Utilities Commission described its December decision denying a WICI request and said it wants Young Brothers to demonstrate prudent operations first. PUC staff also said the commission is evaluating whether it has rule‑making authority to implement a WICI outside of a rate case.
Committee members pressed witnesses on cross‑subsidization (profitable routes supporting loss‑making runs), the role of the PUC’s special observer, and what “financial stability” would look like before a WICI could be revisited. Some lawmakers expressed concern that the bill could undercut a two‑year stay‑out on rate increases that consumers had expected under the PUC order.
The chair deferred final action on SB2694 for further discussion and additional stakeholder engagement, scheduling a follow‑up work session.
What’s next: committee members asked the PUC and stakeholders to supply additional analysis, and the committee deferred decision‑making to a later date to allow that material to be considered.
