Interisland fuel surcharge begins
Young Bros. Ltd., which in October received approval from the state Public Utilities Commission to increase rates 7.5 percent, began implementing a fuel-price adjustment yesterday of 1.29 percent for freight shipped between the islands.
It is the first fuel surcharge ever imposed by the interisland shipper.
Young Bros. will adjust the surcharge -- up or down -- every three months whenever its price of fuel increases or decreases 15 cents per gallon or more from its base rate, which was $2.16 in the September through November period.
The shipper, which notified customers on Nov. 9 that the fuel-price adjustment would be in the 2 percent range, said at the time it would finalize that percentage -- which is based upon costs and revenue -- at the end of November.
On Oct. 12, the PUC issued a ruling approving the rate increase and the initial implementation of a fuel surcharge following a settlement between Young Bros. and the state Division of Consumer Advocacy. The PUC order said that Young Bros. could implement a fuel-price adjustment beginning the first day of the fourth month following the PUC's decision.
However, the PUC issued a clarification on Oct. 29 following a joint motion by Young Bros. and the Consumer Advocate that enabled the shipper to put into effect a fuel-price adjustment as early as Dec. 1.
The PUC said in clarifying its order that when Young Bros. and the Consumer Advocate filed the stipulation of their settlement on July 20, they requested that the PUC issue its order by Aug. 31 and that the fuel-price adjustment be allowed to take effect on Dec. 1.
However, the PUC didn't rule by Aug. 31, instead asking the two parties to file additional information regarding their settlement. When the additional information did not amend the language in the fuel-price adjustment, the PUC ruled that it was the intent of the parties to allow Young Bros. to implement the fuel-surcharge by Dec. 1.
Roy Catalani, vice president of strategic planning and government affairs for the shipper, said earlier that Young Brothers needed a fuel-price adjustment mechanism to react to the volatile fuel market.
The 7.5 rate increase, which already is in effect, will generate an additional $4.4 million in annual revenue and help pay for $186 million in capital improvements.