House Standing Committee on Consumer Protection & Commerce

Good afternoon everyone. We're convening the Committee on Consumer Protection and Commerce. It is Wednesday, March 4, 2026. 2:00pm in Conference Room 329. Right, you're on Vice Chair.

Thank you. Okay, just a reminder that we have a two minute time limit for testimony just to make sure that we stay on track. I have a timer here and when it goes off I will politely ask you to wrap up your comments.

First up on the agenda is HB 1984 HD2 relating to renewable energy. By July 1, 2027 requires government entities in the state that issue building permits to establish a self certification process for behind the meter customer cited solar distributed energy resource systems that deems permit applications approved and allows applicants to proceed to build solar distributed energy resource systems immediately. Public Utilities Commission offering comments.

Good afternoon, Vice Chair Grandinetti, Chair Matayoshi, and Members of the House Committee on Consumer Protection and Commerce. My name is Andrew Kabe, I'm a engineer at the Public Utilities Commission. I'm here on behalf of Chair Itomura and the commission. We sign our written testimony offering comments supporting the intent of HB 1984 HD2.

I'm available for any questions Committee may have. Thank you.

Thank you. Department of Land and Natural Resources offering comments.

Chair, Vice Chair, Carol Tyau-Beam, DLNR. We stand our written testimony offering comments. Available to answer any questions.

Thank you. Grassroots Institute of Hawaii, in support. Present. Hawaii Solar Energy association, in support.

Hello Chair Matayoshi, Vice Chair Grandinetti, and Members of the Committee. I'm Rocky Mould, Executive Director of Hawaii Solar Energy Association. HSEA strongly supports HB 1984 HD2. This bill addresses two practical barriers slowing the deployment of rooftop solar and energy storage in Hawaii, permitting delays, and uncertainty around FEMA floodway requirements.

First, the bill establishes a permitting self certification pathway for qualified behind the meter solar and energy storage projects. By allowing licensed professionals to certify compliance, we can safely reduce administrative delays and lower project soft costs for homeowners and local owners. Second, the bill provides clarity around FEMA rules for solar installations.

This language was developed in consultation with DLNR and you know it preserves full compliance with FEMA rules. At a time when federal incentives are shrinking, one of the most effective tools Hawaii has to keep clean energy affordable is this bill. So I'm here for questions if you have them. We've submitted written testimony. Thank you very much.

Thank you. Holu Hou Energy in support.

Do you have my testimony? I have a copy if you don't have it because I was late this morning. In case you don't have it, apologize.

Thank you.

Thank you. My Apologies for being late, Chair Matayoshi, Vice Chair Grandinetti, Members. I am the president of Holu Hou Energy and I strongly support this bill, especially allowing for self certified permits.

As you can see in my testimony, the rigorous pathway that architects and engineers have to go through to get licensed includes a degree program and years of experience with an entrance exam. And that years of experience have to be under another certified professional.

And it's completed by them completing an exam and then going to the board at DCCA to get certified. And the board is very stringent on validating that these professionals meet the requirements. Once that's done, the professional has to get insurance for what they do as a professional. And so self certification actually doesn't shift any risk from them.

They are fully bearing the risk. Without this, this doesn't change their risk profile and believe it or not, it doesn't change the cities', the counties' risk profile because the county in truth bears no risk. Nobody is going to sue the county for approving a permit. It's just not done.

It ends up on the professional who signs his name on a dotted line and all this does is remove extraneous administrative requirements that don't add to the process. In the last 10 years I have had multiple projects and you. It's, it's well publicized, the delays that DPP has had.

This mayor and this director have done a fine job of working to reduce that, but it still remains. I actually have a client who is attempting to sue me for $100,000 for the delays that DPP imposed on his permit getting approved. So it is an issue that has real money behind it, real time, real employment.

And this is, it's time for self certification to be real in the state of Hawaii. Thank you. Let me know if you have any questions. Aloha.

Thank you. Anyone else in person or on zoom would like to testify on this measure.

Aloha. My name is Paul Orem, Partner CEO of PhotonWorks Engineering, local design, build energy contractor focusing primarily on merchant commercial sector. Been in business for approximately 20 years. Have maintained staff 50 to 60 people during that time.

I'm here to testify in support of HB 1984 in person on behalf of myself and my company because this law is critically needed at this time. As you're all probably aware, the Trump Administration prematurely terminated the federal tax credit for renewable energy projects and now be placed in service by 2027 or 2029 if they're safe harbored.

My customers are now investing millions of dollars in these projects and it's imperative that they be completed on time to receive the federal tax credits. We processed over a thousand permits through DPP over the last 20 years. And without a doubt it's the single biggest challenge I face as a business owner.

It's not getting new customers, it's not doing the work, it's not finding the employees to do the work. It's getting through the quagmire that is the DPP. My business, our customers, and our employees need the self certification process in order to streamline and streamline permitting process to reach our collective goals.

Making meaningful progress on making Hawaii 100% renewable energy powered. Without this, we're sure to fall short of these ambitious goals. Thank you for the opportunity to testify on behalf of myself and PhotonWorks.

Thank you. Anyone else here to testify on HB 1984 HD2?

Good afternoon, Chair and Members of the Committee. My name is Rachel Ah Sue. I am the Co-Founder and President of Malama Solar, a local solar company here in Honolulu. I'm here today in strong support of HB 1984 HD2.

One of the biggest problems that we see for residential solar installations or the adoption of this here in Hawaii is permitting. In many cases for a standard system to be installed on an existing home. The technology is ready, the homeowner is ready, and the installer is ready.

But, the project is simply waiting in a queue at DPP for months. HB 1984 provides a responsible and practical solution to this problem. I understand that there may be concerns about safety if counties don't review permits in advance. However, the process still requires licensed engineers to ensure code compliance.

The counties still maintain inspection authority and installations are still being completed by licensed electricians, providing multiple layers of oversight. This is why I respectfully urge the Committee to pass HB 1984 HD2. Mahalo.

Thank you. Come on up.

Hi, my name's. Chair, Vice Chair, my name's Josh Powell and I'm the CEO of RevoluSun, another local solar company. 125 employees. We've done a lot over the, I'm also a licensed architect in the state of Hawaii and an AV General contractor.

You know, we've done systems over the last 17 years that offset approximately 15% of the energy produced on Oahu every year. To reach the state's goals, it's essential that we streamline this process. And for whatever reason, Oahu has been over that period of time the most challenging county in the state to get permits.

We have the greatest need for renewable energy here and that energy is largely going to happen on residential rooftops and commercial rooftops. This bill, even at its reduced scale will address the majority of those systems in a way that we can efficiently get that work done.

I'd also say that across our 12,000 customers over that time period, I'm not aware of a single code related safety issue that's ever occurred. We have inspectors out there on nearly every job from the city and county that, you know, make sure in the end that things are to their satisfaction, sometimes not in alignment with the code.

We remedy those things at their will. And that doesn't change at all in this. This just allows us to use licensed professionals to make sure that the designs going in can move quickly. I thank you for your support and I'm in support of the bill.

Thank you. Anyone else? Okay, seeing none, noting an additional 16 individuals who submitted testimony in support. Members, any questions? Rep. Iawamoto.

Thank you, Chair. For RevoluSun. I have a question. No. Thank you for sharing that you, I think you cited 1200.

12,000.

12,000 installs and not. And I think you did mention that when things have been flagged, you did work with them and they got aligned, I think.

Yeah, yeah. So as a matter of course, just, you know, we're out there every day. You know, we have licensed journeyman electricians in the field, leading all of our crews. You know, I'm a, I'm the RME for our company. I'm a licensed general contractor.

I'm also a licensed architect. In, you know, when a project is completed, even a little residential project to a large scale commercial project, you're always, you know, doing inspections to close out that.

Okay.

And the city and county inspectors come out, they review those with the, with the licensed journeyman that was on the job, they close it out. You know, sometimes they're passed without anything. Sometimes there's an issue and when there's an issue, we fix it.

And that would still happen under this.

Absolutely. Nothing changes.

So nothing was flagged on the pre permitting side.

To the extent that things come up on the, on the initial design submissions. And I think that's part of what we're facing is that frequently in the current review process there are just, you know, right now it's an automated, you know, it's. The city and county is transitioning to an automated review process.

You could make an argument that, you know, if we're doing a self certification, we're actually going to use a more rigorous process because we're using licensed engineers and architects to certify the designs ahead of time.

There are things that come out of the automated process that frequently, you know, that are like, you know, the font size on a set of plans. Right. Just completely irrelevant to the design. But, but you know, they're, they're flagged in the computer system. You know, those kinds of things can gum up the work, slow things down.

You can, you know, go backwards in your review time for that.

Got it. Thank you. And Chair, can I ask Rocky a question? So I'm not sure. Are you, are you a lobbyist?

Yes. I am.

Okay, great. Because I was wondering, have you taken this to the county councils to...because, yeah.

It's a very rigorous discussion going on with the city and county. And with the counties, and we have passed bills that are supposed to push this type of thing.

Okay.

And they haven't, they haven't been executed. So we need the Legislature to help us out and come in and provide some push to this to get action at the city and county level. That's what we're asking. So we've tried multiple times over years. We've made progress. And this current Administration has actually been open to our communications often.

This self certification and FEMA issue, these are sort of some of the last really hard issues to get through that would make a huge difference if we got through them. And we're asking for the legislature's help to, to push the issue.

Thank you.

Hi, does the city and county do self certification for like solar, PV, or other?

So we have, there are, there are plans in place and they've, they, they're implemented sometimes. So for townhomes, we've implemented a process. For self, it's sort of like a self certification process for townhomes.

Unfortunately, like with a lot, everything that's been going on with the, with the launch of HNL, build the new system, there's been some backsliding on that for larger scale commercial projects. There's supposed to be a pilot program, but that has not been implemented yet to. I've not heard of a single project going through that pilot process yet.

So this self certification process would be a much stronger version of a self certification process that would be, would be a better version of that sort of defunct pilot program.

Thank you. Any other questions? Okay. Moving on to HB 1593, HD 1, relating to affordable housing. This bill requires any affordable rental housing development project that receives financing or financial assistance from HHFDC. It requires that the HHFDC requires the housing development lease or occupancy agreement to allow residents to own or otherwise maintain one or more common household pets. First up is Hawaiian Human Society.

Aloha, Chair, Vice Chair, Committee Members. Stephanie Kendrick with the Hawaiian Humane Society. I apologize for our late testimony. Could have sworn I filed it two days ago. This is our number one priority bill for the session.

For those of you who are more used to hearing from us on things like animal cruelty and access to veterinary medicine, you might wonder why housing is such a big deal when it comes to saving animal lives. But it is.

About the top reason for surrender of pets to animal shelters is the inability to access affordable housing. Almost 60% of local residents on Oahu have at least one pet, and another 17% have had a pet in the last five years.

And there would be many more homes that would be open to animals if they could access housing with those animals. That further, 29% of our unsheltered homeless population on Oahu has at least one pet, and they choose to remain homeless rather than going into housing without their animal companions. So this is an enormous issue for us.

You have our written testimony, which outlines some of the myths about having pets in housing and the damage they can do and the cost that can impose, which really are very much overstated. And we hope that the committee will move this measure on.

It's modeled after a law California passed a few years ago for its own public housing. So there is precedent, and it's a really important bill for both people and animals in our community. I'm happy to answer any questions.

Thank you. Anyone else in person or on Zoom would like to testify on this measure? Seeing none. Members, any questions?

Question for Humane Society. You mentioned that the concerns of the damage that pets can do is overstated. Could there be a compromise in terms of that this pertain to people who have pets before moving into public housing.

In the instance that you mentioned where somebody's unhoused and they have a pet, and the reason why they're in, they will not go into housing is because there's no room for their pet.

But if people are coming into a new publicly funded housing situation, that they be allowed. But those people who enter without a pet, that they not be extended unless they get a service animal, for instance. The reason for my concern is a lot of the public housing is designed, you're income eligible.

And if some people get, you know, from getting housing, they have stabilized situations and now they can earn, their earning is higher and now they're, they might be no longer eligible for public housing. Now then they're forced to now rent in the, in the private market. And I can tell you that the options, the supply of apartments in the private market who are willing to rent to people with pets is much narrower.

It's terrible.

Right. So I'm like, are we setting people up to be overly burdened by pets so that when they transition out, they're trapped? That's my concern. So I'm wondering, is there a way to get people housed but then not create a situation where we're overpopulating housing market with pets?

I think the way is to open up more private housing to pet owners as well. And we had a bill that was intended to address that. The session that unfortunately hasn't moved forward, but I'd love to work with you on that as well.

You know, we need to find homes for thousands of new animals every year, so the more housing we can open to pets, the better. And I think having a you can only have your pet in housing if you've been, If you had your pet before you moved into housing, I'm not sure that that would serve either their people or animals.

But what we would say is that, you know, one of the criteria that we recommend that all property managers and landlords use is the behavior of the pet. And if someone wants to adopt a new pet, you know, you can do a screening and make sure that that pet is going to be a good match for the housing community.

But yeah, we would hate to see people sort of need to get their pets before they moved into housing. And of course, we would love to see that their transition into private sector housing was easier for them. And that's something we're committed to working on going forward.

Any other questions?

You mentioned that California has a similar statute. What was the effect of that?

Well, we haven't been able to find any ill effects. I've been reaching out to them to see if, you know, they have had any pushback on it or had to roll any of it back, and it seems to be going well.

So I don't have anything more specific to share with you than that. But I've also offered to connect HHFDC with their housing authority if they want to have that conversation, professional to professional. But it seems to be going well.

Are they concerned? I'm assuming it's a similar law that it's of more public rental housing kind of assisted.

Actually with California it's broader, which we would love Hawaii to consider as well. It's any housing that's built with any kind of public finance.

Is there an issue or did have they anticipated an issue like Rep Iwamoto was saying, where people are transitioning out and can't find other housing that's pen supportive?

I've not heard that as a concern. Yeah. I will say, and Rep Iwamoto is completely right about this. Hawaii has a lower percentage of private sector housing available to pet owners than any other community in the country. So we have a lot of work to do.

Thank you. Any other questions? Okay. Seeing none.

Moving on to HB2423HD2 relating to biodiesel requires the Director of Business Economic Development Director of Business Economic Development and Tourism to implement a requirement that no later than 1-1-2028 diesel fuel sold in the state for use in on highway diesel powered motor vehicles contains no less than 5% biodiesel by volume.

First up is the Hawaii State Energy Office with comments.

Aloha Chair Matayoshi Vice Chair Grandinetti Munashe Chando for the Hawaii State Energy Office. We stand on our written testimony providing comments to HB2423HD2. I'll be here if you have any questions. Thank you.

Thank you. Hawaii Transportation association in support on Zoom Pacific Biodiesel Technologies in support.

Aloha. I know my husband Bob said he would be here, but I'm going to speak for us and pretend I have a beard on. So I I know you received our testimony yesterday in strong support of SB or HB 2423, HD 2, and our ability to meet the capacity required for a B5 highway diesel fuel mandate.

I'm not going to go into those details, but I will answer questions if you have them. But I have to tell you I was up at 3 o'clock this morning because recent events, very disturbing events, make our message even more urgent than before. The ongoing and unwarranted war efforts in Venezuela and Middle East have caused oil supply disruptions and fossil prices are already spiking unpredictably.

In fact, a few days ago a local Maui Petroleum distributor put out this notice. Quote, due to the ongoing situation in the Middle East, global energy markets are experiencing increased volatility resulting in higher supply side costs. As a result, we anticipate pricing increases across certain products this week and possibly into the foreseeable future.

So the end quote. That's hitting us already. Pacific Biodiesel has always strived to show the economic as well as environmental benefits of locally produced clean fuel, and our biodiesel price continues to be stable and unaffected by national conflict. Having a B5 blending requirement for all highway diesel fuel sold in Hawaii will help to moderate unpredictable diesel prices.

As we have watched petroleum costs spike and drop due to external circumstances over the past decades, we have focused on pricing with a fair margin based on inputs, true inputs and labor, and at times we have even been able to provide savings to our customers for extended periods.

We had a nine month period where we were a $1.50 a gallon cheaper than diesel petroleum diesel in the mid 2000s. In fact, we have not raised our retail or wholesale prices in over a year, something unheard of in the petroleum industry.

As co-founder of Pacific Biodiesel, I'm proud to have survived 30 years of a difficult industry with very fickle and inconsistent support from our federal, state, and county governments. It has taken a lot of dedication, sacrifice, and hard work to maintain focus on sustainability and regenerative practices.

But our hundred employees are with us and are determined to show it is possible to build a renewable energy company with integrity that puts community benefit first. Now more than ever, we need the state to step up to protect the local energy security we have achieved for Hawaii and help expand the ongoing food and fuel security initiatives being developed to defend against uncontrollable externalities.

Bob and I have watched this state invest heavily in other more costly renewable visions, including algae, offshore wind, and hydrogen that have yet to gain a foothold. The 5% mandate we are supporting is a small ask that will go a long way in securing the market needed to ensure further investment in locally produced biodiesel to build the resilience required to survive the fluctuations and uncertainties of global fossil fuel supplies. So we're asking you, help us help you.

Anyone else in person or on Zoom would like to testify on this measure? Seeing none. Members, any questions?

Just for HADA. I'm sorry for Pacific Biodiesel. I guess I just want to know what the... What your capacity is to meet the or...

Okay. For the current situation in the state, we've calculated that the need for 5% across all highway fuel would be 2.2 million gallons per year. Our capacity is, our nameplate capacity is 5.5 million gallons a year. We've actually been priority processing over 6 million gallons a year, increasing that.

We're working towards and will invest towards if we get the help from the state, a second refinery possibly on Kauai, where the feedstock is. We're growing local feedstock and working with Gay and Robinson and the County of Kauai to increase the capacity, in house capacity.

How much of that? You said you're at about 5.5 right now?

Well, 5.5 was the nameplate capacity when we built the plant. We're now producing over 6 million gallons. So we're over our nameplate capacity.

How much of that is being used by HECO or others? What's your access capacity right now? How much are you over? So are you making 6 million and selling 6 million?

We're actually about, our production is about 80% of that right now. Because over the past year, we've seen the fluctuations in the standby generator business. Hamakua caught on fire having nothing to do with biodiesel, and they went down for six months.

And so we have these big standby generator, HECO, Hamakua, the Schofield, the Schofield Barracks generator that do take up a large capacity. And all it takes is for them to go down for a few months and that affects our capacity. And that's why this proposal is so important. This will give us that stable amount to focus on the transportation industry and then build that up as well.

So, understandable. But you're producing six and how much...

We produce six, over six the previous year. Last year it was about 80% of that because of... Our capacity is still there, but the customers are not there when a large company like Hamakua...

20% of 6 is 1.2. But you said by your calculations will need 2.2. So I'm just, I want to make sure that we're producing enough biodiesel to meet the needs of the state. If we're going, you're pretty much the only producer in town for...

We would commit 2.2 million gallons to the transportation industry first.

But do you have ongoing contracts that already commit your current capacity?

Well, apparently they're not strong enough because they can break them. You know, I mean, if they go down, they don't order fuel for six months and we get no compensation.

They can break them and you can sue them, but I don't want you to have to break them. Would you folks have to affirmatively break some of your...

No, it's because that's written into the contract

That you can pull, that you don't have to supply them with a certain amount of biodiesel?

It's as available. So we're, you know, we're happy to. I mean, we would love to be at full capacity, we would love to be beyond full capacity, and we're willing to invest in more capacity. But we just need a little bit of assurance of this market.

If you were going to invest in more capacity, what would that look like? How much more could you invest? Would it be... From what I understand, you're already using about 90% of the used cooking oil, that kind of fuel, as it were, for your process. So there isn't a lot of wiggle room up from 90% to give you more feedstock.

No, there is. Because we are heavily invested in ag now, agriculture. And so with the help of our Senator Mazie Hirono, we have secured, of course, before this current administration came in, we were able to secure federal funding to help us get our ag operations going on Kauai.

And we're currently collaborating with Gay and Robinson on their properties. We're into the first couple of hundred acres, and our goal is to reach up to 10,000 acres, at which time we would be able to start looking at the next refinery. But we have great support.

We have water there, which is really important. We have the equipment that we need to start reaching towards those goals. And we have expanded into, because of our byproducts being animal feed and culinary oils, we've expanded.

That's why I talk about food security is we're expanding into products that have been shipped in traditionally to feed our livestock, our chickens, our cows, our pigs, that we are able to provide on island and in the state because of these operations.

What's the timeline for creating a new refinery for that kind of feedstock?

You know, our original goal with our proposal from two years ago was five to 10 years. That was with consistent funding. We got two years of funding before the current President came in and cut all funding for what's viewed as renewable energy projects.

So we would still like to see that happen before, not too much after the end of this decade. So our goal is before 33, 2033, we'd like to get that second refinery going on Kauai. And I believe that that was the original date that Kauai Energy Company gave for reaching, them reaching 100%, 100% renewable.

So what would be the capacity of that new plant?

Our goal is for 10 million.

But without the federal funding, and I'm assuming nothing's going to change in the next couple of years with that.

Yeah, I mean, I think this will help us get private funding as well, you know, additional investors. And we'll get that production tax credit that will help as well. And so we can, I have no doubt that we can do it. We just need the political will to get it done.

But I also have no doubt that it's absolutely necessary that we have to have this bit of resilience in our energy and our fuel capacity in state or we're going to be in a world of hurt coming down the line. So I'm scared personally of what's happening in the world, and I'm happy that we're in this position where we have a local fuel source that we can grow.

Okay, thank you.

Thank you.

Any other questions? Seeing none. Moving on to HB 1691, HD1 relating to transportation. Authorizes supporting documents used to transfer ownership of a motor vehicle to an insurance company after payment of damages from the result of a total loss. Insurance settlement to be signed electronically.

Requires insurance companies to indemnify and hold harmless the Director of Finance for any claims resulting from the issuance of motor vehicle titles utilizing documents signed electronically without a notary. First, I think is up Copart in support on Zoom?

Good afternoon. Aloha, Vice Chair of Members of the Committee. My name is Mark Bender, for the record and I'm testifying on behalf of Copart for HB 1691 and what we are. We're vehicle auction company and we service across the U.S. including a facility in Coppola Lake.

Our Business primarily involves working close with insurance companies to liquidate vehicles that have been declared a total loss. So if you've ever had a total loss vehicle or know somebody that has, we're the company that takes the possession of the vehicle for the carrier and then and then auctions it off to help with the claim settlement.

And what this build does is it modernizes the vehicle title transfer process by allowing electronic signatures without requiring a notary. And this is a very narrow transaction type. And, it's not like all title transfers, it's only for total loss claims, but it'll significantly reduce delays for consumers.

I mean, because if you think about it, under the current system, owners must locate a notary, mail documents and this takes several days or even longer, especially if the documents have to go to the mainland, which they do in a lot of insurance companies.

So what it's going to do is going to make this a completely, completed its process more quickly, typically in one phone call. And it helps them get replacement cars faster and return to normal sooner. We ask for your support on this Bill and we supplied written testimony as well.

But thanks for the opportunity to testify and I'm able to answer any questions.

Thank you. Anyone else in person or on zoom would like to testify on this measure? Okay. Seeing none. Members, any questions?

City's not here, huh? Asked for more time and I didn't show up.

Okay, I'll ask him later.

Okay. Moving on to HB2283HD1 relating to port pilotage. Clarifies the consulting role and responsibilities of the Department of Transportation in the Department of Commerce and Consumer Affairs. Development and implementation of pilot licensure standards, requirements and criteria repeals the inclusion of Port Allen as part of the waters of the state that are regulated by statutory pilotage requirements. First up is DCCA port pilot program in support.

Good afternoon, Chair, Vice chair, Members of the Committee, I'm Danny Chow, program specialist for DCCA. We signed in full support of this Bill and we as noted in our testimony, we also support the deletion of Fort Allen in in HRS. Section 4628.

Thank you. Department of Transportation and support on Zoom.

Chair, Vice chair, Members, thank you for hearing this Bill. We stand in support and available for any questions. Thank you.

Thank you. Anyone else in person or on Zoom he'd like to testify on this measure. Seeing Members any.

Sorry about that. Vice chair and chair Committee Members. Sinclair Brown with the White Pilots association. The Harpo Pilots. Port pilots. I'm here with a couple of my colleagues Captain Koa Parker, Ryan Hopkins and Council Lauren Onaka and we just stand on our testimony as submitted House Bill

2283, House Draft 1 and thank you for your time and we're here to answer any questions or listen to any comments. Appreciate it. Aloha.

Thank you. Anyone else here for HB 2283? Seeing none. Members, any questions?

Moving on to HB 2386, HD 1, relating to water carriers. Authorizes the Public Utilities Commission to establish automatic adjustment mechanisms to address economic factors sua sponte or on application by a water carrier.

Requires the Public Utilities Commission to establish a water carrier inflationary cost index automatic adjustment mechanism, and authorizes the PUC to waive or exempt any water carrier from any requirement under the Hawaii Water Carrier Act. First up is DCCA Division of Consumer Advocacy with comments.

Chair, Vice Chair, Members of the Committee. Mickey Knox for the Consumer Advocate. We'll just stand on our written comments, but we're available for any questions.

Thank you. Public Utilities Commission with comments.

Chair, Vice Chair, Members of the Committee. Andrew Okabe, engineer for the Public Utilities Commission here again. I'm available for any questions your committee may have, and I stand on the commission's testimony offering comments.

Thank you. Department of Transportation in support on Zoom

Aloha, Chair, Vice Chair. Dre Kalili, Deputy Director of Transportation for Harbors. We stand in strong support and available for questions. Mahalo.

Thank you. Young Brothers in support.

Aloha. My name is David Veltri, associate general counsel for Young Brothers, where I work on regulatory and legal matters. We support this measure to modernize the regulatory framework for water carriers, including the implementation of WICI, which is the State Water Carrier Working Group's top recommendation.

Inter island shipping plays a vital role in our supply chain and way of life. So the state regulates water carriers like YB under a traditional public utility framework that has not been meaningfully updated in decades. At the foundation of public utility regulation is a balancing act known as the regulatory compact.

On one hand, customers receive reliable and efficient service. On the other hand, the utility is allowed to recover reasonable costs and a fair return on the investments that make that service possible. However, the balance has been slipping out of alignment for years, to the detriment of both customers and Young Brothers.

Currently, any level of general rate adjustment triggers a complex and contentious process known as a rate case. And these rate cases can be very time and resource intensive for all involved, our regulators.

While the process was designed to protect customers and consumers, in practice it's resulted in long periods where rates stagnate and no longer reflect the true cost of providing service. As time passes, the gap between costs and rates grows and shockingly high catch up rates increases become necessary. So WICI is this common sense targeted modernization tool to address this gap.

It's not replacing or reducing regulation and it doesn't mean YB can stop working to improve its operations or its business. That's very clear to us. There's clear guardrails. Okay, so one, it's a scheduled predictable annual adjustment. Two, it's tied to an existing DOT maritime benchmark for fee changes. Three, it's capped at 5%. Four, it's paired with mandatory full rate reviews every third year.

So in short, WICI helps restore the balance to the regulatory compact by ensuring rates stay better aligned with real world cost changes, thus enabling water carriers to operate sustainably and keeping our local supply chain strong. Thank you for the opportunity to testify. I'll be available for questions. We also have our Director of Finance and our communication specialist here as well. So thanks.

They want to speak separately than you or no?

No. But yeah, to be respectful of everyone's time, we'll keep it at that for now, and we're available for questions.

Thanks. Grassroots Institute of Hawaii in opposition on Zoom. Not present. Hawaii Food Industry Association in opposition on Zoom.

Thank you. Thank you, Chair, Vice Chair, Committee Members. Lauren Zirbel on behalf of Hawaii Food Industry Association. We represent about 200 member companies, including grocery stores, food suppliers, manufacturers, farmers. We are in opposition to this measure.

Although we do agree that the current system could use some work, we do not agree that this is the best way to address the problem. Automatic rate increases will result in higher prices for consumers at a time when one and three people cannot afford enough food. We don't believe that this is the right answer.

We'd love to work with you on a bill that we feel is consumer friendly. To put this in perspective, rate payers since 2018 have seen a 91% increase cumulatively. Comparing that to mainland competitive prices, it's about 20-22%. So it's a four times faster growth in prices.

We have had significant issues with product spoilage, but this is ubiquitous. You can ask anyone about that. And when the PUC just recently approved this 25.75% increase, they did that with the understanding that rates would not increase again for two years.

If you pass this bill, rates will automatically increase for the next two years and then they will be able to do a full rate case review, which there's nothing in this bill to prevent them from asking for another very large rate increase. As they're the only provider, it creates a lot of instability in the market.

So if they go under, it creates a crisis automatically. Puts the PUC in a very difficult position. Puts the consumers in a difficult position. We don't feel this is the answer, and I'd be happy to answer any questions. Thank you very much for the opportunity to testify.

Thank you. The Maritime Group in support on Zoom. Not present. Kinsleykim Kahumoku, individual in support. Not present. Mike Sullivan, individual in support. Not present. Blaine Miura, individual in support. Anyone else in person or on Zoom would like to testify on this measure? We had 85 additional individuals submit testimony, written testimony in support. Members, any questions? Rep Iwamoto.

Thank you, Chair. For PUC. I think I read in your testimony that you actually or the PUC deliberated on whether to allow this automatic and then you denied. It was denied.

Yes. In order number 42100, we did deny the request for for WICI in the context of that order, feeling that the 25.75% was enough at the time and that we wanted to see what additional improvements that YB could make and has since pursued, operational efficiencies that could alleviate the need for the WICI short term.

So the whole purpose of this bill is to authorize you guys to consider this, and you guys currently have that. It seems like it.

We have a lot of power within the context of our rate making powers in a rate case. That's correct. It's not fully clear in the statutory language whether or not we can do that outside rate case.

The measure, in our opinion, if you adopt the shall requirements that's currently in the measure, we we would have to reconsider it outside of either inside or outside rate case. But if you adopt our amendments which says shall, we could do it in the constitution rate case or outside of rate case. We may. We may, yes.

I have a question for PUC as well. In the Consumer Advocate's testimony, they referenced that the commission already attempted to implement similar mechanisms, flexibility in the zone of reasonableness program as well as an annual rate adjustment program, and that those were terminated because they were not being used for their intended purposes. Can you explain that?

So I do want to clarify for both the zone of reasonableness and the AFRA programs. AFRA program was a pilot program and zone reasonableness was also a program born out of a rate case. I do not believe we terminated per se. We allow them to expire and allow YB or Young Brothers to pursue another rate case. So kind of you can kind of think of it was in lieu of rate case.

I understand at the time the Chair of the Commission for AFRA did have a dissent argument, and we do respect his dissent. But we did allow the program by vote of 2 to 1 to continue on for at least one more year, but then it expired. It was a pilot program, very limited in scope. It did expire. It's no longer. We can no longer use it or why we can no longer use it.

I was also curious about... So the water, the inflationary adjustment thing was recommended by the working group, which you folks were a part of. Can you explain? I don't know whether you supported it then or you supported a concept and you don't support it now. I'm just curious about the nuance there.

So I guess the nuance is that we had one commissioner assigned to a working group. I did personally assist that commissioner with that working group. The working group itself made a proposal for a whole set of measures to help stabilize Young Brothers.

Amongst that was WICI. That WICI proposed within SR 125, SD 1 is a little bit different than what's being proposed here. And you know, there were some changes made to WICI that YB elected to make. And you know that's within their right.

Namely the WICI, I believe in SR 125, SD 1, the initial tier one would have applied to only non fuel and non labor expenses, and tier 2 would have applied to labor expenses. You know, they already have a fuel surcharge that increases the increases of revenue for fuel. You know, they have to pay more fuel.

It's only fair that they get to charge more for fuel. You know, this is not quite fair to force them to eat it whenever the fuel costs go dramatically up within the deadline, of course. But you know, at the time the commission did join the recommendation that this is what we agree, that this could be reasonable if implemented this way.

Got a bunch of questions for you.

Yeah, thank you. Thank you, Chair. I think I'm ready. I hope I'm ready.

So overall, I think I like this bill. I mean, I'm not, I'm not, certainly not against inflationary increases. That, that makes sense to me.

My questions stem more from what's been happening in the past and why we are at this stage where we feel that automatic rate increases are needed, but also are pissing a lot of people off, I think. So in 2021, there was. Or 2020 to 2021 there was a rate case as part of that rate case.

Well, a lot of things came out of it. There's an audit report. A lot of different. A lot of different recommendations from the audit report. One of them was to commit to delivering a minimum annual 3.4 million dollar level of savings to be achieved by December 2022. And I understand that there was an independent observer assigned. Yes.

Was that met?

According to the reports we received. We do, we do want to acknowledge that that was met, that they have met that continually. People may not feel it. It was absorbed within the operations to help, you know, keep their business afloat. I don't know what else to say other than that it was.

$3.4 million is not a lot of money when you're comparing to the amount of enormous cost they have on everyday basis, it's not.

But if the $3.4 million of savings got immediately eaten by other. Is that really savings? I mean, is that. I thought the point was to kind of reduce from the base level. I mean, it's like saying I saved 10 bucks, but I just, you know, my budget went up $100.

I understand, I understand. But at least in our perspective, we did. I'm sorry. At least from the perspective of the IO and our perspective, after reviewing the IO reports, we do believe they have met that, that particular requirements. Okay.

I just think that we're. I mean, seems like there's a lot of issues with Young Brothers too, operationally that's putting them in a bad position. And I think part of that might have been better with better PUC oversight over them. I just don't understand how these costs are getting out of control.

But one of the things that comes up over and over are labor costs and overtime. Triple overtime being going up by 725% between 2020 and 2021. And granted, it was a weird time. Like, I'll grant you that, like Covid was an odd time.

It seems like though, that overtime is highlighted in bold and italic in here as an issue to address in 2021. And maybe this is a question better posed to Young Brothers. But have you, I know the independent observer has been around for a bit now. What did the independent observer observe for overtime?

Excessive overtime payments and Young Brother's ability to curtail those.

So actually we got more recent updates directly from Young Brothers around their overtime. They used to call their lcc, but I don't if it don't remember what it's called. Is it LMC now?

So Lead Managed Contain where they did starkly reduce the amount of triple over time they were forced to having to force to pay their employees by managing work schedules. They've been more successful in that more lately, especially with coming into the adventure hearings.

They did help that as a benefit that they are doing to contain costs and you know, kind of meet their obligations because overtime was 20% of their overall costs. It is eye popping. It is eye popping how much, how big that is. And I, I fully understand and appreciate your concern.

Yes, let's hear from Young Brothers. But maybe stick around. Sure, yeah, I'll be available. Young Brothers. Can you guys comment on that?

Hi, David Valtteri, Associate General counsel for Young Brothers. To my right is Ashley Kishimoto, Director of Finance for Young Brothers. And can you please clarify the specific question that you want?

Yeah, I mean it seems like labor costs were kind of out of control, especially overtime labor costs back when this report was written a while ago, 2021. So what has Young Brothers been doing between then and now and kind of what are your overtime labor costs now?

We have initiative that started late in 2024 called Lead Manage Contained. So that's the LMC initiative that we've talked about and it is an initiative specifically targeted to reduce double time and triple time. We have seen good results from it on a year over year basis. Like 202025 versus 2024.

We saw nearly a $2 million decrease in overtime hours. From a dollar perspective, we are continuing that initiative in 2026. And for the month of January, which we closed, we saw about $100,000 reduction year over year, 26 versus 25.

We kind of just talked about how $3 million is kind of a drop in the bucket for you guys. I mean what kind of percentages? Maybe we could talk more percentages and not millions of dollars overall revenue or

our overall cost structure.

I don't have it in front of me is what I'd say. But I hear your question, we can come back and provide you with the details. Of on a percentage basis of how much overtime I guess makes up our total.

And can I just add to the discussion here? You know, as a regulated company, we're required to do certain sailing, meet certain sailing schedules and certain, provide certain services. And the result is that you essentially have a lot less flexibility to change your cost structure as a result of these things.

So if there were some way to be more flexible about these things or even just more internally creative about these things, then we can see, you know, more changes. But this is like one of those problems that you have to tackle with a lot of, a lot of small step.

What was that, that phrase about the paper, thousand paper cuts kind of thing. We have to do a lot of small things in order to create a dent in the problem that we're experiencing. So yes, these are not like eye popping numbers compared to like overall cost.

But there's no giant lever that we can just pull and fix all of this at once. There's no silver bullet. We have to do a lot of different things. And that's why this is so difficult to do. And the good news is that we have new management in place. They're new executives.

They're specifically operational experts in the maritime and transportation industry. So they're working on the problem right now. They're wrapping their hands around it. They have a business update, a business plan update that they're planning that we're currently implementing and working on right now. And we're going to have, you know, I'm, we're very hopeful.

We're going to have a robust discussion with the PUC and the special overseer that's being installed about this process so that we can, you know, start making the changes that everyone is asking us to make.

Okay. I think the analogy is eating an elephant one bite at a time. Regardless. That's much better. The, the problem, the reason I bring up overtime is because it seems like overtime is maybe one of the easier things to solve. And I was labor chair before. I know how difficult labor is.

That being said, overtime is when the company is not anticipating adequately its workload and is not hiring sufficient staff at regular pay in order to meet the demands. So if that's been happening since, I mean, in 2021, you were at 725% triple overtime. You're already paying the money.

You know, this is not a money thing because you're already paying the money. What steps have you taken to hire sufficient staff to reduce that overtime so you are sufficiently staffed in order to meet the workload?

There are There are a lot of other problems I think with, with YBN operations, overtime seems like one of the more straightforward ones to solve. So I'm wondering what kind of impact, I mean, if you're saving 100,000 a year, but you're paying 725% triple overtime, that's crazy.

I mean, I think that's a literal drop in the bucket in the problems that you're facing right now. So what steps have you guys taken?

So we have taken, we have hired additional laborers as part of the new collective bargaining agreement. And so that's part of what I mentioned. We saw $2 million year over year decreases in overtime. That's part of that initiative was to have additional increase our headcount to be able to do that.

But increasing our headcount also comes with a lot of other additional costs, right, benefit costs, etc. So we're really trying to make sure we balance it. And we are actively looking at this initiative to think about how do we reduce overtime. As David mentioned, we have logistics experts as part of our new management team.

And this is an initiative that we are actively looking at as we move forward.

I'm not sure that the argument that labor is going to be more expensive is really legitimate though here. When it was 20% overtime was 20% of your budget in 2021. I mean that's a lot of your budget. So saying that, you know, hiring more people is going to cost more money when you're hemorrhaging it through overtime.

I mean, I would think you'd be desperate to hire more people to reduce that over time amount. The triple, triple overtime, that's three times. So I mean I, I, we are,

I guess my are seeing reductions year over year. Right? We are trying things and as David mentioned earlier, right. It's not something that is quick to do or very simple.

It is not. But that, that's why since 2021 it's been five years. You know, if this was a last year kind of problem, I'd say, you know, okay, they're trying their best.

It's been five years and if all we have to show for it is like a very slight reduction in overtime, but yet you're here asking for more money. And again, I agree with the bill, I think it's a reasonable bill.

But year after year you folks are coming to us saying you're on the verge of bankruptcy, you need more money, you need these rate increases, you need to force a rate increase now.

But yet it's been five years since just this report came out, and you've really just scratched the surface on the labor overtime problem, which is 20% of your budget. That I don't see the. I guess I don't see the effort here that justifies these constant increases.

And not only that, but, I mean, we're hearing a lot of complaints from your customers. Honestly, I think you folks need a more independent, anonymous survey of your customers to see what the actual issues are and to try to fix those. But if your customers, for better or worse, they kind of stuck with you guys, right?

You're the only game in town. But if they're extremely unhappy and we're hurting them too, at the same time, sky higher labor costs and you're needing to keep your prices high and make them even higher.

I mean, what's been done in the last five years that justifies these constant increases and this Bill to now automate it to a certain extent.

Chair, we hear you loud and clear. And it's a very. I understand the way that it looks from the outside is that this is like a simple problem to fix, but it's actually, there's a lot of other complexities and considerations, and I'd love to talk about them with anybody who wants to talk to me about them.

But with respect to the customer service issues, I'm going to invite our communications person, Jennifer Lim, our communications specialist, to respond to the comments you made about dissatisfied customers. That plays an anonymous survey.

Before I get into the customer service issues, I did want to add that related to the overtime and the penalty time, some of that is contributed to ocean and weather conditions. Why we operates in a highly complex environment that is heavily influenced by ocean and weather conditions. RA also regulated.

And we are under collective bargaining agreement requirements that we have to maintain. So a portion of that overtime and triple time is, you know, included in that. So while we work through some of those mechanisms, like, we're seeing a decrease in that, but some of it might not all go away.

I understand that 20% of your operational budget, My God. And also, I mean, if it, if it's weather conditions that are completely unavoidable, that kind of speaks to the failure of the business model as a whole. Right?

I mean, if you're operating a business where conditions that are unavoidable are making it so that you can't make money and that your business doesn't work, then why are we here even trying really

to address some of the things that we can have control of to reduce some of that overtime are things like investing in the niashore tension project that helps us make sure that the barge comes in and we're not waiting for the barge to see if it's going to come in that way.

We are not going to put our people in overtime. That's a $1.5 million investment that we made in Lanai specifically to maintain reliable service there, but that we'll probably see over time as the service continues. But to specifically address the customer service related issues.

You know, YB has always been committed to delivering safe and reliable services to the businesses and the communities that depend on us every day. But we do recognize that there's always room to improve, which is why we do have an anonymous survey that's provided to our customers. It's called Voice of a Customer Survey.

And it's provided to them shortly after they finish the service for us. Whether it's shipping a car, shipping a container and whatnot.

That service results are reviewed by our management team on a weekly basis and that information is filtered down to our frontline employees so that we can address the service related issues frequently and as necessary and make sure that we hear what their customers our concerns are and we can address them right away.

Improving customer service is a top priority for YV's new leadership.

Wait one second because I do appreciate that you guys have an anonymous survey. I do want to hear from the other side about that survey right here. Lauren, are you.

Hey, I can't speak directly to what people, but I don't know what. No, no, no.

Are your Members using the survey at all? Do they know about it? I mean, is it, is it even a thing?

I don't know if they know about it. I haven't heard about it. I recently met with one of the other larger shippers and they did a customer survey and they said like 95% of their complaints were related to the Inter Island service, which because they used MYB for their Inter Island service exclusively.

So they were going to be looking into that as well.

Someone move that cursor. It's like a fly on the screen. Thank you.

Anyway. Okay, thank you. I just wanted to kind of. You can gossip.

So our new leadership team, which David had mentioned previously, they got a combined about 60 years of experience solely in transportation and logistics. So building on that foundation, we're hoping that we can improve the overall customer service experience for our customers and work on fixing any remaining service issues that customers are experiencing.

As of March 1, our customer service satisfaction survey score is at 89%.

So we do have room to improve, which is why we encourage all of our customers, including HFIA's 200 members, to reach out to us directly if they are experiencing any issues so that we can find out what's going on and address them as soon as possible.

Yeah, I mean, I'm going to be real honest with you. What I've been hearing is fears of retaliation from being honest with you guys. I think there might be a disconnect here in trust and the relationships that need to be built back up. So that's something I think young brothers might want to look at improving.

I mean, a survey is only as good as it's, you know, the number of people are willing to take it, even if it's anonymous. I think there might be a lack of trust. Anyway, I appreciate the survey results, but I'm not sure that they accurately reflect what people are feeling. And from what I've been hearing, at least.

And, you know, granted, it's like Yelp reviews, right? If you're. If you love a restaurant, you're not going to necessarily go on there, but if they. They piss you off, you're going to go give them one star and write a big paragraph. So I understand that.

I mean, it's like any other customer service issue you have. Right. Everyone remembers the. They, you know, you could do everything right nine times out of ten times, but it's that one time that you fail to meet the expectations that that's the one that they'll remember, and that's what they're going to report on. Right.

We've always been an open book, and it's a, you know, it's really big on our new President to make sure that our customers are heard and they're addressing, you know, all the concerns that they have, you know, and I hope that customers hear us and know that, you know, they shouldn't expect any retaliation from us, you know, because we try our best to make sure that we address the issues.

Issues so that they maintain their anonymity and that we can improve the experience that they have.

Okay, when's the next. This might not be a question for you, but when's the next collective bargaining agreement negotiation?

I believe it's in two years.

Yeah, July 1, 2027.

About a year year change left. Okay. In that are there plans to try to address some of these labor issues? So the surprising thing about the triple overtime is the triple overtime was 725% in 2021. Double overtime was just 23% or, I'm sorry, 8% over time, 17%. It's highly stacked on the.

On the triple dip, it just kind of indicates that something is amiss, I think. I'm just wondering what the, what the plans are to negotiate with organized labor.

I can't speak to the labor relations negotiations, but I can tell you that from an operational standpoint, our operations team has been meeting on a regular basis to make sure that they are addressing triple time and double time and penalty time every week.

So they review it on a weekly basis and they're reviewing the steps that they can do to reduce that.

Are you having trouble hiring more union guys? I mean, I feel like they're willing to work probably at the salary that's been bargained for. It's just that if you're not hiring enough of them, they're going to have to work triple, which I think no one wants.

Sorry, can I just. I think that none of the people we have here today were prepared to speak about that level of detail regarding operations, but I happy to be happy to put you in touch with someone who is able to speak about that level of detail.

Okay. I think we'll be meeting sometime fairly soon, so I. We can talk more about it then. PC again, sorry, did anyone else have any questions for them? Okay, Sorry.

Oh, no, some tiny with PUC. Thank you for being here. He's my cousin.

Trying to figure out what's around your neck. Is that a.

It's a mask. I have a weird throat thing and I've been telling them not to touch me, but if they get sick, it's not going to be my, my fault.

I thought it was like a visor or something or. Anyway, okay, so 2021 audit, tons of stuff on here, a lot of suggestions. How did young brothers do. I mean, how did the independent observer rate them? Were they on track to meet their goals? Or what's kind of like Mary descriptions?

I can go. For the most part, the IO did, did admit that, for the most part, again, that young brothers did meet many of the goals. In some ways cheekily, I guess you could say, but in other ways, wholeheartedly. And I know you're, you're, you're, you know, the face, you're making like the $3.4 million.

Obviously they met, you know, they met it, but, you know, got absorbed real quick. Yeah, yeah, it got, you know, cost rise, whatever. But there are other meaningful changes they did make in 2022-2023 after, after the audit was done.

Kind of begs the question why we're back here though, right? I mean, if the independent auditor had all of These suggestions if, I mean, maybe they were bad suggestions, but if they had met all these goals and yet they still came in for a huge rate increase fairly recently, and now they're asking for this bill.

How are we, how are we back here? Do we need another audit for more benchmarks and more goals in order to control this problem, or will the same thing happen again if we do that again?

Well, that's the issue with having an audit is that you're looking at things after the fact. Maybe having a partner that rides along with young brothers would be more helpful. And that's certainly what we're looking at now. You know, that's part of our order that we are implementing a special overseer.

I know that, you know, they have quibbled about that. They don't really, didn't really want the special overseer at first. We kind of got them around to it and it really is kind of a better partner to keep track of young brothers. So I think having a special observer would be more appropriate, at least at this time.

And looking at audit maybe later would be, would be a fine idea.

You guys just canceled that though. The RFP just got pulled last month. When are you planning on getting this person in place?

Yeah, so we did cancel the initial solicitation. We actually issued the solicitation before they filed their up update, an update to their business plan. We didn't incorporate the changes that they're making into the RFP and we felt RFP was faulty at that time. So we did cancel the original solicitation. We actually solicit.

We actually sent out the solicitation yesterday, the new solicitation yesterday. So we have a copy of it for your Committee. If you'd like it, let us know. And we, we refined it. I redid most of the scope of work to fully refine it.

We saw a lot of issues with the bids coming in that they totally were not really knowing where they were going to, what kind of work they would be doing. Because I left it so open ended because at the time, again, we didn't have the update and now we do.

They gave us the update as of December 17th, which was actually five days after we issued the initial RFP. You know, I'll take some fault with that. You know, that was my fault. Maybe I should have pushed the stabilization back by a month and said instead of canceling, we just, we just push it back by a month.

But we already received, you know, the bids from the bidders and we looked at them and we were not satisfied with what we Got.

So I just like to add what Andrew said earlier too is that you know, a lot of the concerns you brought up don't touch them. But it sounds like you have a throat issue now. Sorry. No, but you know a lot of the issues you brought up we were actually brought up hearing for the actual rate case.

You know because we look at the audit report comparing to what they weren't always successful in every point. You know there's some things that need to be done.

In fact we're asking the IO to kind of go back and make sure as we move forward to the SO to see what has been actually accomplished and what needs to be done moving forward too. We don't want to repeat the past basically. Right.

Did you share that analysis with the Committee later too once we have it?

Yep, we can. So that, that's one thing we were trying to. We're trying to get from the IL2 right now. Let's just conclude that the former IO now. Yes.

But the thing is that we brought up a lot of these issues over time was another one thing we brought up with concern was and then YB decided to put it in their business plan. So that's what they're moving forward. That's being addressed focused on too in the business plan.

Also long term what concern we had was CPA of course like you addressed earlier. This is like 60 plus percent of their fixed costs. It's a huge part of it. And then it's only every three years you can make these adjustments. Right.

So the thing is that we want them to kind of think ahead of time moving forward and that's so would be there too in addition with their new staff, you know, with new CEO, new CFO.

One thing we did meet with them technical conference with the CA and we talked to them about how we plan moving forward implementing this business plan. And one thing what they wanted to we want to see is actually performance metrics.

You know, like not just like promises but also like actually tangible quantitative, you know measures to see if they're actually progressing. And this is, this is the whole thing. We're not against the wiki, the the automatic rate adjustment.

The only thing is that we just want to make sure that they're actually achieve or establish some history of financial stability before they can receive some type of automatic rate increase.

You know, I mean it's just only reasonable because we don't want them to be rewarded if there's some inefficiency there because we won't have any say on it. Right. This automatic rate adjustment. But once they establish that financial stability, that that's something we would definitely consider in terms of the automatic rate adjustment mechanism.

One of the reasons why I'm not necessarily against this automatic rate increase is because they're going to come back for a rate increase at some point.

We just approved. Right, but I mean in the next five years they'll be back. Right? I mean we did a two year stay out, but if there's an emergency or some mitigating circumstances, they still can come in for rake insurance.

Yeah, but I mean in the next five years, like they'll certainly, they'll certainly be back. I would put a prediction market bet on it.

We're hoping that if things go well right. With YB and if they do produce, you know, prove that they actually can, you know, establish a history of financial stability, then then we would revisit that, you know.

But the automatic increases is what I'm saying in this Bill will be accounted for in the next rate case anyway. So it's not like if we don't grant this, they're going to come, come in for the same rate case.

I mean, I would think that you folks doing your jobs would look at the automatic increases that they got prior and take that into consideration when determining whether the next rate case is appropriate or not.

Right. I mean, what I think you're trying to get at is that in the rate case we look at all the expenses and determine it's reasonable. So in the event that they get, let's say they do have wiki year one, year two and whatever it is, 5%, 5%, we could look at their expenses.

Did the expenses actually grow by 10%? Or 5 and 5 would be like 10.5%. Did it actually grow by 10.5%? If they didn't, then we might say no, you don't. We're not giving you 10.5% for that. But if it did, then maybe we would, you know, but we would look at the core costs.

The core costs, the core rate base, the core investment costs that they have, the carrying costs, you know, the normal rate regulation things we look at in a rate case, it's not guaranteed 5%. Right. 5% is the Max. That would be the Max. I was just using an example. I apologize. If I represented as. Yeah.

And it will be based on some type of inflationary index. Yeah, well, but this one's not, this one's. This is based upon Harbor's warpage fee increase percentage.

Still an inflationary cost index, but not inflation. Inflation or for Water carrier.

It'd be specific to water carriers.

Yeah. Yeah. Harbors. Okay. Yeah. We'll talk later though. But thank you. Thank you for being here.

We're available. Yeah, we're still available for any other questions if something pops up. Oh, yes.

I was going to ask the consumer advocate, but I will ask you instead. Last year the consumer advocate raised concerns about the relationship between Young Brothers and their parent company based in Washington and advocated for an investigation into that relationship. Is. Do you share those concerns? Is an investigation within your regulatory scope or do we have.

Have we made any progress in better understanding that relationship and its potential impacts on their, their rate cases?

You can still ask the consumer advocate that question too. It's not. We don't, you know, we don't want to, you know, overstep them anyways.

So I guess addressing that there was obviously when Soul Truck decided to buy Young Brothers off of I believe one Electric at the time or HEI at the time because they used to be with Hei then before that Hawaiian trucking goes way back. Where was I?

We did look at that concern at that time and they think that we thought it was just generally okay that it would be more appropriate for Shimmy company to own YB rather than HEI own YB. And I guess at this time, you know, HEI only has electric companies.

But we do constantly kind of look at that type of arrangement. We look at the costs associated with them being under Salt Truck. They have certain fees that they pay to Salt Truck. You don't want those fees to be outside. You don't want them to have this free flowing type of arrangement. You know, certainly put.

Those are the things that we look at in the rate case. In our rate cases. Sorry.

Well, part. Also part of the audit report too, we asked them to kind of like separate it a little bit more because like they had shared services. Right. So we actually kind of why we took over some of the services so that there will be that tie too. Also.

The IO had access to, you know, even the Salt Truck too. He, he talked to the board, the CEO too as well. As well too. So we have, we had access to them and so. And we're hoping that we're planning that the SO would also have access to YP meetings too as well.

So YB says they're losing money every year, which I believe. How much money are they giving to their parent company every year though?

Yeah, we. You'd have to ask YB. They did represent that to us in the rate case. But it's still information, it changes based on the contracts they have. They have a few contracts, you know, Foster Maritime as well.

Can you guys give us a ballpark? We've given $0 to Saltchuck in the past two years in the form of a distribution because we haven't had any money to give to them.

But I'm assuming that you're talking about contract. It's not a set amount. It's a percentage of. If you guys make money, you just haven't been making any money. Sorry, there was two people talking. It's not like you owe them a flat amount every year.

If you're talking about shared for shared services, then that's one thing. But if we're talking about a distribution of. Yeah, I guess.

I guess any kind of payment, I'm not sure how it's structured.

So there's. There's. There's a contract between Young Brothers and its parent company for shared services.

Now, that covers, like, a lot of, you know, it's just General economies of scale arrangement that a lot of businesses have with whatever, you know, larger, you know, back office stuff like accounting services, certain legal services, like certain software licenses that are shared. You know, we have.

We're under similar insurance plans that are, you know, we get cheaper rates because we're essentially like part of a bulk deal. Essentially. So, yes, there are shared services payments being made for that from us to our parent company.

But with respect to distributions, like discretionary distributions, or I guess what would be more commonly called like a dividend type of thing, we haven't done that in over two years at this point because we haven't had any money to send back to the people who own the company. So.

Okay, yeah, let's hear from our other law school classmate about this. You might want to follow up on that question about the years before those two years. I believe Ms. Beltry is right. Last two years, in the harder times, they have not sent anything back.

But in the plush times, right after they got the 46% increase, there were some discretionary distributions, though. Okay, that's fair. Do you guys have that information about this from before the last two years? Yes, we did, and we reported them to the PUC because it's required that we report all discretionary gave us kind of an idea.

I'm just trying to get a.

So I can't say them out loud in public?

Yeah, write them down now.

Okay, yes, fair. But we. We report them to the PUC and the CA. They're aware of them.

Oh, so wait.

It's confidential to.

It's confidential.

But YB could waive that confidentiality and tell you. I can't.

I can't waive that confidentiality. I don't have authority to wave that.

Okay. I'm curious though, I mean, if you could run it up the chain and ask that. That is something that's a little concerning that that consumer advocate has brought up too. If you guys are willing to waive that to let us know, I appreciate it. I'll look into it. Okay, thank you.

Did you have anything else to add about the.

Oh, I just wanted to say that I'm actually optimistic. I am optimistic, especially about the new business plan and especially about what they're trying to do. Not to increase costs, not to increase rates, but to get their cost structure down.

So Mr. Valtteri talked about the inflexibility of their cost structure. We've looked at that a lot and one of the factors that may make that true is the set routes and schedules. But YB can come in and can ask the PUC to make their routes and schedules more flexible. And that's something we've brought up repeatedly.

And I believe that's something that is a part of their current business plan they are looking at. And I'm optimistic that that could make their cost structure more flexible. Instead of just raising prices, they can start to bring down their costs.

Good to know. Thank you. Okay, well, I'm done for now. Anyone else have questions?

Okay, let's move on to the last bill.

Moving on to HB 1824 relating to condominiums allows small condominium associations to waive the requirement for the reserve study to be reviewed by an independent reserve study preparer every three years if a majority of unit owners at a meeting approve the waiver and complies with their requirements.

DCCA Hawaii Real Estate Commission offering comments.

Afternoon Chair, Vice Chair Members Klein and here on behalf of the Hawaii Real Estate Commission, I will send out a written comments and available for any questions. Thank you.

Thank you. Community Associations Institute Legislative Action Committee in opposition.

Chair, Vice Chair, Community Members, thank you for the opportunity to be here. CEI lack is in opposition of the bill as drafted. If there does want to be some consideration about waivers, it should probably be based more on the property building type rather than the unit count. So far.

For example, if it's a lot, that is CPR to two single family homes and it's just the only common element is a concrete driveway that will last decades and decades, that is a reasonable waiver. But for a community that maybe have 10 or 20 units, that has common areas such as roofs, elevators, things like that.

That's where we would have opposition. So I think that if there is consideration for a waiver it should be based more on property type rather than actual unit counts. Thank you and I'm open for questions.

Thank you. Is there anyone else in person or on Zoom who'd like to testify on this? Okay. Seeing none. Any questions?

Talk to the real estate commission. I think the last testifier had a point. I mean I kind of considered it when I was considering your testimony. I'm not sure I agree with the standard they wanted to set it at which was kind of single story buildings kind of thing.

I am a little more concerned about the two or three story walk ups in wiliui kind of kind of deals which wouldn't then fall under that.

Is there some kind of benchmark we could set for the value of the common elements being considered or the maintenance cost of them or peg it to some kind of per unit cost or maintenance fee?

I'm just trying to think of some other way we could narrow the scope of this to get at those two or three houses sharing a driveway kind of deals that probably don't need every three year, you know, a re up every three years.

There's a couple of ideas at least that comes off in my mind is if the common elements contain an elevator then you can't request a waiver. But if it maybe just contains driveway then you can request a waiver.

Okay, okay, thanks.

So specify the components as to cost I guess might work to an extent given the inflation will always keep costs going up and up and the bill would have to be revised. There is a route to just say, zero but then that might render the bill ineffective for those associations that seek the benefit from.

I have a question for the real estate commission. Thank you. The so I think you mentioned in your testimony that it shouldn't just be an infinite waiver that there should be maybe perhaps a time element to those. I think you suggested.

Well first of all exempting single low rise or single story with no shared common element to just. Was your idea to exempt them completely. But then those who do share common elements if they are given a waiver that the waiver be finite.

And so the finite would be is it like three year waiver or is it a ten year waiver? What was your.

Yeah, a three year waiver could be considered maybe one other idea that was brought up was until the association conducts its next reserve study because this is just a waiver of the review of the reserve study. But three years might be more in line because review is conducted every three years. Thank you.

Thank you. Any other questions?

I think that's it. Let's take a recess.

All right, reconvening. Thank you Members, for the robust discussion. Mostly from me on the young brothers thing, a number of items on the agenda. First up, we've got HB 1984 HD2 relating to renewable energy. Chair's recommendation is to pass this as is. Members, any comments?

I just wanted to say that I support this bill, but my only reservation is that it overrides county home rule. Okay.

Are you voting with reservations? Yes, with reservations. Correct. Support with reservations. Okay, any other comments? Vice Chair for the vote.

Okay. Voting on HB 1984 HD2. Chair's recommendation is to pass as is. [Roll Call] Chair, your recommendation is adopted.

Thank you. Members, Moving on to HB 1593 HD1 relating to affordable housing. Chair's recommendation has passed this as is as well. Members, any comments?

I just wanted to share. I, I, I'm supporting this Bill, but my only reservation reservation is that it will, I think it will create a lot more pet owners who will then try to eventually rent apartments in the private marketplace, which I think is very limited.

So they may have the tense unintended consequence of setting more people up for potential homelessness with pets.

Okay, thanks. Members, any other comments? Vice Chair for the vote,

voting on HB 1593 HD1. Chair's recommendation is to pass as is. Representative Iamoto voting with reservations. Yes. Any other reservations? Any nos? Oh, I'm sorry. Noting the excused absence of Representative Peric on all on this measure and all others on the agenda unless otherwise noted. Chair, your recommendation as well.

Moving on to HB 2423 HD2 relating to biodiesel. Rep. Kusch worked very hard on this bill, which we appreciate. Chair's recommendation is to amend this slightly. We're going to codify it instead of just putting it in session law so it'll stick around for a while.

I do want to put in the E10 enforcement mechanisms here to give a little bit of tea and put in a provision that if the biodiesel supply is insufficient, then companies can use renewable diesel as well to meet the P5 goals. Members, any comments? Vice Chair for the vote.

Voting on HB 2423 HD2. Chair's recommendation is to pass with amendments. Any reservations? Any noes? Recommendation adopted.

Moving on to HB 1691 HD1 relating to transportation. Chair's recommendation is to put a. I think I'm going to put in the Committee report the effective date of July. Suggest an effective date of July 1, 2027.

We've been in contact with the DMV and they needed a little bit of time to put this measure into place in their systems. That will just be in the Committee report though. We also want to change a little bit of language here on page two, line 12. David is normally notarized.

It's a little weird not to have one notarized. So instead we're going to have it read or a declaration signed electronically without a notary. Just a little matter of semantics. Members, any. Any comments? Vice Chair for the vote.

Voting on HB 1691 HD1. Chair's recommendation is to pass with amendments. Any reservations? Any noes? Chair, your recommendation is adopted.

Moving on to HB 2283, HD 1, relating to port pilotage. Chair's recommendation is to pass this as is. Members, any comments? Vice Chair for the vote.

Voting on HB 2283, HD 1. Chair's recommendation is to pass as is. Any reservations? Any noes? Chair, your recommendation is adopted.

Moving on to HB 2386, HD 1, relating to water carriers. Chair's recommendation is to add a provision in this bill to require the PUC to appoint the Special Overseer by July 1, 2026. Members, any comments?

Yes, Chair. I'll be voting no. And I'll be citing the concerns raised by DCCA's Consumer Advocate, and also that we're not accepting the recommendation of the PUC, which is to replace the shall with may. For those reasons, I'm voting no.

Okay, thank you. And I want to assure the committee I will be having a robust discussion with PUC and Young Brothers in the very near future. Members, any other comments? Vice Chair for the vote.

Voting on HB 2386, HD 1. Chair's recommendation is to pass with amendments. Any reservations? Representative Kong. Representative Tam. Representative Ilagan. Any other reservations? Oh, okay. Lowen and Marten. Okay. Any noes? Rep Iwamoto. Okay. Chair, your recommendation is adopted.

Thank you, Members. Moving on to HB 1824, relating to condominiums. Chair's recommendation is to defect the date. We're also going to add a provision allowing the, preventing condominium, the small condo associations who voted to skip one of the three year reserve study reviews to not be able to skip the next three year review. So they'll be able to skip one, but then maximum it'll be six years before the new reserve study review. Members, any comments? Vice Chair for the vote.

Voting on HB 1824. Chair's recommendation is to pass with amendments. Any reservations? Any noes? Recommendation adopted.

Moving on to HB 1697, relating to natural hair braiding. Chair's recommendation is to defect the date. We're going to also be amending the, amending it to add a DCCA registration for hair braiders.

The Board of Cosmetology, requiring the Board of Cosmetology to set the required courses for hair braiders for sanitation, health, and safety, and require the Board to set these course requirements by November 1, 2026. Members, any comments? Vice Chair for the vote.

Voting on HB 1697. Chair's recommendation is to pass with amendments. Any reservations? Any noes? Chair, your recommendation is adopted.

Moving on to HB 2164, HD 1, related to workers compensation. Had some discussion with the testifiers, and I think the bill looks good. Chair's recommendation is to pass this as is. Members, any comments? Vice Chair for the vote.

Voting on HB 2164, HD 1. Chair's recommendation is to pass as is. Any reservations? Any noes? Chair, your recommendation is adopted.

Thank you, Members. Moving on to HB 2165, HD 1, relating to the Hawaii Employment Security Law. We'll be adding a savings clause to this. I also want to note in the committee report a suggested effective date of April 1, 2027 to allow DLIR to implement these changes with their new main, corresponding with their new mainframe update.

We're also going to add language allowing or restricting DLIR's ability to claw back to 25% of each UI payment for recipients for overpayment reimbursement purposes.

I don't want to do it here, but I am going to add to the committee report recommendation that the next committee look at whether there should be some kind of floor set after which they cannot claw back UI payments. My understanding is that the UI office often enters into payment plans with individuals.

The whole point of UI is to sort of be a lifeline for these individuals. If we dip UI down past a point where they can't, where people can't survive, I am concerned about that. So we'll set it at a 25% clawback for now. But if the floor is set that claw back number percentage probably higher above that floor. Members, any comments?

Yes, Chair. I'll be voting no on this. I'm really concerned about the federal administration's interpretation of Congress's law. And the idea that states are expected to change their statutes based on these interpretations.

That many of the federal agencies interpretations have been challenged by our state Attorney General. And although this one is very new, it only came out in January. And I don't know if Attorney Generals from across other states have had time to look at this and think about challenging.

I know I put a call in to the Attorney General's Office and did not get a call back about the status on this particular agency interpretation. But because of that, I just don't think it makes sense for us to codify in our statutes the whims of the federal agency that can change next year. Thanks.

You know what? I'm going to change my recommendation for this bill. I do want to put in a floor. Let's put in a floor of $1,000 a month where UI cannot be clawed back, and then 50% of each UI payment above that floor that can be clawed back.

I just, I really want to make sure people have something to be able to pay rent and live on when they're on UI. Sorry. Any comments about this change, Members? Okay. Vice Chair for the vote.

Okay. Voting on HB 2165, HD 1. Chair's recommendation is to pass with amendments. Any reservations? Noting no from Rep Iwamoto. Any other noes? Chair, your recommendation is adopted.

Okay. Thank you, Members. We're adjourned.