Beginning tomorrow, the Molokai ferry will initiate a temporary fuel surcharge that will add $26 to the $40 one-way ticket price, The Maui News reported today.

Later this month, the Public Utilities Commission will hold public hearings on Maui and Molokai to consider a permanent fuel-cost pass-through for Sea Link of Hawaii, which has operated a ferry between Lahaina and Kaunakakai since 1988.

"If the tariff doesn't pass, we shut down," David Jung, president of Sea Link, said Tuesday.

The last general tariff was established in 1995, when diesel oil cost about $1 a gallon. Recently, Jung has been paying $4.25 a gallon.

In May, both Sea Link and Expeditions, which operates the ferry between Lanai and Lahaina, went public with their concerns about oil prices. Jung's solution has been to ask for a neutral fuel cost pass-through, worded exactly like the one the PUC wrote into the rules for the Hawaii Superferry.

Although Jung has to go through a formal docket and hearing process to make the pass-through permanent, he has gotten PUC permission to begin using it temporarily on Friday. He says he cannot predict what effect the higher fare will have on his business. "That's the big question," he said.

But the weekly tracking of domestic visitor arrivals shows a decline of about 20 percent during the first part of August, and Jung said he's seeing that reflected in bookings for his other, tourist-related businesses.

The proposed tariff would not apply to Molokai residents commuting to jobs in West Maui whose fares are subsidized by their employers. The ferry was originally established at the urging of Gov. John Waihee at a time when Molokai was losing jobs and West Maui resorts were short of workers.

Until 1995, the state subsidized Sea Link's Molokai workers' service for up to $30,000 a month. Then Gov. Ben Cayetano cut off the subsidy and Jung regrouped. He obtained a smaller boat, the Molokai Princess, and continued to operate, but the business has been marginal.

In a letter last month to PUC Chairman Carlito Caliboso, Jung noted that his small company has not enjoyed the financial support that the state has given the Hawaii Superferry, although the Molokai Princess has managed to plug along, averaging "less than one day per year of cancellations because of weather."

That was a dig at the Superferry, which was tied up for weeks at a time over this past winter because of weather or weather-related damage.

At first, Jung says, the PUC wanted him to seek a general tariff revision, a lengthy and expensive process.

"We have always been a small (under $2 million in gross sales) locally owned and operated company. We simply do not have the hundreds of thousands of dollars to lobby government officials, and (we) receive no subsidies or loan guarantees from the state, county or federal government," he wrote.

He also said that his company needed relief quickly. After some negotiations, and with backing from the state consumer advocate, the commission staff agreed that a revision to one section of the tariff would be considered, instead of a rehearing of the entire tariff.

This will be much cheaper for Jung, although he said he already has had to spend $20,000 on lawyers and accountants to prepare the application for the temporary surcharge.

He told Caliboso Sea Link's situation is "desperate."

"We are in an emergency energy crisis and cannot operate in a 'business as usual' mode," he said.

He reminded Caliboso that "the governor chided Aloha Airlines for not speaking out before shutting down. I am speaking out as loudly as I can that we cannot continue to operate without an immediate temporary rate increase."

The pass-through Jung wants starts at a base price of $300 a metric ton for fuel oil. Since a metric ton equals just over 300 gallons, that works out to a dollar a gallon.

Jung wants to add a surcharge equal to 2 percent of the ticket price for each 10 percent advance in the price of fuel.

The surcharge would be adjusted up or down every month, based on the average price of fuel delivered in the previous month.

Many other regulated, oil-intensive businesses have fuel pass-through charges, including Maui Electric Co.

Hawaii Superferry says its current calculation of the surcharge works out to 68.7 percent of the base price. However, during its promotional fare period through October, it is waiving the surcharge for passengers. Commercial customers are paying the surcharge.

Jung's calculation comes out very close to Superferry's. On Friday, he will add a pass-through of 65 percent (with taxes applied).

If his fuel cost should advance another 25 cents a gallon to $4.50 a gallon next month, that would up the pass-through by $2 per ticket. If his diesel costs should drop by 25 cents to $4, the surcharge would drop $2 to $24.

Jung warned his customers in a letter distributed on Aug. 4 about the changes. The surcharge will affect adults and children and six-ticket commuter books. That means a six-ticket booklet will cost $352.10.

"This surcharge is absolutely necessary to keep our round-trip commuter worker program alive," he warned.

Public hearings on the permanent surcharge will be held at 6 p.m. on Aug. 27 at Kaunakakai School cafeteria and on Aug. 28 at Maui Waena Intermediate School cafeteria.

More Maui News at www.mauinews.com.