A preliminary decision by the Office of the B.C. Ferries Commissioner would cap annual ferry fare hikes at 2.3 per cent for five years starting in 2020.
The ferries commissioner’s office said a maximum yearly fare increase of 2.3 per cent is based on total operating expenses increasing at, or just above, the rate of inflation.
At the same time, commissioner Sheldon Stoilen expects the trend of increased ferry traffic will level off by next year.
The proposed price cap covers April 1, 2020 to March 31, 2024.
The commissioner has until September to finalize the decision and public comments are being accepted until the end of June.
Deborah Marshall, B.C. Ferries executive director of public affairs, noted the preliminary decision does not necessarily mean ferry fares are going to increase by 2.3 per cent across the board. “This is the maximum permitted increase to average fares,” she said.
“With this preliminary decision in hand, we now have an opportunity to discuss price caps, service levels and service fees with the province.”
Marshall called the preliminary decision workable given B.C. Ferries’ plans.
“Our goals for the next four years are ambitious. The $3.9 billion 12-year capital plan is the largest in B.C. Ferries’ history. We are ready to upgrade existing vessels, purchase new vessels, invest in the fleet maintenance unit and upgrade and rebuild terminals,” she said.
B.C. Ferries was permitted to implement annual fare hikes of up to 1.9 per cent during the last five-year performance term, but Stoilen said average increases were lower than the maximum allowed. He is pleased the proposed price caps are close to the consumer price index in B.C., but warns holding the line on fare increases could become increasingly difficult.
“The major challenges to operating a world-class system that is affordable to the riding public and taxpayers can be expected to persist and even deepen,” Stoilen said.
Fuel costs are the second-highest cost for the service and are estimated at $108.7 million for fiscal 2019, but Stoilen said they have been effectively managed and could decline due to higher use of liquefied natural gas.
However, long-term capital plans will have a moderate impact on the upcoming performance term and “could have a larger impact for following terms,” the commissioner said.
Stoilen pointed to non-controllable costs , such as $19.8 million for the provincial carbon tax, $6.1 million for the new provincial health tax and $19.4 million for Canada Pension Plan rates.
He urged B.C. Ferries to develop a plan for the conversion to all-electric ferries as soon as infrastructure and technology is available.
Marshall said the corporation is already walking down that path.
“We are actively looking at electrification and we are motivated to move in this direction when the technology becomes more feasible for our operation,” she said. “We actually have two 47-vehicle hybrid-electric ferries currently under construction. We plan to put these ships into service early next year. We can convert them to fully electric in the future.”
Other recommendations include possible reductions in the long-term capital plan to ease pressure on future price caps at the publicly owned, independently managed company.
A tracking process and reporting requirement to meet targets for reducing operating, maintenance costs and administration costs should also be developed, Stoilen said.
— With The Canadian Press