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Commissioner finds BC Ferries has 'unfair advantage' in drop trailer biz

British Columbia Ferry Services Inc. has an unfair competitive advantage offering its drop trailer service and must charge more, B.C. Ferry Commissioner Martin Crilly said in a ruling released today.

BC Ferries has the advantage over competitors including Seaspan and Van Isle Barge Services Ltd. because it is exempt from income tax and "operates under a regulatory framework designed to allow it to meet the cost of providing its contracted capacity, plus a return on equity, through price caps set before the start of each performance term."

Crilly ruled that a "route overhead charge" should be applied for BC Ferries' costs that are indirectly related to the drop trailer service. "This charge recognizes BC Ferries’ provision of terminal and deck space and marine transport, for drop trailers. It is in addition to the costs that BC Ferries considers appropriate as presented in its submissions to the commission."

BC Ferries has been pricing its service on the major routes between the Lower Mainland and Vancouver Island "below its direct costs and an appropriate proportion of indirect costs associated with the service," it said.

Starting on April 1, 2011, the Ferry Commission will set a minimum allowed tariff and will review BC Ferries records to make sure the publicly-owned company complies.

"The ruling should remove the uncertainty in the market and set a level playing field, while still allowing for BC Ferries to offer drop trailer service to its customers at reasonable rates," Crilly's announcement said. "BC Ferries will not be limited on how it can expand the service, including during peak periods."

BC Ferries' decision to offer drop trailer service was met with opposition from Seaspan and VIBS who argued the competition was unfair. Seaspan hired former deputy to the premier Ken Dobell to lobby the government regarding the service.

A BC Ferries spokesperson did not immediately respond for a request for comment.

Andrew MacLeod is The Tyee’s Legislative Bureau Chief in Victoria. Reach him here.

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