BC Libs Ignored Own Law on Ferry Price Hike: NDP

Fuel surcharge a 'backdoor' way to get prohibited fare bump, says MLA Coons.

By Andrew MacLeod 28 Nov 2011 |

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

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Coons: Price rise 'a slap in face, not only to ferry users but to the minister.'

The British Columbia government passed a law in June that was to block an increase in ferry fares until Oct. 1, 2012, but is allowing a fuel surcharge to go ahead.

The government passed Bill 14 in June, making amendments to the Coastal Ferry Act to address public concerns about sharply increasing ferry fares. Among other things, the bill was to "prevent ferry operators from obtaining extraordinary price cap increases... until October 1, 2012," according to an explanatory note.

Extraordinary price cap increases, according to Section 42 of the act, are for things like "an extraordinary increase in the price of any non-controllable input such as fuel."

On Nov. 25, BC Ferry Services Inc. announced fares will rise by 2.5 per cent on Dec. 12 on major routes, thanks to a fuel surcharge. They will also introduce a 2.5 per cent fuel surcharge on the Horseshoe Bay-Langdale route.

The New Democratic Party's Gary Coons was quick to point out the increase breaks at least the spirit of the government's June law.

During debate of Bill 14, Transportation Minister Blair Lekstrom first said that it would prevent BC Ferries from requesting such an increase, but later said the intent was to make sure ferry users would know there would be no unexpected fare hikes. 

In a key part of the debate, Coons asked Lekstrom what would happen in the period up to Oct. 1, 2012: "As far as no extraordinary price caps, under what circumstances would an extraordinary price cap increase be allowed?"

Lekstrom responded, "Under the bill that we're debating here before the House, under no circumstances could that take place -- any extraordinary price-cap increase."

Following ruling, says BC Ferries

"We're following the commissioner's ruling on the management of fuel deferral accounts, and that's not affected by Bill 14," said Deborah Marshall, a BC Ferry Services Inc. spokesperson.

Transportation Minister Lekstrom was unavailable for an interview with The Tyee, though he told CKNW radio he's concerned about the increase.

His ministry, however, appears to accept the increase is necessary and legal. "The fuel surcharge dates back to 2004, when the Ferry Commissioner created a fuel surcharge mechanism to address the effects of volatile fuel prices," a ministry spokesperson said in an emailed statement. "BC Ferries has rebated the fuel surcharge to passengers if and when the price of fuel drops."

Despite the arguments from BC Ferries and the government, fuel surcharges have been closely related to price caps since they were introduced.

At the end of the first performance term in 2008, the amount in the deferral account was rolled into price cap increases and passed on to passengers as higher fares.

And when The Tyee asked deputy ferry commissioner Sheldon Stoilen how price caps and fuel surcharges are linked, he said, "Yes, very definitely they are."

'It was our interpretation': Stoilen

The price of fuel is volatile and the commissioner has tried to give BC Ferries some flexibility to address the fluctuations, Stoilen said. The most recent order on fuel surcharges, dated Nov. 30, 2008, allows BC Ferries to raise or lower them within a certain range at its discretion, as long as it gives at least 15 days notice.

"All current orders of the commission are still to be applied," Stoilen said. "The administration under previous directives, orders, memoranda still apply as far as the commission is concerned."

Asked what part of the Coastal Ferry Act allows for deferral accounts, Stoilen said, "I guess I would say there's Section 42, which allows BC Ferries to apply for an increase in the price caps based on unforeseen increases in costs."

There is no other section of the act that allows for the establishment of deferral accounts or the commissioner to approve them, he acknowledged.

Rather than increase the cap, the surcharge was created, he said. "It was our interpretation of Section 42."

That is, as mentioned above, the section of the law that deals with extraordinary price cap increases, the same section Lekstrom suspended in June.

'Backdoor' Christmas fare hike: NDP's Coons

As a transportation ministry spokesperson put it, the commission had already approved the mechanism, "so this fuel surcharge announced today is not a new extraordinary price cap request under Section 42." 

While the act failed to spell out the authority to establish such a mechanism, the spokesperson pointed out that it does not prohibit it either.

BC Ferries' Marshall, when asked if she could point out which section of the act allowed for the fuel deferral accounts, said, "Not specifically, but it gives (the) Commissioner wide latitude in setting price caps and this is per his orders and memoranda."

It's bizarre the government would allow a three-year-old memorandum to override its legislation from June, said the NDP's Coons. "They're ignoring the spirit of the legislation Lekstrom brought in," he said. "It's a slap in the face, not only to ferry users but to the minister himself."

It's "unbelievable" Lekstrom would allow the fare hike to be made, said Coons.

"I think this is a real slimy way to try to sneak in a fare hike ,and it's being sanctioned and approved by Lekstrom and the government," he said. "Here they are with this backdoor way of bringing in a Christmas fare hike."

[Tags: Politics.]  [Tyee]

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