Canada Gazette, Part I, Volume 150, Number 2: Regulations Amending the Pacific Pilotage Tariff Regulations
January 9, 2016
Statutory authority
Pilotage Act
Sponsoring agency
Pacific Pilotage Authority
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Issues
The Pacific Pilotage Authority (the Authority) has continued on its planned rundown of the surplus that had been built up over the past several years. As a result of this planned rundown, the Authority has run a deficit in fiscal 2013 and 2014, and will run a deficit in 2015 and 2016. This action was planned and agreed to in order to assist Authority customers.
The marine industry that the Authority serves continues to struggle with the ongoing issue of overcapacity, limited cargo opportunities and low charter rates, as it has since the global economic downturn in 2008–2009.
Without changes to the tariff, the Authority expects to incur substantial losses in fiscal 2016, which will bring the Authority into a deficit cash and liquidity position.
Background
The Authority is a financially autonomous Crown corporation listed in Schedule III of the Financial Administration Act whose role is to establish, operate, maintain and administer, in the interest of safety, an efficient and economical pilotage service within all coastal waters of the west coast of Canada, including the Fraser River.
Section 33 of the Pilotage Act allows the Authority to prescribe tariffs of pilotage charges that are fair and reasonable to permit the Authority to operate on a selfsustaining financial basis.
Objectives
The Authority's objective is to ensure that it continue to safely operate on a self-sustaining basis. In order to do so, the tariff charged to customers for assignments must be implemented such that it accounts for the declining cash balance.
Description
The Authority proposes to implement a temporary surcharge of $120 per assignment effective from July 1, 2016, to December 31, 2017.
This fee is intended to provide temporary relief to the Authority, which is experiencing increasing losses and a decreasing cash position. It is expected that during this period, a longer term sustainable tariff plan will be put in place.
“One-for-One” Rule
The “One-for-One” Rule does not apply to this proposal, as there is no increase in administrative costs to business. The proposal is not a new regulation.
Small business lens
The small business lens does not apply to this proposal.
Consultation
The marine industry on the west coast of Canada is the key stakeholder impacted by this proposal.
The Chamber of Shipping of British Columbia supports this tariff. The Shipping Federation of Canada (the Federation) opposes the tariff.
The Chamber of Shipping of British Columbia represents approximately 90% of industry agents on the west coast of Canada, with the remaining 10% represented by the Federation.
The Federation does not support this tariff. The Authority has explained its position and the fact that this action is part of a planned reduction in the Authority's cash position implemented in 2012 (when the Federation was not present on the west coast of Canada) and that the current loss rate is unsustainable and would affect the Authority's ability to maintain its self-sustaining position. The Federation has not suggested an alternative.
In an effort to ensure the Federation is fully informed, the Authority has met with the President and the west coast representative of the Federation to explain the detailed rationale for this bridging tariff. At this meeting, the Authority also addressed the concerns of the Federation. The Federation committed to take this item back to its membership, but the Authority has not yet heard back on any further resolutions.
Rationale
The Authority has continued to run down surpluses that had been built up over the past several years. As a result of this planned rundown, the Authority has run a deficit in fiscal 2013 and 2014, and will run a deficit in 2015 and 2016. These deficits are the result of the Authority not matching industry tariff increases with increases it received from the British Columbia Coast Pilots (BCCP).
Since 2012, the Authority has paid the BCCP an increase of 4% per year (in 2012, 2013, 2014 and 2015). Over the same period, the Authority has increased its tariff by 2.9%, 2.9%, 2.25% and 2.5%. The costs of the BCCP represent approximately 67% of the Authority's total revenues. Choosing to not match contractual increases therefore results in a substantial effect on the Authority's cash position.
It was always intended that once the surplus cash was used up, the Authority would need to rebalance the tariff and charges in order to maintain its self-sustaining mandate.
In 2015, several phenomena have increased the speed of the loss of cash of the Authority, namely
- higher callback costs to the BCCP due to lower pilot availability;
- lower industry volumes due to a downturn in coal and forestry; and
- a significantly delayed $60 pilot boat replacement fee that was budgeted to be effective January 1, 2015.
As a result, the Authority requires the bridging fee to help slow the loss of cash, which is occurring at an elevated pace.
Implementation
The temporary tariff would come into effect on the later of the day on which the Regulations are registered and July 1, 2016.
Contact
Stefan Woloszyn
Director
Finance and Administration
1000–1130 West Pender Street
Vancouver, British Columbia
V6E 4A4
Telephone: 604-666-6988
Fax: 604-666-1647
Cellular: 604-365-8268
Email: swoloszyn@ppa.gc.ca
Web site: www.ppa.gc.ca
PROPOSED REGULATORY TEXT
Notice is given, pursuant to subsection 34(1) (see footnote a) of the Pilotage Act (see footnote b), that the Pacific Pilotage Authority, pursuant to subsection 33(1) of that Act, proposes to make the annexed Regulations Amending the Pacific Pilotage Tariff Regulations.
Interested persons who have reason to believe that any charge in the proposed Regulations is prejudicial to the public interest, including the public interest that is consistent with the national transportation policy set out in section 5 (see footnote c) of the Canada Transportation Act (see footnote d), may file a notice of objection setting out the grounds for the objection with the Canadian Transportation Agency within 30 days after the date of publication of this notice. The notice of objection must cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to the Canadian Transportation Agency, Ottawa, Ontario K1A 0N9. The notice of objection must also be filed with the Minister of Transport and the Pacific Pilotage Authority in accordance with subsection 34(3) (see footnote e) of the Pilotage Act (see footnote f).
Vancouver, December 23, 2015
Kevin Obermeyer
Chief Executive Officer of the Pacific Pilotage Authority
Regulations Amending the Pacific Pilotage Tariff Regulations
Amendment
1 The Pacific Pilotage Tariff Regulations (see footnote 1) are amended by adding the following after section 6:
Temporary Surcharge
6.1 For an assignment that begins before January 1, 2018, a surcharge of $120 is payable on each pilotage charge payable under section 6.
Coming into Force
2 These Regulations come into force on the later of the day on which they are registered and July 1, 2016.
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