PSC to conduct hearings on St. John ferry rate hike
Published: February 27, 2013
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ST. THOMAS - The V.I. Public Services Commission will conduct public hearings today and Thursday concerning a proposed increase in ferry rates by the two companies that control transportation between St. Thomas and St. John.
Varlack Ventures and Transportation Services of St. John have requested a rate increase of 50 cents per trip - or $1 round-trip - and a $2.25 increase in fees for checked luggage.
The fare increases would apply to the following classes of riders: adults, children, seniors, teachers, students, commuters and bulk.
A hearing will take place at 6 p.m. today in the cafeteria of the Julius Sprauve Elementary School in Cruz Bay on St. John.
A hearing also will take place at 6 p.m. Thursday at the office of the Public Services Commission in Barbel Plaza on St. Thomas.
The Public Services Commission has appointed a private attorney, Dolace McLean, to listen to public comment and act as a hearing examiner. McLean then will make a recommendation to the commission's board as to whether to adopt the proposed fare increases, according to Tisean Hendricks, a Public Services Commission utility staff assistant.
Varlack and Transportation Services share a ferry franchise agreement to provide public transportation between St. Thomas and St. John, but they are two different companies.
The franchise holders are legally entitled to a rate of return between 6 percent and 8 percent.
The two companies submitted a report by a private consultant arguing that the rate increases are necessary to generate the 8 percent profit prescribed by the Public Services Commission.
According to the report, written by Malcolm Kirwan and submitted to the Public Services Commission in January 2012, ridership on the ferries declined 30.5 percent from 2006 to 2011.
Since 2010, the two companies have not received subsidies from the V.I. government to close the gap between revenues and the prescribed 8 percent return on investment, according to the report.
Based on numbers from 2010, the two companies had a combined net loss of $208,538 before taxes, which represents a gap between the goal of 8 percent profit and the actual revenue of $479,933, according to the report.
The fare increases should generate an extra $480,307 in revenue, according to the report.
"The fares proposed are modest and reasonable, amounting to a nominal increase of 50 cents for each class of service plus an increase of $2.25 for each item of checked baggage," the report states. "The incremental revenues of $480,307 would be sufficient to cover the revenue deficiency of $478,933. This additional stream of revenues would enable the consolidated franchise to earn the minimum allowable rate of return of 8 percent or $137,167 in profits after taxes as prescribed by the Public Services Commission."
The report used ridership data from 2010 and 2011 to project ridership numbers and revenues for 2012, and the author projected a further drop of 2.5 percent in passenger traffic for the year 2012.
Hendricks said she did not know why the issue of fare increases was not taken up by the commission earlier, given that the report was submitted in January 2012.
The recommendations in the report will form the basis of the requests for fare increases in spite of the data being old, Hendricks said. For more information about the hearings, contact Hendricks at 776-1291 or by email at email@example.com or in person at the Public Services Commission office in Barbel Plaza.
- Contact reporter Amanda Norris at 714-9104 or email firstname.lastname@example.org.