BC Ferry Commission Announces Preliminary Price Cap of 9.2% for Next Performance Term

VICTORIA, British Columbia, March 31, 2023 (GLOBE NEWSWIRE) -- The British Columbia Ferry Commission today announced its preliminary decision on the price cap for BC Ferries' next four-year performance term. This preliminary decision, if finalized, would allow average ferry fares to increase by a maximum of 9.2% annually from April 1, 2024 to March 31, 2028. A final decision ? which will take into account recently announced additional provincial funding of $500 million ? will be confirmed on September 30, 2023.

"Facing labour difficulties and high inflation, BC Ferries is emerging from the current performance term (PT5) in less-robust financial shape than initially expected. And the next four years (PT6) will bring significant additional challenges," says Commissioner Eva Hage. "Continued labour supply issues, rising fuel prices, escalating costs associated with maintaining an ageing fleet, and a 12-year, $5.2-billion proposed capital plan driven by a need to replace vessels will create substantial pressure. Given this, we believe that a price cap of 9.2% is appropriate and necessary to allow BC Ferries to meet the demands of the upcoming performance term."

The proposed maximum increase marks a sharp departure from the PT5 and PT4 price caps of 2.3% and 1.9%, respectively. The higher price cap is contingent, however, on BC Ferries identifying $10 million in operating cost savings over the four-year term. Additionally, the Commissioner has reduced BC Ferries' proposed capital plan ? the largest in the corporation's history ? by $330 million.

"Although we believe that a higher price cap is necessary to ensure BC Ferries' financial stability in PT6, it will not come without higher expectations," says Hage. "The corporation must demonstrate good fiscal management and find a solid footing in which expenses align with revenues. To that end, we are requiring BC Ferries to provide us with a plan that sets out the steps it will take, in consultation with the Province, to ensure a financially sustainable, safe, reliable and affordable ferry system over the long term."

In setting the preliminary price cap, the Commissioner reviewed BC Ferries' Performance Term 6 submission provided on September 30, 2022, as well as a supplemental submission made on March 3, 2023. In these, the ferry operator details its capital plan, projected expenses and traffic forecasts. The Commissioner also considered public input, as well as the results of a third-party performance review on BC Ferries' organizational effectiveness, risk management and yield management.

The Commissioner's preliminary decision does not take into account the provincial government's recently announced $500 million in new funding, as the details as to how this funding will be applied have not yet been determined. The $500 million will, however, be taken into account prior to finalizing the price cap on September 30. "Certainly the $500 million will help alleviate a significant amount of the pressure facing our ferry system," says Hage, "and allow us to lower the final price cap accordingly."

More detailed reasons for the proposed price cap increase for the upcoming performance term are set out in the Commissioner's Report on the Preliminary Price Cap Decision for the Sixth Performance Term.

Next Steps:
The British Columbia Ferry Commission will confirm the price cap on September 30, 2023. In making the final decision, the Commissioner will consider the recently announced $500 million in provincial funding, as well as any other relevant information received from April through July of this year, including amendments to the Coastal Ferry Services Contract, additional input received from the public, and new information received from BC Ferries or the provincial government.

Public input on the PT6 price cap is welcome at bcferrycommission.ca/share-your-thoughts or by mail at:
PO Box 9279 Stn Prov
Victoria, BC, V8W 9J7

About the British Columbia Ferry Commission:
The British Columbia Ferry Commission (BCFC) provides independent oversight of BC Ferries' regulated ferry service. BCFC's role is to hold ferry service providers accountable to the people of BC, balancing the interests of ferry users and taxpayers with the financial sustainability of the ferry operator.

The Commissioner's primary responsibility is to regulate fares by setting the price cap. Additionally, they approve or set conditions for major capital expenditures, monitor BC Ferries to ensure that it adheres to its service contract with the provincial government, regulate unfair competitive advantage, conduct performance reviews, and encourage BC Ferries to meet provincial greenhouse gas emission targets, to innovate, and to minimize costs while maintaining safe and reliable services.

Contact:
British Columbia Ferry Commission
Eva Hage, Commissioner
Piet Langstraat, Deputy Commissioner
250 952-0112
bcferrycommission.ca
[email protected]
@ferrycommission

Media Contact:
Susan Kerschbaumer Communications
206 718-9495 (March 31)
250 217-5074 (From April 3)
[email protected]