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PSC Approves $1 Surcharge to Keep Ferries Afloat

Aug. 11, 2005 — Without a $1 surcharge for ferry operators, V.I. residents might have seen service between St. Thomas and St. John discontinued within the next few months. So said Claudette V. Ferron, the attorney representing the two franchised ferry services contracted to provide scheduled transportation between the two islands. Ferron testified at a Public Services Commission meeting Thursday.
Transportation Services of St. John and Varlack Ventures, the franchise holders, have been charging $3 for a one-way adult fare since 1989.
Ferron pointed out that in the years since the last rate increase, fuel costs had skyrocketed by about 200 percent, while other operating costs had risen, too.
Ferron said the $1 surcharge was desperately needed to keep the boats afloat until a rate increase could be negotiated. "Ferry boats can't wait for a full proceeding to take place," Ferron said, adding that her clients would be out of business within the next two months without some relief.
PSC commissioner Jerris Browne agreed the ferries needed help, but asked, "Why is $1 the right figure?"
Ferron replied the figure wasn't necessarily right, but that the dollar surcharge would provide some support while the correct figure was determined to keep the boats in service for the long term.
"The rate in 1989 was $3 … fuel was $20 a barrel," she said. "Today fuel costs $65 a barrel, so the $1 surcharge is not enough."
And she pointed out that fuel is not the only cost that has risen — salaries, insurance and dockage fees have all increased in the 15 years since the last fee hike.
Ferron said the ferries' per-hour cost to run was $325.74, while revenues were $236.53 per hour. "Anytime you haven't had an increase in 15 years, you're going to run at a deficit."
She said the moderate increase was a temporary measure, "just to stop the hemorrhaging."
Ferron said, "The ferry boats can't afford to wait for a detailed analysis to ask for a $1.36 increase."
None of the commissioners disagreed that the ferry operators needed an increase, and in fact, in the end they voted to allow the franchisees to impose a $1 adult surcharge and a 50-cent senior citizen surcharge.
However, a few commissioners had questions about the operations and the fairness of imposing the surcharge when services were not up to speed.
Commissioner Alecia Wells said the boats needed to be fumigated. In reponse, Kenrick C. Augustus, general manager for Transportation Services, said fumigation was in his plan.
Boyd Sprehn, PSC legal counsel, asked what percentage of the ferry services' costs were actually for fuel. Ferron said 25 percent.
Ferron said the astronomical rise in costs without corresponding revenue increases has played havoc with vessel repairs and maintenance. "You may have noticed new vessels that have not been in service before," Ferron said, adding that the vessels have been leased by Varlack to replace vessels that have had to be taken out of service.
According to Ferron, Varlack has been so damaged by the deficit they've been running that they also had to suspend nonfranchise operations, which Ferron said bring in $710 per hour.
Ferron says Transportation Services is still getting 10 percent of its business from its nonfranchise operations. She also pointed out that ferry boat nonfranchise activities were subsidizing the public transportation franchise operations, which she said was "unlawful" and "unconstitutional."
Commissioners questioned if the ferry companies weren't entitled to federal highway funds or other government subsidies.
Ferron replied that they were, but said the governor hadn't pushed the Legislature to appropriate funds. And the federal money, she said, had to be passed through Public Works down to the ferries, so there was no guarantee of how much they could get or when the money would be available.
At a press conference held Thursday by Delegate Donna M. Christensen, the delegate touched briefly on the fact that ferry services were eligible for funding under the recently signed Safe, Accountable, Flexible and Efficient Transportation Equity Act. (See "Congress Increases Territory's Transportation Funding".)
Along with approving the surcharge, the PSC also approved the appointment of Roy Jackson, certified public accountant, to be the hearing examiner for the rate investigation, which should start immediately since Ferron presented the commission Thursday with the documents needed to start the inquiry. It is expected to be completed by the first of the year.
Three and a half years have passed since the commission was mandated to conduct a rate investigation into the operations of the franchised ferry companies.
Commissioner Alric Simmonds introduced the motion to appoint Jackson and allow the implementation of the surcharge. Browne seconded the motion. Verne David abstained, while Brown, Valencio Jackson, Simmonds and Wells all voted in favor of the motion.
Commissioners Desmond Maynard and Yvette Canegata-Jones were not in attendance.

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