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Vol. 140, No. 40 — October 7, 2006 Regulations Amending the Atlantic Pilotage Tariff Regulations, 1996Statutory authority Pilotage Act Sponsoring agency Atlantic Pilotage Authority REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Description The Atlantic Pilotage Authority (the Authority) is responsible for administering, in the interests of safety, an efficient pilotage service within the Canadian waters in and around the Atlantic Provinces. The Authority prescribes tariffs of pilotage charges that are fair and reasonable and consistent with providing revenues sufficient to permit the Authority to operate on a self-sustaining financial basis. In accordance with recommendations from the Canadian Transportation Agency and its customers, the Authority strives to be self-sufficient on a port-by-port basis, as well as for the Authority as a whole. The Authority is consequently amending tariff charges for 2007 in eight compulsory pilotage areas: Saint John, New Brunswick; Halifax, Nova Scotia; Strait of Canso, Nova Scotia; Bras d'Or, Nova Scotia; St. John's, Newfoundland and Labrador; Holyrood, Newfoundland and Labrador; Placentia Bay, Newfoundland and Labrador; and Bay of Exploits, Newfoundland and Labrador. All other tariff charges in the remaining compulsory and non-compulsory pilotage areas will remain unchanged at this time. The Authority has been affected by significant declines in activity and revenue in some major ports, particularly in Placentia Bay, St. John's, Halifax, and Saint John. At the same time, the cost of providing a pilotage service per assignment has increased, particularly the cost of maintaining pilot boat services. As a result, the Authority is projecting a loss for the 2006 fiscal year, and without tariff increases, a further loss would occur in 2007. The increases in tariff are intended to allow the Authority to remain financially self-sufficient. The proposed tariff increases will also offset inflationary pressures, will provide funding for an increase in pilot resources in some ports, will allow for improvement of pilot boat services in some ports, and will alleviate cross-subsidization amongst ports. The Authority continues to consult widely with its customers in various ports, and address concerns expressed by the customers. The amendments constitute an increase in charges for eight compulsory pilotage areas effective January 1, 2007. The tariff increases are applied to those areas that are operating at a loss or have a marginal profit margin. Alternatives Two alternatives were considered in determining tariff charges required by the Authority. The Authority could have maintained tariffs at the status quo. This alternative would have resulted in the Authority remaining in a loss position, and would not have been conducive to the goal of self-sufficiency. The ports that remained profitable would have been cross-subsidizing other ports. The Authority rejected this alternative because an increase in tariff charges is necessary to reflect the actual costs for pilotage services being performed, to ensure that the Authority maintains its financial self-sufficiency, and to avoid cross-subsidization among ports. The Authority could have reduced costs by decreasing the number of pilots employed in those areas affected by the proposed increase or by attempting to reduce the cost of maintaining or contracting pilot boats. The Authority has endeavoured to keep costs to the minimum consistent with maintaining a safe and effective service. Further reductions in costs could be achieved by reducing the number of pilots available in those areas that are in an operational loss position. Any attempt to reduce the maintenance or contracting costs of pilot boats could impact on the safety and reliability of pilot boat service. Such alternatives would reduce the quality of service provided by the Authority. Therefore, these alternatives would be unacceptable to both the Authority and its clients. The Authority's clients have requested increased personnel resources to reduce delays in service and the Authority has worked diligently to meet this request. The Authority has also worked closely with its customers and employees to ensure that pilot boat service remains safe and efficient in all ports served. The current contingent of pilots in these ports is the minimum necessary to provide the service considering the physical size of the territory covered, the level of traffic in the ports, and the necessity to have coverage for illnesses and vacations. Benefits and costs The proposed tariff rate increases are intended to alleviate cross-subsidization among ports and to provide funding for an increased pilot work force in some ports. Customers in all areas will find comfort in the reduction and eventual elimination of cross-subsidization. The increase in tariffs in some areas are intended to fund beneficial developments within the ports, such as increased pilot strength or improved pilot boat service. Each port will be dealt with individually below. Placentia Bay The Authority is increasing manpower in the region that includes Placentia Bay, St. John's, and Holyrood. This increase in manpower was requested by the customers in Placentia Bay who have clearly indicated that any delay in providing pilotage service is not acceptable. The pilot boat service in Placentia Bay is also being upgraded with the construction of two new pilot boats at a total cost of $6.5 million. One of these boats has been planned for some time, is currently under construction, and will be delivered in early 2007. The second new boat is required to replace the Placentia Pilot, a modern fast craft that had an unfortunate accident in Placentia Bay during 2006 causing a total constructive loss. After consultation with our customers, it was determined that the appropriate course of action to replace the Placentia Pilot would be to build a sister ship to the boat currently under construction. This vessel will be available for service in the latter part of 2007. The proposed amendments are intended to provide the required revenue to support these improvements in service. There have been two tariff decreases in Placentia Bay since 1996 and a reduction on the rate for movages between the Whiffen Head and Come-by-Chance terminals. The current tariff amendments will result in rates that remain below the rates charged prior to the rate reductions. For example, the basic charge for Placentia Bay was $663 in 1997, reduced to $648 in 1998, then reduced to $538 in 2000. The proposed increase for 2007 will see this rate become $619. The increase requested in Placentia Bay is 15%. St. John's The amendment to the Atlantic Pilotage Authority Regulations of May 17, 2006, has had a major impact on the port of St. John's. This amendment meant that offshore supply vessels of 5 000 gross tons or less operating out of the port no longer required a pilot. At that point in the year, supply ships under 5 000 gross tons constituted 71% of our assignments in the port and 69% of our revenue. We discussed this situation with our customers in the port and they advised that they wanted the same number of pilots available for the remaining traffic. As a result of the reduction in assignments, the price of the contracted pilot boat on a per-assignment basis also increased significantly. It is projected that, even with the proposed increase, St. John's will remain in a loss position. The increase requested in St. John's is 25%. Holyrood The pilotage activity in Holyrood has declined to the point that revenues and assignments are less than half of their totals a few years ago. The total pilotage revenue for 2006 in Holyrood will be approximately $50,000, which is much less than the cost of providing pilots and pilot boats to the port. Despite the low volume of business in Holyrood, the tariff basic charge is the second lowest of any compulsory port, and the unit charge is the sixth lowest. A substantial increase in tariffs is required in this port to continue to move toward a break-even position. The increase requested in Holyrood is 25%. Bay of Exploits The Bay of Exploits continues to see a decline in traffic, with 2006 having approximately 22% fewer assignments than occurred in 2005. The number of pilotage assignments in the Bay of Exploits has declined from 258 in the year 2000 to less than 100 in 2006. We have reduced the pilot manning for the district, which also includes Humber Arm and Stephenville, to three pilots, all cross-licenced to serve each port. Due to the large geographic area covered by the pilots, it is impossible to reduce the numbers below the current level. The proposed increase is necessary to provide the current level of service to our customers in the Bay of Exploits. The increase requested in the Bay of Exploits is 25%. Halifax The vessel traffic in the port of Halifax also declined with the amendment to the Atlantic Pilotage Authority Regulations regarding offshore supply vessels. The proposed tariff increases in Halifax are intended to maintain the port's financial health in spite of the decline in activity. The customers of the port have expressed their opinion in opposition of cross-subsidization many times, and the proposed increases will assist in redressing the recent situation of Halifax being subsidized by other ports. The increase requested in Halifax is 4%. Strait of Canso In the Strait of Canso, traffic has actually increased significantly in 2006. However, the average size of vessels has decreased, meaning that revenues have not kept pace with the increase in traffic or expenditures. To cope with the increased activity, the Authority has hired two more pilots for the area, and has had an increase in pilot boat costs. After discussing the matter with our customers, it was determined that the fairest method to increase our revenue would be to increase the basic charge so that it would approximate the cost of providing the pilot boat service, while leaving the unit charge at the current level. There is also an anomaly in Canso in that there is a minimum charge for a movage on a vessel, while there is no minimum on trip assignments. For smaller vessels, a trip would end up costing less than a move. This is counter-intuitive because a trip takes, on average, more of the pilot's time and always requires a pilot boat, while a move may not require one. To correct this anomaly, we have instituted a minimum charge for trip assignments. The increase requested in the Strait of Canso is 5%. Bras d'Or The Bras d'Or Lake has a modest amount of traffic and has been suffering a gradual decline in activity. There will only be approximately 90 assignments in the area for 2006 and 2007. This area benefits from being part of the larger Cape Breton district. If pilots and pilot boats had to be provided exclusively for the area, the tariff rates required would be much greater than they are at present. The area has been in a loss position for several years now, and requires increases in tariffs or traffic over the next few years to eliminate the deficit. The increase requested is 10%. Saint John Traffic levels in Saint John have decreased by 15% in 2006 from 2005. In 2005, the Authority added manpower and upgraded the pilot boat service in the port. The Authority is projecting a loss in the port in 2006. The proposed amendments are intended to provide the required revenue to support these improvements in service at the reduced level of activity in the port and to return the port to a break-even position. The increase requested is 6%. The proposed tariff rates will increase the cost of a pilotage assignment for an average-sized vessel in each port that has a tariff increase by the following amounts and percentages (average-sized vessel based on activity in each port for the period of January 1 to July 31, 2006):
In the Strait of Canso, it is proposed that the basic charge for a trip be increased from $507 to $600, while the unit charge remains unchanged. The minimum charge for a movage would be increased from $637 to $669, while a minimum charge for a trip of $743 is implemented. The overall impact of these amendments would be a 5% increase in revenue. It is projected that the proposed increases in tariff will result in an overall increase of 7.3% in pilotage revenues for the Authority. Without the increases, it is projected that the Authority would have a loss of $789,000 in 2007, while with the increases there would be a modest return of $375,000, or 2.2% of revenue. Consultation Consultation in various forms has taken place with the parties affected by these proposed amendments. The parties consulted include the Shipping Federation of Canada, the Canadian Shipowners Association, the Halifax Pilotage Committee, the Saint John Pilotage Committee, the St. John's Pilotage Committee, shipping lines, port authorities, and local port agents and users. The consultation took the form of numerous meetings, as well as written, personal, and telephone communications with individuals. Alternatives to tariff increases were presented, where applicable, and participation from the attendees was encouraged. When meeting with customers, the Authority provided an analysis of the situation and solicited responses. The response of those consulted has varied, but the majority of our customers accept that the increases are fair and reasonable. Compliance and enforcement Section 45 of the Pilotage Act provides an enforcement mechanism for these Regulations in that a Pilotage Authority can inform a customs officer at any port in Canada to withhold clearance from any ship for which pilotage charges are outstanding and unpaid. Section 48 of the Pilotage Act stipulates that every person who fails to comply with the Act or regulations is guilty of an offence and liable on summary conviction to a fine not exceeding $5,000. Captain R. A. McGuinness, Chief Executive Officer, Atlantic Pilotage Authority, Cogswell Tower, Suite 910, 2000 Barrington Street, Halifax, Nova Scotia B3J 3K1, 902-426-2550 (telephone), 902-426-4004 (fax). Notice is hereby given, pursuant to subsection 34(1) (see footnote a) of the Pilotage Act, that the Atlantic Pilotage Authority proposes, pursuant to subsection 33(1) of that Act, to make the annexed Regulations Amending the Atlantic Pilotage Tariff Regulations, 1996. Interested persons who have reason to believe that any charge in the proposed Regulations is prejudicial to the public interest, including, without limiting the generality thereof, the public interest that is consistent with the national transportation policy set out in section 5 of the Canada Transportation Act (see footnote b), may file a notice of objection setting out the grounds therefor with the Canadian Transportation Agency within 30 days after the date of publication of this notice. The notice of objection should 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. Persons making representations should identify any of those representations the disclosure of which should be refused under the Access to Information Act, in particular under sections 19 and 20 of that Act, and should indicate the reasons why and the period during which the representations should not be disclosed. They should also identify any representations for which there is consent to disclosure for the purposes of that Act. Halifax, September 27, 2006
CAPTAIN R. A. MCGUINNESS REGULATIONS AMENDING THE ATLANTIC PILOTAGE TARIFF REGULATIONS, 1996 AMENDMENTS 1. The portion of item 3 of Schedule 2 to the Atlantic Pilotage Tariff Regulations, 1996 (see footnote 1) in columns 3 and 4 is replaced by the following:
2. The portion of item 4 of Schedule 2 to the Regulations in columns 2 to 4 is replaced by the following:
3. The portion of item 6 of Schedule 2 to the Regulations in columns 3 and 4 is replaced by the following:
4. The portion of item 8 of Schedule 2 to the Regulations in columns 2 to 4 is replaced by the following:
5. The portion of items 11 and 12 of Schedule 2 to the Regulations in columns 3 and 4 is replaced by the following:
6. The portion of items 13 and 14 of Schedule 2 to the Regulations in columns 2 to 4 is replaced by the following:
7. The portion of item 1 of Schedule 3 to the Regulations in columns 4 and 5 is replaced by the following:
8. The portion of item 3 of Schedule 4 to the Regulations in column 2 is replaced by the following:
9. The portion of item 4 of Schedule 4 to the Regulations in columns 3 to 7 is replaced by the following:
10. The portion of item 6 of Schedule 4 to the Regulations in columns 3 to 7 is replaced by the following:
11. The portion of item 8 of Schedule 4 to the Regulations in columns 3 to 7 is replaced by the following:
12. The portion of items 11 to 14 of Schedule 4 to the Regulations in columns 3 to 7 is replaced by the following:
13. The portion of items 1 and 2 of Schedule 5 to the Regulations in columns 4 to 6 is replaced by the following:
14. The portion of item 3 of Schedule 5 to the Regulations in column 2 is replaced by the following:
15. The portion of items 4 to 7 of Schedule 5 to the Regulations in columns 4 to 6 is replaced by the following:
COMING INTO FORCE 16. These Regulations come into force on January 1, 2007. [40-1-o] S.C. 1998, c. 10, s. 150 S.C. 1996, c. 10 SOR/95-586 |
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