Canada Gazette, Part I, Volume 148, Number 4: Regulations Amending the Pacific Pilotage Tariff Regulations
January 25, 2014
Statutory authority
Pacific Act
Sponsoring agency
Pacific Pilotage Authority
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Executive summary
Issues: Due to increased costs in 2014, 2015 and 2016 resulting from long-term contracts, collective agreements and general inflationary pressures, the Pacific Pilotage Authority (the Authority) needs to amend the Pacific Pilotage Tariff Regulations (the Regulations) to ensure the revenue it receives from pilotage tariffs is sufficient to cover its costs of providing the pilotage services for its clients.
Description: The following amendments to the Regulations are proposed:
- Increase by 2.25% its general tariff for pilotage units and hours on April 1, 2014; by 2.5% on January 1, 2015; and by 2.75% on January 1, 2016;
- Increase by 2.5% its general tariff for pilot boat and helicopter charges on April 1, 2014; by 2.75% on January 1, 2015; and by 3.0% on January 1, 2016;
- Change the fuel adjustment date to the 20th of the preceding month;
- Modify the wording of delay charge in the tariff to account for current practice;
- Modify the wording of the hampered ship definition in the tariff to account for current practice; and
- Modify Schedule 7 to include Prince Rupert Anchorages 8, 9 and 10 to 31.
Cost-benefit statement: The cost-benefit analysis shows that the net present value of the cost to the shipping industry would be $26.8 million over 10 years. This is equivalent to the net present value of the revenue that the Authority would receive.
The main benefit of the proposed amendments is that the Authority would be enabled to continue to provide sustainable service to port users as a result of the increased revenues these fees will bring. Without the fee increases, the Authority would begin to operate in deficit, and thus would need to reduce service levels in response. These services are beneficial in that they provide stakeholders with a safe, efficient and timely pilotage service that ensures protection of the public and its health, and environmental and social concerns while taking into account weather conditions, currents, traffic conditions, protection of recreational boating and fishing, and tourism interests. As it is assumed that the tariff increases would not cause traffic to divert to other ports, the value of pilotage services is worth, at a minimum, the increased rates.
“One-for-One” Rule and small business lens: The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business. The small business lens does not apply to this proposal.
Domestic and international coordination and cooperation: These proposed amendments are not inconsistent, nor do they interfere with the action(s) planned by other government departments/agencies or another level of government.
Background
The Authority is responsible for maintaining and administering, in the interests of safety, an efficient pilotage service within all Canadian waters in and around the province of British Columbia. This area covers all waters between Washington State in the south to Alaska in the north, including Vancouver Island and the Fraser River.
Issues
Due to increased costs in 2014, 2015 and 2016 resulting from long-term contracts, collective agreements and general inflationary pressures, the Authority is seeking to match the anticipated cost pressures, thus preventing bank borrowing to fund these costs, which would result in interest charges.
Objectives
The objective of the proposed amendments to the Regulations is to allow the Authority, a Crown corporation listed in Schedule III to the Financial Administration Act, to operate on a self-sustaining financial basis as required by section 33 of the Pilotage Act. The proposed amendments are intended to ensure the Authority remains in a positive cash flow basis for the years 2014, 2015 and 2016. The proposed amendments would allow the Authority to cover the costs of its pilotage services to clients while continuing to provide a safe and efficient pilotage service in accordance with the Pilotage Act.
Description
The Authority proposes to increase its general tariff by 2.25% on April 1, 2014; by 2.5% on January 1, 2015; and by 2.75% on January 1, 2016, for the following pilotage charges:
- pilotage assignments;
- time charges for bridge watches and minimum charges; and
- cancellation charges, out-of-region charges, delay charges, short order charges and hampered ship charges to ensure financial self-sufficiency in each individual area.
These increases will fund expense increases that are currently committed to under labour and service agreements for the years 2014, 2015, and 2016. These agreements cover contract pilots and employee pilots.
The Authority proposes to increase its general tariff by 2.5% on April 1, 2014; by 2.75% on January 1, 2015; and by 3.0% on January 1, 2016, for the following pilotage charges:
- pilot boat and helicopter charges.
These increases will match the labour cost increases negotiated for 2014, 2015 and 2016 covering pilot launch, dispatch and billing staff employees.
The Authority is also proposing four minor housekeeping changes to its tariff:
- The fuel adjustment date will be changed from the 25th of the preceding month to the 20th of the preceding month. This date change will ensure the new fuel rates are available on the 1st of every month.
- The wording of the delay charge in the tariff is to be modified to account for current practice.
- The wording of the hampered ship definition in the tariff is to be modified to account for current practice.
- In Prince Rupert, current practice is to offer a reduced rate to industry when pilot boats are used to go to or from anchorages. This started informally to reflect the shorter distance travelled. In the inner harbour, Anchorages 8 and 9, the current charge is $514. For the others, all outside the harbour limits, i.e. Anchorages 10 to 31, the charge is $871. This is compared to the Triple Island launch charge of $2,020 which is a longer run. The Authority proposes to list these charges in Schedule 7.
Regulatory and non-regulatory options considered
The retention of the existing tariff rates was considered as a possible option. However, the Authority rejected this status quo alternative since the increase of tariff rates is necessary to reflect the actual costs for the various pilotage services provided to the industry. These proposed amendments would ensure that the Authority maintains its financial self-sufficiency.
Further reductions in operating costs are not deemed to be an alternative since such reductions could reduce the quality of service provided. Approximately 78% of the Authority's annual revenues are used to pay for pilot contracts, travel and dispatching expenses. Pilot boat operations, including employee salaries, repairs, fuel and contractor costs represent 12%. The remaining margin covers pilot training and administrative overhead expenses. The Authority has maintained its administrative expenses at the lowest possible level, in the range of 8% of annual revenues.
| Base Year: 2014 | 2015 | 2016 | Final Year: 2023 | Total (PV) | Annualized Average | ||
|---|---|---|---|---|---|---|---|
| A. Quantified impacts (in Can$, 2013 price level / constant dollars) | |||||||
| Benefits | By stakeholder | 987,000 | 2,811,000 | 4,495,000 | 4,495,000 | 26,821,624 | 3,818,796 |
| Costs | By stakeholder | (987,000) | (2,811,000) | (4,495,000) | (4,495,000) | (26,821,624) | (3,818,796) |
| Net benefits | - | - | |||||
| B. Quantified impacts in non-$ (e.g. from a risk assessment) | |||||||
| Positive impacts | By stakeholder | - | - | - | - | - | - |
| Negative impacts | By stakeholder | - | - | - | - | - | - |
| C. Qualitative impacts | |||||||
| Short list of qualitative impacts (positive and negative) by stakeholder | |||||||
| Shipping industry — Efficient and timely pilotage services in navigable waters within the jurisdiction of the Pacific Pilotage Authority. | |||||||
| Pacific Pilotage Authority — Sustainability of the Pacific Pilotage Authority. | |||||||
| Canadians — Safe shipping on the west coast of Canada. Sustainability of the Authority will avoid layoffs and the associated consequences for unemployment. | |||||||
| Canadian importers and exporters — There is potential for the shipping industry to pass on the cost of the increased tariff to importers and exporters in the Pacific pilotage area. However, the increased costs represent an insignificant part of the industry's total costs and the pass-through cost would be negligible. | |||||||
The Authority benefited from sustained traffic levels in 2011 and 2012 mainly due to continuing Asian demand for commodities. The 2013 traffic is forecast to be close to the previous year's traffic levels and will result in a small deficit for the year of 2013. This has allowed the Authority to delay implementation of a 2014 tariff adjustment to April 1, 2014. This offers three months of cost relief to customers, as the adjustment would only be in effect for nine months of the year. Additionally, the Authority is adjusting its tariff for 2014, 2015 and 2016 by rates that are substantially lower than the cost pressures of a 4% contract increase for its entrepreneur pilots, which was negotiated with the assistance of an arbitrator.
The cost assumptions shown in the table below are based on the Authority's corporate plan traffic level projections for the years of 2014, 2015 and 2016.
2014 April to December |
2015 (including 2014 increase) |
2016 (including 2014 and 2015 increases) |
Total Increase in Revenue 2014–2016 | |
|---|---|---|---|---|
| Pilotage assignments | 2.25% $888,000 | 2.5% $2,530,000 | 2.75% $4,047,000 | $7,465,000 |
| Time charges for bridge watches and minimum charges | 2.25% Included above | 2.5% Included above | 2.75% Included above | |
| Cancellation charges, out-of-region charges, delay charges, short order charges, hampered ship and remote port charges to ensure financial self-sufficiency in each individual area | 2.25% Included above | 2.5% Included above | 2.75% Included above | |
| Pilot launch operating charges | 2.5% $99,000 | 2.75% $281,000 | 3.0% $448,000 | $828,000 |
| Total impact on annual gross revenues in the year noted | $987,000 | $2,811,000 | $4,495,000 | $8,293,000 |
| Average cost increase per trip based on 2014 corporate plan traffic budget | $107 | $229 | $366 | $702 |
| Total trips per annum | 12 280 | 12 280 | 12 280 |
The Authority is forecasting an increase in revenues for 2014, 2015 and 2016 of $987,000, $2,811,000 and $4,495,000, respectively. The total cost to industry of the revenue increases will be $8,293,000 over three years.
On an average invoice total of $5,367 per vessel, the 2014 increases will add $107 per trip from April 1, 2014, until December 31, 2014, an average of $229 per trip for 2015 and an average of $366 per trip for 2016.
“One-for-One” Rule
The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business.
Small business lens
The small business lens does not apply to this proposal.
Consultation
The Authority has committed to regular consultation with the Chamber of Shipping (CS) and the Shipping Federation of Canada, which represent the shipping community on the West Coast of British Columbia, along with other shipping community members including the North West and Canada Cruise Association, agents, terminal operators and shipowners. This consultation covers all aspects of the Authority's operation, including financial, operational and regulatory matters.
The Authority consulted the CS on these proposed tariff increases on June 12, July 16 and August 13, 2013. The Shipping Federation was consulted via email on June 12, 2013, and in person on August 19, 2013.
Rationale
The Authority is forecasting increased costs for the coming years mainly due to a long-term service agreement with contract pilots and collective agreements covering employee pilots and launch and office employees. The benefit of these long-term contracts is the stability and certainty provided to industry.
The status quo, a further reduction in operating costs and the selling of assets are not feasible options as they would result in reduced service levels to industry. Additionally, they would compromise the Authority's financial self-sufficiency and/or its ability to provide safe and efficient pilotage services.
These increases over the next three years will be used to fund expense increases that are currently committed to under labour and service agreements for the years of 2014, 2015 and 2016.
Implementation, enforcement and service standards
Section 45 of the Act provides an enforcement mechanism for the Pacific Pilotage Tariff 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 Act stipulates that every person who fails to comply with Part I of the Act (other than section 15.3) and some of its regulations is guilty of an offence and liable on summary conviction to a fine not exceeding $5,000. These existing mechanisms are expected to be sufficient for the implementation and enforcement of the amendments.
Contact
Kevin Obermeyer
President and Chief Executive Officer
Pacific Pilotage Authority
1130 West Pender Street, Suite 1000
Vancouver, British Columbia
V6E 4A4
Telephone: 604-666-6771
Fax: 604-666-1647
Email: oberkev@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, January 16, 2014
KEVIN OBERMEYER
President and Chief Executive Officer
Pacific Pilotage Authority
REGULATIONS AMENDING THE PACIFIC PILOTAGE TARIFF REGULATIONS
AMENDMENTS
1. The definition “hampered ship” in section 2 of the Pacific Pilotage Tariff Regulations (see footnote 1) is replaced by the following:
“hampered ship” means a ship that cannot operate at full manœuvring speed, or a ship that requires additional time to work up to full manœuvring speed because of routine maintenance carried out on its engines while the ship was in port; (navire difficile à manœuvrer)
2. (1)Paragraphs 6(2)(a) and (b) of the Regulations are replaced by the following:
- (a) $3.4458 multiplied by the pilotage unit, and
- (b) $0.01007 multiplied by the gross tonnage of the ship.
(2) Paragraphs 6(2)(a) and (b) of the Regulations are replaced by the following:
- (a) $3.5319 multiplied by the pilotage unit, and
- (b) $0.01032 multiplied by the gross tonnage of the ship.
(3) Paragraphs 6(2)(a) and (b) of the Regulations are replaced by the following:
- (a) $3.6290 multiplied by the pilotage unit, and
- (b) $0.01060 multiplied by the gross tonnage of the ship.
(4) Subsection 6(3) of the Regulations is replaced by the following:
(3) Subject to subsection (4), for an assignment to a tethered tanker ship with a deadweight tonnage (summer) that exceeds 39 999 metric tons, in any waters, the pilotage charge payable is $5.9233 multiplied by the pilotage unit.
(5) Subsection 6(3) of the Regulations is replaced by the following:
(3) Subject to subsection (4), for an assignment to a tethered tanker ship with a deadweight tonnage (summer) that exceeds 39 999 metric tons, in any waters, the pilotage charge payable is $6.0714 multiplied by the pilotage unit.
(6) Subsection 6(3) of the Regulations is replaced by the following:
(3) Subject to subsection (4), for an assignment to a tethered tanker ship with a deadweight tonnage (summer) that exceeds 39 999 metric tons, in any waters, the pilotage charge payable is $6.2384 multiplied by the pilotage unit.
(7) Paragraphs 6(4)(a) and (b) of the Regulations are replaced by the following:
- (a) $5.1687 multiplied by the pilotage unit, and
- (b) $0.0151 multiplied by the gross tonnage of the ship.
(8) Paragraphs 6(4)(a) and (b) of the Regulations are replaced by the following:
- (a) $5.2979 multiplied by the pilotage unit, and
- (b) $0.0155 multiplied by the gross tonnage of the ship.
(9) Paragraphs 6(4)(a) and (b) of the Regulations are replaced by the following:
- (a) $5.4436 multiplied by the pilotage unit, and
- (b) $0.0159 multiplied by the gross tonnage of the ship.
3. (1) Section 8 of the Regulations is replaced by the following:
8. Despite sections 6 and 7, the total charges payable under those sections in respect of a ship shall not be less than $917.79.
(2) Section 8 of the Regulations is replaced by the following:
8. Despite sections 6 and 7, the total charges payable under those sections in respect of a ship shall not be less than $940.73.
(3) Section 8 of the Regulations is replaced by the following:
8. Despite sections 6 and 7, the total charges payable under those sections in respect of a ship shall not be less than $966.60.
4. (1) Subsections 10(2) and (3) of the Regulations are replaced by the following:
(2) If a pilot embarks on or disembarks from a ship at Anacortes, Bellingham, Cherry Point or Ferndale, in the State of Washington, a charge of $1,771 per pilot is payable in addition to any other charges.
(3) If a pilot embarks on or disembarks from a ship at an out-of-Region location that is not listed in subsection (2), a charge of $2,361 per pilot is payable in addition to any other charges.
(2) Subsections 10(2) and (3) of the Regulations are replaced by the following:
(2) If a pilot embarks on or disembarks from a ship at Anacortes, Bellingham, Cherry Point or Ferndale, in the State of Washington, a charge of $1,815 per pilot is payable in addition to any other charges.
(3) If a pilot embarks on or disembarks from a ship at an out-of-Region location that is not listed in subsection (2), a charge of $2,420 per pilot is payable in addition to any other charges.
(3) Subsections 10(2) and (3) of the Regulations are replaced by the following:
(2) If a pilot embarks on or disembarks from a ship at Anacortes, Bellingham, Cherry Point or Ferndale, in the State of Washington, a charge of $1,865 per pilot is payable in addition to any other charges.
(3) If a pilot embarks on or disembarks from a ship at an out-of-Region location that is not listed in subsection (2), a charge of $2,487 per pilot is payable in addition to any other charges.
5. Section 13.2 of the Regulations is replaced by the following:
13.2 (1) On each occasion that a pilot boat is used to embark or disembark a pilot at a location set out in Schedule 8, the charge set out in the corresponding column for that location is payable. Subject to subsection (2), the reference price that is to be used to establish the price range set out in column 1 is the daily average wholesale (rack) price per litre for diesel in Vancouver, British Columbia, for the 20th day of the preceding month, as posted on the following Department of Natural Resources (Natural Resources Canada) website: http://www2.nrcan.gc.ca/eneene/sources/pripri/wholesale_bycity_e.cfm?PriceYear=2001&ProductID=13&LocationID=2.
(2) If a daily average wholesale (rack) price per litre for diesel in Vancouver, British Columbia, is not posted on the website for the 20th day of the preceding month, the reference price that is to be used is the daily average (rack) price per litre for diesel in Vancouver, British Columbia, for the last day before the 20th day of the preceding month that is posted on that website.
6. Section 14 of the Regulations is replaced by the following:
14. If a pilot reports to a ship for an assignment and, for reasons unrelated to any act or omission of the owner, master or agent of the ship, does not commence the assignment at the time for which the pilot was ordered, a charge of double the time charge set out in item 1, column 2, of Schedule 3 is payable for each hour or part of an hour during the period that begins 30 minutes after the time for which the pilot was ordered and ends when the ship sails.
7. (1) Section 15 of the Regulations is replaced by the following:
15. (1) On each occasion that a pilotage order is initiated during the period that begins at 06:00 and ends at 17:59 with less than 10 hours' notice for local assignments and less than 12 hours' notice for all other assignments, a charge of $792.80 is payable in addition to any other charges.
(2) On each occasion that a pilotage order is initiated during the period that begins at 18:00 and ends at 05:59 with less than 10 hours' notice for local assignments and less than 12 hours' notice for all other assignments, a charge of $1,585.60 is payable in addition to any other charges.
(2) Section 15 of the Regulations is replaced by the following:
15. (1) On each occasion that a pilotage order is initiated during the period that begins at 06:00 and ends at 17:59 with less than 10 hours' notice for local assignments and less than 12 hours' notice for all other assignments, a charge of $812.64 is payable in addition to any other charges.
(2) On each occasion that a pilotage order is initiated during the period that begins at 18:00 and ends at 05:59 with less than 10 hours' notice for local assignments and less than 12 hours' notice for all other assignments, a charge of $1,625.28 is payable in addition to any other charges.
(3) Section 15 of the Regulations is replaced by the following:
15. (1) On each occasion that a pilotage order is initiated during the period that begins at 06:00 and ends at 17:59 with less than 10 hours' notice for local assignments and less than 12 hours' notice for all other assignments, a charge of $835.00 is payable in addition to any other charges.
(2) On each occasion that a pilotage order is initiated during the period that begins at 18:00 and ends at 05:59 with less than 10 hours' notice for local assignments and less than 12 hours' notice for all other assignments, a charge of $1,670.00 is payable in addition to any other charges.
8. (1) Section 16 of the Regulations is replaced by the following:
16. On each occasion that the master or agent of a ship who initiates a pilotage order fails to inform the Authority that the ship is a hampered ship that may require a bridge watch exceeding eight consecutive hours, a charge of $1,490.29 is payable in addition to any other charges.
(2) Section 16 of the Regulations is replaced by the following:
16. On each occasion that the master or agent of a ship who initiates a pilotage order fails to inform the Authority that the ship is a hampered ship that may require a bridge watch exceeding eight consecutive hours, a charge of $1,527.55 is payable in addition to any other charges.
(3) Section 16 of the Regulations is replaced by the following:
16. On each occasion that the master or agent of a ship who initiates a pilotage order fails to inform the Authority that the ship is a hampered ship that may require a bridge watch exceeding eight consecutive hours, a charge of $1,569.56 is payable in addition to any other charges.
| Item | Column 3 Amount ($) |
|---|---|
| 1. | 3.9487 |
| 2. | 7.8974 |
| 3. | 3.9487 |
| Item | Column 3 Amount ($) |
|---|---|
| 1. | 4.0474 |
| 2. | 8.0948 |
| 3. | 4.0474 |
| Item | Column 3 Amount ($) |
|---|---|
| 1. | 4.1587 |
| 2. | 8.3174 |
| 3. | 4.1587 |
| Item | Column 2 Time Charge ($) |
|---|---|
| 1. | 198.20 |
| Item | Column 2 Time Charge ($) |
|---|---|
| 1. | 203.16 |
| Item | Column 2 Time Charge ($) |
|---|---|
| 1. | 208.75 |
| Item | Column 2 Cancellation Charge ($) |
|---|---|
| 1. | 792.80 |
| 2. | 198.20 |
| Item | Column 2 Cancellation Charge ($) |
|---|---|
| 1. | 812.64 |
| 2. | 203.16 |
| Item | Column 2 Cancellation Charge ($) |
|---|---|
| 1. | 835.00 |
| 2. | 208.75 |
| Item | Column 2 Charge ($) (per hour or part of an hour) |
|---|---|
| 1. | 198.20 |
| 2 | 198.20 |
| 3. | 198.20 |
| Item | Column 2 Charge ($) (per hour or part of an hour) |
|---|---|
| 1. | 203.16 |
| 2. | 203.16 |
| 3. | 203.16 |
| Item | Column 2 Charge ($) (per hour or part of an hour) |
|---|---|
| 1. | 208.75 |
| 2. | 208.75 |
| 3. | 208.75 |
13. Schedule 7 to the Regulations is replaced by the Schedule 7 set out in the schedule to these Regulations.
| Item | Column 2 Charge ($) |
|---|---|
| 1. | 378 |
| 2. | 1,512 |
| Item | Column 2 Charge ($) |
|---|---|
| 1. | 389 |
| 2. | 1,557 |
| Item | Column 2 Charge ($) |
|---|---|
| 4. | 5,911 |
| 5. | 3,892 |
| 6. | 761 |
| 7. | 528 |
| 8. | 895 |
| Item | Column 2 Charge ($) |
|---|---|
| 4. | 6,088 |
| 5. | 4,009 |
| 6. | 784 |
| 7. | 544 |
| 8. | 922 |
COMING INTO FORCE
16. (1) Subject to subsections (2) and (3), these Regulations come into force on April 1, 2014, but if they are registered after that day, they come into force on the day on which they are registered.
(2) Subsections 2(2), (5) and (8), 3(2), 4(2), 7(2), 8(2), 9(2), 10(2), 11(2), 12(2), 14(1) and 15(1) come into force on January 1, 2015.
(3) Subsections 2(3), (6) and (9), 3(3), 4(3), 7(3), 8(3), 9(3), 10(3), 11(3), 12(3), 14(2) and 15(2) come into force on January 1, 2016.
SCHEDULE
(Section 13)
SCHEDULE 7
(Section 12)
| Item | Column 1 Location |
Column 2 Charge ($) |
|---|---|---|
| 1. | Brotchie Ledge | 368 |
| 2. | Sand Heads | 1,472 |
| 3. | Triple Islands | 2,020 |
| 4. | Cape Beale | 5,753 |
| 5. | Pine Island | 3,788 |
| 6. | The entrance to Nanaimo Harbour | 741 |
| 7. | Prince Rupert Anchorages 8 and 9 | 514 |
| 8. | Prince Rupert Anchorages 10 to 31 | 871 |
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