DLCA and DPW Against Ferry Rate Increase

Governor John deJongh said last week that both the Departments of Licensing and Consumer Affairs and Public Works have suggested the Public Services Commission either deny the proposed increases to ferry rates or at minimum, maintain an increase in the rate of return to the lowest possible level.

DLCA Commissioner Wayne Biggs wrote to PSC Chairman Joseph Boschulte that, “our residents cannot currently entertain any assessment which will cause additional burdens.”

Both ferry franchise operators Varlack Ventures and Transportation Services are seeking increases in their passenger rates.

Biggs wrote that the residents of the Virgin Islands are currently experiencing the harsh impact of a financial recession.

“Our residents have been placed in a situation where their daily expenditures must be closely monitored: the current cost of basic needs is substantially higher than in recent years, and it continues to rise,” wrote Biggs. “Power and basic utilities have also increased significantly.

Prices at the grocery checkout are easily described as astronomical.”

The commissioner also pointed to the fact that residents of St. John have been experiencing the effects of the recession more intently.

“Most notably however is the fact that St. John’s relative reliance on St. Thomas for the purchase of food, educational facilities and provision of a majority of government services and private sector options places its residents in a unique situation where frequent travel to St. Thomas is a necessity rather than a luxury,” Biggs wrote.

Biggs understands ferry boat operators are also faced with increased operational costs, without increased revenue, he added.

“DLCA concedes that an increase may very well be unavoidable,” wrote Biggs.

Any increase of fees should be minimal and he further recommended to the PSC that it establish as part of its investigation and authorization of a possible rate increase that the two franchises be required, at a minimum, to produce audited financial statements and that they be required to maintain a separation of expenses and allocation audits between franchise and non-franchise expenses.

DeJongh said the administration through DLCA “will continue to keep the community informed through the implementation of gasoline and prescription drug price surveys, but putting the government’s position on the proposed ferry boat increases in the public domain is part of the mission of the DLCA in advocating and informing the consumers of the Virgin Islands.”

In similar correspondence to the PSC, Public Works Commissioner Darryl Smalls wrote that while the intent of the April 1, 2009 PSA decision was to increase the passenger fares and provide an allowable profit for the two franchises, the decision did not consider the impact of the fare increase on ferry passengers.

“The decision solely considered the impact of revenue need of the two franchise operators,” wrote Smalls. “The department recommends that the current fare structure remains the same and an increase in the annual subsidy to each franchise operator be negotiated with the government of the Virgin Islands to offset the impact of the fare increase on the public marine transportation passengers.”

The department has applied and received federal grant approval for financial resources to assist the franchise operators with funding for the acquisition of ferry boats, Smalls explained.

“The acquisition of these vessels for the franchise route will decrease operating costs while providing safe, reliable and efficient transportation services to passengers,” wrote Smalls.

At the present time Public Works is finalizing the required documentation with the federal agency and is in discussion with the operators on the type of vessels to be acquired.

Governor deJongh said his Administration has demonstrated its commitment to the continuation of the ferry boat franchise operation as well as maintenance of costs to residents, and with legislative authorization, has provided an operating subsidy to each operator since 2007.

“Most recently, we executed a subsidy agreement with each company as a condition of the release of the funding, establishing baseline operating standards and financial reporting requirements,” said deJongh.

“The residents and visitors of St. John, who are completely dependent on the public marine transportation, do not have any other mode of transportation,” said the governor.

“Imposing a fare increase during this period of economic downtown on a population that already experiences high costs for goods and services will affect their decision to travel for necessity or other purposes,” Small said.

The department took into consideration the economic downturn on the economy while considering the commitment to assist the ferry boat franchise operators with ferry boats to defray their operating costs and an annual operating subsidy, Smalls added.