The cost of taking the ferry from Red Hook to Cruz Bay depends on who you are. When this writer got his Virgin Island senior citizen card, the cost went from something of a concern to inconsequential. However, one could often see the dismay on the faces of tourists in the terminal when they learned because they were not residents, the senior citizen rate did not apply to them. These different rates may become an issue of contention between the Public Services Commission and the ferry operators.
David Hughes, chairman of the Public Services Commission, indicated this Spring that the Commission would be looking into the methodology used to determine the ferry rates, but little has been said at public meetings about the rates.
In the September PSC meeting, discussion of ferry rates was on the agenda. However, the meeting was lengthy, and it appeared the ferry company’s attorney, Maria Hodge, was not going to make the meeting, so it was put on hold.
The agenda for the October meeting set for next week is lengthy, with a discussion set with the Water and Power Authority concerning outages and brown water on St. Croix. Also, the Waste Management Authority is to give an update on the Bovoni landfill. Consideration of the ferry boat rates will probably be on the November agenda, according to Sandra Setorie, executive director at the PSC.
At the September meeting, although it did not come up for discussion, commissioners had available a docket filing from the ferry franchise attorney Hodge objecting to an April report proposing a new methodology for determining ferry ticket prices.
She wrote that the new methodology adopted calculations that would substantially reduce the ferryboat company’s revenues and would not allow them “control over their income until after the PSC approves each monthly revenue and expense calculation.”
In the Source’s conversations with PSC Chairman David Hughes, it appears, for him, a major issue in the proposed calculations is how the ferry assets are determined. The ferryboat franchise owners are guaranteed a rate of not less than 8 percent nor more than 10 percent on the current fair value of applied assets, according to Hodge. The present calculations include the coast of ferry boats. Hughes points out that the boats are in the hands of the ferry operators through federal grants.
Hodge emailed the Source Friday that the operators also have other concerns with the draft proposal. She says, “Their plan involves trading protection for local consumers for lower rates for tourists, holding all ferryboat revenues in some kind of PSC managed escrow, and generally lower revenues for the two companies after years without a rate increase.”
As for the difference in the tourist rates and resident senior rates, she made this statement. “Recently, the Public Services Commission, charged with the role of regulating the ferryboat rates, has begun to express concerns that tourists are being discriminated against in the rates, which offer a lower fare to local residents, seniors, and children. A suggestion has been made that V.I. seniors’ rate may be “too low,” and tourists may be paying a “discriminatory” rate because they are not charged the same as local residents and commuters. The ferryboat operators have disputed this idea and argued that allowing a lower rate for residents who need the ferry service to get to work, to school, to shopping, to the hospital, and the like, as compared to the tourists who travel once or twice between the islands on vacation, is not an unfair or improper “discrimination” but a reasonable allocation of costs based on these important differences.”
Transportation Services of St. John, Inc. and Varlack Ventures, Inc. have been operating the ferryboat service between St. Thomas and St. John for over fifty years, according to Hodge. The two family-owned businesses together employ about 60 residents.
Hodge told the Source that the draft proposal by consultant Avery Williams has been revised but she has been unable to obtain a copy. The Source contacted the PSC Friday to get a copy, but none was forthcoming.
Hodge stated, “These are not businesses operating at a significant profit. They work hard. Their income is modest.”
