Re: Letter “Ferries profit from fuel costs,” February 16
B.C. Ferries has just announced an increase in fuel rebates due to the current lower cost of fuel, which will offset the April 1, 2016 tariff increase.
There will be no increase in the cost of ferry travel this spring, which is good news for ferry travellers.
But I wanted to take the opportunity to clarify the facts regarding tariff increases and the cost of fuel for B.C. Ferries, which were raised in a recent letter to the editor in the Saanich News.
Every four years, the B.C. Ferries Commissioner sets price caps for B.C. Ferries based on financial forecasts. These forecasts include the best estimates for operating expenses which include a forecast fuel price, referred to as the “set price.”
Many years ago, the provincial government recognized the risk of fluctuations in fuel prices and the potential impact on B.C. Ferries and its customers. As a result, the Commissioner established fuel deferral accounts to allow surcharges and rebates. This allows B.C. Ferries to manage the financial risks associated with volatile and unpredictable fuel prices by using fuel deferral accounts and a surcharge and rebate mechanism.
The fuel surcharge/rebate mechanism is separate from the tariff calculation and any fuel rebate or surcharge is strictly a pass through to the fuel deferral accounts. B.C. Ferries does not profit from lower fuel costs.
While B.C. Ferries actively manages expenditures, tariff increases are necessary to cover operating costs and major capital replacement projects. The company needs to replace one ship per year for the next 12 years in order to maintain safe, efficient and reliable service at an estimated cost of approximately $3 billion. This is the reason why tariff increases are necessary.
Dennis DodoChief Financial OfficerB.C. Ferry Services