HER MAJESTY, by and with the advice and consent of the Legislative Assembly of the Province of British Columbia, enacts as follows:

1 Section 1 of the Coastal Ferry Act, S.B.C. 2003, c. 14, is amended by adding the following definition:

"ferry users" means

(a) ferry passengers and their families,

(b) communities serviced by ferries, and

(c) businesses that rely on or utilize ferry services; .

2 Section 38 is amended

(a) by repealing subsection (1) (a) and substituting the following:

(a) the primary role of the commissioner is to balance, in the manner the commissioner considers appropriate,

(i) the interests of ferry users,

(ii) the interests of taxpayers, and

(iii) the financial sustainability of ferry operators; ,

(b) in subsection (1) (d) by striking out "to minimize" and substituting "to be innovative and to minimize",

(c) by repealing subsections (1) (e) and (f) and (2) (g), and

(d) by adding the following subsections:

(5) Without limiting any other power of the commissioner under this section, the commissioner may order a ferry operator to

(a) prepare a plan to indicate how the ferry operator proposes to achieve an outcome, proposed by the ferry operator or the commissioner, that is consistent with the objectives of this Act or the applicable Coastal Ferry Services Contract,

(b) review any of the ferry operator's policies that the commissioner considers may not be in the interests of ferry users and taxpayers and do one or both of the following:

(i) explain the rationale for that policy;

(ii) indicate how that policy could be amended to better balance the interests of ferry users, taxpayers and the ferry operator, and

(c) undertake public consultation in relation to any services the ferry operator is providing or intends to provide or that the commissioner considers appropriate for the ferry operator to provide.

(6) If the commissioner makes an order under subsection (5) (a) or (b), the ferry operator must prepare the required plan, rationale or proposed amendment and have it approved by the commissioner.

3 Section 40 is amended

(a) in subsection (1.2) by striking out "must publish" and substituting "must, subject to subsection (1.3), publish", and

(b) by adding the following subsection:

(1.3) The commissioner need not, under subsection (1.2), publish information that, under section 17 or 21 of the Freedom of Information and Protection of Privacy Act, the commissioner may or must refuse to disclose in response to a request made under that Act.

4 Section 41 is amended

(a) by repealing subsections (1) and (4),

(b) by repealing subsection (2) (b) and substituting the following:

(b) the price cap, when combined with all other price caps applicable to all route groups serviced by the ferry operator, must allow for a return sufficient to enable the ferry operator to

(i) meet its debt obligations, and

(ii) maintain access to borrowing rates that, in the opinion of the commissioner, are reasonable in all of the circumstances; , and

(c) by repealing subsection (3) (d) and substituting the following:

(d) attribute to capital assets deployed within or in support of the route group a value that, in the commissioner's opinion, acting reasonably, is appropriate in all of the circumstances, and .

5 The following section is added:

Fuel deferral account

41.1  (1) The commissioner may

(a) require a ferry operator to establish a fuel deferral account in relation to one or more route groups, and

(b) establish terms and conditions for the use of any fuel deferral account established by the ferry operator.

(2) The commissioner may, on any conditions the commissioner may specify,

(a) allow a ferry operator to add a temporary fuel surcharge, or

(b) require the ferry operator to provide a temporary discount,

to reflect fluctuations in the fuel deferral account for any period.

6 Section 42 is amended

(a) by repealing subsections (1) to (4) and substituting the following:

(1) A ferry operator may make application to the commissioner for relief under this section if the ferry operator believes that an extraordinary situation exists, including, without limitation,

(a) the deployment of a new capital asset such as a vessel on one or more designated ferry routes in a route group during the currency of the applicable performance term of the Coastal Ferry Services Contract,

(b) an extraordinary increase in the price of any non-controllable input such as fuel,

(c) an unanticipated and extraordinary change in traffic levels on one or more designated ferry routes in a route group, or

(d) the introduction of new safety or other regulations that impose a new, unexpected and significant cost burden on the ferry operator.

(2) In an application referred to in subsection (1), the ferry operator may request a price cap increase or a reduction in service on a designated ferry route.

(3) For the purposes of subsection (1), the following do not constitute an extraordinary situation that would justify relief under this section:

(a) changes in labour costs or terms of employment, other than changes effected under regulations referred to in subsection (1) (d);

(b) an extraordinary situation that has resulted, or will result, in the ferry operator being temporarily unable to provide a required level of service.

(4) Before providing relief in response to an application under this section, the commissioner must

(a) publicize the application in a manner that the commissioner is satisfied will bring the application to the attention of the public, and

(b) provide a period of at least one month within which persons wishing to comment on the application may do so. , and

(b) by adding the following subsections:

(7) A decision of the commissioner under subsection (5) or (6) may do one or more of the following:

(a) authorize a temporary price cap increase for the period and on the terms that the commissioner considers appropriate;

(b) authorize a permanent price cap increase on the terms that the commissioner considers appropriate;

(c) authorize a temporary reduction in service on a designated ferry route, below the core ferry services required for that designated ferry route, for the period and on the terms that the commissioner considers appropriate;

(d) authorize or direct the ferry operator to permanently reduce service on a designated ferry route in a manner and to a level that are consistent with the applicable Coastal Ferry Services Contract;

(e) authorize or direct the ferry operator to defer one or more specified major capital expenditures for the period and in accordance with any terms and conditions that the commissioner specifies.

(8) Despite subsections (5) and (6), the commissioner must not make a decision referred to in subsection (7) unless the commissioner is satisfied that

(a) an extraordinary situation exists, and

(b) in the case of a decision referred to in subsection (7) (e), the authorizations and directions included in the decision can be made without compromising the safety of the employees and customers of the ferry operator.

7 Section 43 is amended

(a) in subsection (1) by striking out "of the commissioner." and substituting "or direction of the commissioner to do so.",

(b) in subsection (2) by adding "temporarily" before "reduce service",

(c) in subsection (2) by striking out "must make" and substituting "must, unless a temporary reduction in service is authorized under section 42, make",

(d) in subsection (2) by striking out "requested reduction." and substituting "requested reduction in accordance with subsection (2.1).",

(e) by adding the following subsection:

(2.1) An application may be made under subsection (2) if an extraordinary situation exists and has resulted, or will result, in the ferry operator being unable to provide a required level of service. ,

(f) in subsection (3) by striking out "The commissioner" and substituting "On application under subsection (2), the commissioner", and

(g) in subsection (4) by adding ", under this section or section 42," after "agrees".

8 The following section is added:

Permanent reduction in service

43.1  (1) Without limiting the commissioner's powers under section 42 or 43 to authorize or direct a ferry operator to reduce service on a designated ferry route, the commissioner may at any time direct a ferry operator to permanently reduce service on a designated ferry route in a manner and to a level that are consistent with the applicable Coastal Ferry Services Contract.

(2) Before issuing a direction under subsection (1) of this section, the commissioner must

(a) publicize the intended reduction in service in a manner that the commissioner is satisfied will bring the reduction in service to the attention of the public, and

(b) provide a period of at least one month within which persons wishing to comment on the reduction in service may do so.

(3) After the conclusion of the consultation period referred to in subsection (2) (b), the commissioner may direct a ferry operator to reduce service on a designated ferry route in a manner and to a level that are consistent with the applicable Coastal Ferry Services Contract and may impose terms and conditions on that reduction in service.

(4) If the commissioner directs a reduction in service on a designated ferry route, the ferry operator must reduce service on that designated ferry route in the manner and in accordance with the terms and conditions specified by the commissioner, but not otherwise.

9 Section 45 is amended by striking out "section 43," and substituting "section 43 or 43.1,".

10 The following section is added:

Performance review

46.1  The commissioner may conduct a review of one or more aspects of a ferry operator's operations, including, without limitation, ancillary services, at such time or times as the commissioner considers reasonable, and section 46 applies to such a review.

11 Section 53 (1) is amended by striking out "4 months" and substituting "5 months".

12 Section 55 is repealed and the following substituted:

Commissioner to consider capital deployment and expenditures

55  (1) Subject to subsections (2) to (5), before deploying capital assets on, or incurring capital expenditures in connection with, a designated ferry route or terminal, the ferry operator may apply to the commissioner and the commissioner must, within one month after the application, declare whether the capital assets proposed to be deployed on, or the capital expenditures proposed to be incurred in connection with, the designated ferry route or terminal are reasonably required.

(2) A ferry operator must not incur a major capital expenditure without first obtaining the commissioner's approval of the expenditure.

(3) A ferry operator may apply to the commissioner for approval of a proposed major capital expenditure and the commissioner must respond to the application within 2 months after its receipt by the commissioner.

(4) The commissioner may approve a proposed major capital expenditure if the proposed major capital expenditure is

(a) reasonable,

(b) prudent, and

(c) consistent with

(i) the current Coastal Ferry Services Contract, and

(ii) any long term capital plan established by the ferry operator.

(5) For the purposes of this section, a capital expenditure of a ferry operator is a major capital expenditure if it meets the criteria

(a) established from time to time by the commissioner, and

(b) most recently provided by the commissioner to the ferry operator.

13 Section 59 (2) is repealed and the following substituted:

(2) In preparing a budget for a fiscal year, the commissioner must ensure that the budget for that fiscal year does not exceed 1/5 of 1% of the previous year's tariff revenue.

14 Section 64.1 is amended

(a) in subsection (1) by striking out "subsection (2)," and substituting "subsections (2) and (3)," and

(b) by adding the following subsection:

(3) A capital plan must be approved by the commissioner before it is submitted to the commissioner for publication under section 40.

Commencement

15  This Act comes into force by regulation of the Lieutenant Governor in Council.

 
Explanatory Notes

SECTION 1: [Coastal Ferry Act, section 1] adds a definition of "ferry users".

SECTION 2: [Coastal Ferry Act, section 38]

• provides that regulation of ferry operators is to be done with a primary view to protecting the interests of ferry users, taxpayers and ferry operators;
• adds encouragement of innovation as a principle to guide the commissioner's regulation of ferry operators;
• removes the prohibitions against cross subsidization of ferry routes and the requirement to move towards a greater reliance on a user pay system;
• gives to the commissioner the power to require ferry operators to prepare plans, review policies and engage in public consultations.

SECTION 3: [Coastal Ferry Act, section 40] allows the commissioner to avoid publishing information provided by a ferry operator if that information might be harmful to the financial or economic interests of the ferry operator or to the business interests of a third party.

SECTION 4: [Coastal Ferry Act, section 41]

• removes a definition rendered unnecessary by the repeal and replacement of section 41 (2) (b) of the Act by this Bill;
• replaces the requirement that the price caps applicable to a ferry operator must allow that ferry operator a specified pre-tax return on equity with a requirement that the price caps must allow the ferry operator to meet its debt obligations and maintain access to reasonable borrowing rates;
• replaces the requirement for the commissioner to determine the replacement cost of a ferry operator's assets with a requirement for the commissioner to attribute to assets a value the commissioner considers appropriate;
• removes the prohibitions against cross subsidization of ferry routes.

SECTION 5: [Coastal Ferry Act, section 41.1] provides for fuel deferral accounts.

SECTION 6: [Coastal Ferry Act, section 42] allows the commissioner to respond to applications from ferry operators for relief by providing temporary or permanent price cap increases, temporary or permanent service reductions or deferrals of major capital expenditures.

SECTION 7: [Coastal Ferry Act, section 43] clarifies that service reductions allowed to a ferry operator under section 43 of the Act are to constitute a temporary response to a circumstance in which the ferry operator is unable to provide a required level of service.

SECTION 8: [Coastal Ferry Act, section 43.1] authorizes the commissioner to direct a ferry operator to permanently reduce service on a designated ferry route.

SECTION 9: [Coastal Ferry Act, section 45] is consequential to the addition of section 43.1 of the Act by this Bill.

SECTION 10: [Coastal Ferry Act, section 46.1] allows the commissioner to undertake performance reviews of a ferry operator.

SECTION 11: [Coastal Ferry Act, section 53] provides the commissioner with an additional month to consider a ferry operator's report before the commissioner must report to the Lieutenant Governor in Council under section 53 of the Act.

SECTION 12: [Coastal Ferry Act, section 55] prohibits ferry operators from incurring major capital expenditures without approval of the commissioner.

SECTION 13: [Coastal Ferry Act, section 59] increases the amount the commissioner is entitled to receive from ferry operators to 1/5 of 1% of the previous year's tariff revenue.

SECTION 14: [Coastal Ferry Act, section 64.1] requires that a ferry operator must obtain the commissioner's approval of the ferry operator's capital plan before that plan is provided to the commissioner for publication under section 40 of the Act.