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BC Ferries' Submission

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BC Ferries' Submission British Columbia Ferry Services Inc. Performance Term Three Submission to the British Columbia Ferries Commissioner September 30, 2010 This page intentionally left blank. TABLE OF CONTENTS INTRODUCTION........................................................................................................................................ 1 PART I – CORE INFORMATION............................................................................................................. 3 SECTION 1: CORE FERRY SERVICES............................................................................................................. 3 SECTION 2: TARIFFS FOR CORE FERRY SERVICES........................................................................................ 3 SECTION 3: SERVICE FEES ........................................................................................................................... 3 SECTION 4: REVENUES FROM ALL OTHER SOURCES.................................................................................... 4 SECTION 5: EXPENSES ................................................................................................................................. 4 SECTION 6: ALTERNATIVE SERVICE PROVIDERS ......................................................................................... 4 PART II – OTHER INFORMATION ........................................................................................................ 5 SECTION 7: CAPITAL EXPENDITURES .......................................................................................................... 5 SECTION 8: TRAFFIC.................................................................................................................................... 5 SECTION 9: PRODUCTIVITY IMPROVEMENTS ............................................................................................... 5 SECTION 10: RETURN ON EQUITY................................................................................................................ 6 SECTION 11: INTERNATIONAL FINANCIAL REPORTING STANDARDS............................................................ 6 SECTION 1: CORE FERRY SERVICES..................................................................................................9 COASTAL FERRY SERVICES CONTRACT....................................................................................................... 9 Description of Core Service Levels ........................................................................................................ 9 Minimum Daily Sailings ....................................................................................................................... 10 Social Programs ................................................................................................................................... 11 Temporary Service Disruptions............................................................................................................ 11 REVIEW OF CORE SERVICE DELIVERY....................................................................................................... 11 2008/09................................................................................................................................................. 11 2009/10................................................................................................................................................. 12 2010/11 (First Quarter)........................................................................................................................ 13 Remainder of Performance Term Two ................................................................................................. 13 SECTION 2: TARIFFS FOR CORE FERRY SERVICES .................................................................... 14 TARIFF STRUCTURE................................................................................................................................... 14 PRICE CAP SETTING .................................................................................................................................. 14 Fare Regulation.................................................................................................................................... 15 TARIFFS CHARGED IN PERFORMANCE TERM TWO..................................................................................... 15 EXTRAORDINARY PRICE CAP INCREASES .................................................................................................. 17 FUEL SURCHARGES AND REBATES ............................................................................................................ 17 SECTION 3: SERVICE FEES .................................................................................................................. 20 SERVICE FEES FOR DESIGNATED FERRY ROUTES ...................................................................................... 20 Ferry Transportation Fee..................................................................................................................... 20 Social Program Reimbursement........................................................................................................... 21 SERVICE FEES FOR UNREGULATED FERRY ROUTES .................................................................................. 22 CONTRIBUTION TO CHARTER AGREEMENT ............................................................................................... 22 SECTION 4: REVENUES FROM ALL SOURCES ............................................................................... 23 TARIFF REVENUES .................................................................................................................................... 24 Traffic Levels........................................................................................................................................ 24 Revenues from Fares ............................................................................................................................ 25 RESERVATION REVENUE ........................................................................................................................... 26 OTHER ANCILLARY REVENUES ................................................................................................................. 27 FEDERAL/PROVINCIAL SUBSIDY AGREEMENT........................................................................................... 28 ALLOCATION OF REVENUES ...................................................................................................................... 28 Allocation Methodology ....................................................................................................................... 28 Revenue Allocated to Route Groups..................................................................................................... 29 SECTION 5: EXPENSES .......................................................................................................................... 31 OVERVIEW OF EXPENSES .......................................................................................................................... 31 Operating, Maintenance and Administrative (OM&A) Expenses ........................................................ 31 Amortization of Capital Costs .............................................................................................................. 33 Financing Expense ............................................................................................................................... 34 Gain/Loss on Disposal of Assets........................................................................................................... 36 ALLOCATION OF EXPENSES ....................................................................................................................... 36 Allocation Methodology ....................................................................................................................... 36 Expenses Allocated to Route Groups.................................................................................................... 39 SECTION 6: ALTERNATIVE SERVICE PROVIDERS....................................................................... 40 IMPLEMENTATION OF THE ASP PLAN........................................................................................................ 40 INITIATIVES SUPPLEMENTAL TO THE ASP PLAN ....................................................................................... 42 SECTION 7: CAPITAL EXPENDITURES............................................................................................. 45 OVERVIEW OF CAPITAL PROJECTS ............................................................................................................ 45 Capital Planning Process..................................................................................................................... 46 Capital Spending in Performance Term Two ....................................................................................... 47 Performance Term Three Capital Expenditures................................................................................... 60 SECTION 8: DEMAND FORECAST ......................................................................................................63 ECONOMETRIC FORECASTING ................................................................................................................... 63 CONCLUSION............................................................................................................................................
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