Canada Gazette, Part I, Volume 148, Number 45: Regulations Amending the Atlantic Pilotage Tariff Regulations, 1996
November 8, 2014
Statutory authority
Pilotage Act
Sponsoring agency
Atlantic Pilotage Authority
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Issues
In accordance with recommendations from the Canadian Transportation Agency (the CTA) and its customers, the Atlantic Pilotage Authority (the Authority) strives to be financially selfsufficient on a port-by-port basis, as well as for the Authority as a whole. After analyzing projections for coming years, and consulting with industry, the Authority has determined that 5 of the 17 compulsory pilotage ports would require tariff adjustments to remain financially self-sufficient on a port-by-port basis and provide the service levels required by industry, without crosssubsidization.
Background
The Authority is responsible for administering, in the interests of safety, an efficient pilotage service within the Canadian waters in and around the Atlantic Provinces. As required by the Pilotage Act, the Authority prescribes tariffs of pilotage charges that are fair, reasonable and consistent with providing revenues sufficient to permit the Authority to operate on a self-sustaining financial basis.
Objectives
The objective of this proposed regulatory amendment is to increase pilotage charges in certain compulsory pilotage areas in order to
- — maintain the ability of the Authority to meet its mandate to operate, in the interest of safety, an efficient pilotage service within the Atlantic region;
- — help ensure the long-term financial self-sustainability of the Authority as a whole;
- — help ensure the long-term financial self-sustainability of each port individually; and
- — be mindful of the economic realities of the region by ensuring that the tariff increases are within the ability of the shipping industry to absorb while allowing the ports to remain competitive.
Description
Compulsory pilotage areas regular tariffs in the Atlantic Pilotage Tariff Regulations, 1996
These proposed tariff amendments would increase all of the charges related to one-way trips, movages, and trips through for the following compulsory pilotage areas:
- Effective January 2, 2015, or if they are registered after that day, they come into force on the day on which they are registered (the coming-into-force date)
- Cape Breton (Strait of Canso) 10.00%
- Saint John 5.00%
- Halifax 5.00%
- Bay of Exploits 3.00%
- Humber Arm 3.00%
- Effective July 1, 2015
- Saint John 3.00%
Also effective on the coming-into-force date, the budgeted fuel consumption used to calculate the fuel charge in Saint John will be increased from 75 to 100 L per assignment for which a pilot boat is used. This increase reflects the greater fuel consumption with the new pilot boat in the area.
The overall increase in revenues from these 2015 tariff adjustment is estimated to be $731,000, or a 3.2% increase in projected revenue.
“One-for-One” Rule
The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business.
Small business lens
The small business lens does not apply to these amendments, as there would be no disproportionate costs to small businesses.
Consultation
Consultation in various forms has taken place with the parties affected by these proposed amendments. The parties consulted include the Shipping Federation of Canada, which represents foreign vessels and accounts for 77%–79% of the Authority's activity and revenue, and the Canadian Shipowners Association. Local committees representing stakeholders in Halifax, Saint John, St. John's, Placentia Bay, and Cape Breton were also consulted extensively, including presentations made by the Authority in May and August 2014.
The consultation took the form of meetings, as well as of written, personal, and telephone communications with individuals. Alternatives to tariff increases were presented, where applicable, and participation from the attendees was encouraged. For various ports and districts, an alternative to increased tariff rates would be a reduction in pilot strength. The parties affected have always expressed that their primary concerns are with service levels. They have requested that the number of pilots be increased in some areas, and maintained in others, so that pilot availability is not compromised. When meeting with customers, the Authority provided an analysis of the situation and solicited responses. The response of those consulted was mainly positive with no significant concerns raised. Every indication was given that the adjustments were accepted as fair and reasonable.
Rationale
Without the increases, the Authority anticipates a loss of $391,000 for the organization in 2015. The proposed increases would provide an estimated profit of $344,000, or approximately 1.5% of revenue, for 2015. This rate of return remains below the Authority's long-term targeted rates of return even though the Authority has invested significantly in new vessels and still carries debt for their construction. The Authority is also investing in increased pilot strength in several ports to address service concerns and prepare for pending retirements.
Cape Breton District
This district contains three compulsory pilotage zones: the Strait of Canso, the Bras d'Or Lake, and the port of Sydney. The district utilizes a pool of pilots, each of whom is capable of providing service to any of the three zones. Operating as a district is advantageous to the individual zones as they can draw on resources from the pool to cover peak periods. An individual zone that is not part of a district would have to carry more pilots to cover for these periods at an increased cost to industry. The total costs of the pilots in a district are allocated to the individual zone based on the total time pilots spend working in each zone.
The traffic levels in the Strait of Canso have been volatile after losing a significant amount of business in 2011. The area has a transshipment terminal that supplies refineries along the eastern seaboard of the United States. With no new refineries being developed and demand for petroleum products declining, the transshipment terminal has been relying more and more on a few major customers. In 2013, there was a spike in traffic in the summer as world oil prices made the terminal operations more attractive. That business declined later in 2013.
After allowing the pilot strength in the area to be reduced by 30% from 2011 levels, the Authority realized that pilots would need to be added to maintain service levels to the satisfaction of our customers. Two pilots are being added to provide improved service to the district.
Strait of Canso
For the compulsory pilotage area of the Strait of Canso, the Authority has had significant volatility in the area. This has made it very challenging to determine the proper manning for the district. Service levels are indicating that increased manning is required. With a goal of breaking even in the port, the Authority is increasing the tariff charge by 10%, estimated to provide an additional $200,000. This increase is expected to move the port to a break-even position.
Saint John
There are a number of business prospects for the port of Saint John. The business growth is expected to increase the demand for pilotage within the planning period. The Authority has also received notice of a pilot's intention to retire. In preparation for the retirement, and the increased demand for service, the Authority is adding to the pilot strength. The Authority has developed an operating budget for 2015 that includes two additional pilots and traffic growth in the port.
Based on this budget, the Authority is proposing a 5% increase that is already in effect with an additional 3% increase effective July 1, 2015. This two-stage increase was proposed by the users in the port as a means to accelerate the hiring of additional pilots to mitigate risks of a shortage in the area due to retirement and business growth.
Since the new pilot boat was launched in 2013, the Authority has not adjusted the budgeted fuel usage used to calculate the fuel charge in the port. After observing the usage for more than a year, the Authority is adjusting the budgeted fuel per assignment to 100 L.
Without these increases, the Authority anticipates a loss of $246,000 for the port in 2015. The proposed increase would provide an estimated profit of less than 1% in 2015. Again, this rate of return is below the Authority's long-term targeted rates of return for the area where the Authority has invested significantly in a new vessel and carries debt for its construction.
Halifax
For Halifax, the amendment would increase pilotage revenue in the port by 5% or $258,000 over the 2015 projected revenues under the current tariff. This assumes 2 763 total assignments in the port for 2015, activity very similar to the 2014 projections. Halifax is budgeted to provide about 24.7% of the Authority's overall revenue in 2015.
The port of Halifax also faces challenges regarding the workforce and possible retirements. The Authority has received notice of two retirements in the port by early 2016. In order to keep the pilot strength at 12, the Authority has hired one apprentice pilot and will be hiring another one in the near future. The port will be carrying the extra pilot costs until the retirements take place.
Without the 5% increase, the Authority anticipates a loss of $226,000 for the port in 2015. The proposed increase would provide an estimated profit of less than 1% in 2015. Again, this rate of return is below the Authority's long-term targeted rates of return for the area where the Authority has invested significantly in a new vessel and carries debt for its construction.
Central/Western Newfoundland District
Similar to the other districts, Central/Western Newfoundland encompasses three ports, Humber Arm, Bay of Exploits, and Stephenville, which share pilot resources. This district has had a dramatic decrease in assignments due to the decline of the paper industry over the years. The compulsory pilotage ports in this district are served by a complement of three pilots, reduced from four in previous years. Due to the large geographic area covered by the pilots (more than 400 km from one extremity to the other), it is impossible to reduce the number of pilots below the current level.
After consulting with industry representatives, it was determined that the Authority would apply a one-year, 10% surcharge in 2014 to cover the temporary cost of a training period for a new pilot to be prepared to replace a retiring pilot by the end of the year. The charge was effective from January 1, 2014, to December 31, 2014.
Humber Arm
The tariff rates in Humber Arm will decrease by 10% on January 1, 2015, when the 2014 surcharge expires. Effective on the coming-into-force date, the proposed change will increase pilotage rates by 3%, leaving Humber Arm with a net decrease in pilotage tariff rates of 7% from 2014 levels. The 3% adjustment increases projected revenues in the port by $15,000. This assumes 224 total assignments in the port for 2015, activity similar to what is projected for 2014. This increase would be meant to cover inflationary increases in expenses and the increased cost of a winter pilot boat. This is projected to leave the port with a small loss.
Bay of Exploits
The tariff rates in Bay of Exploits will decrease by 10% on January 1, 2015, when the 2014 surcharge expires. Effective on the coming-into-force date, the proposed change will increase pilotage rates by 3%, leaving the area with a net decrease in pilotage tariff rates of 7% from 2014 levels. The 3% adjustment increases projected revenues in the port by $8,000. This assumes 127 total assignments in the port for 2015, activity similar to what is projected for 2014. This increase would be meant to cover inflationary increases in expenses experienced over two years and would leave the port projected to have a small profit of 3%.
Summary
The following tables indicate the current charges and the amendments in the compulsory pilotage tariffs:
| Basic Charge | Unit Charge | Minimum Charge | Cancellation Charge | Estimated Fuel Charge (see reference 1) (see reference 2) (see reference 3) |
Cost for an Average Ship (see reference 4) (see reference 5) (see reference 6) |
||
|---|---|---|---|---|---|---|---|
| Halifax, N.S. | 2014 | $634 | $2.48 | $1,409 | $634 | $143 | $1,910 |
| 2015 | $666 | $2.60 | $1,479 | $666 | $143 | $1,998 | |
| Reference 1 The 2015 fuel charge is based on the latest 2015 average fuel price of $1.102 and 130 L per trip. | |||||||
| Reference 4 Based on a ship of 456.67 units for Halifax. | |||||||
| Cape Breton (Strait of Canso), N.S. | 2014 | $953 | $3.52 | $1,306 | $900 | $342 | $3,415 |
| 2015 | $1,048 | $3.87 | $1,436 | $900 | $342 | $3,760 | |
| Reference 2 The 2015 fuel charge is based on the latest 2014 average fuel price of $1.180 and 290 L per trip. | |||||||
| Reference 5 Based on a ship of 612.09 units for the Strait of Canso. | |||||||
| Saint John, N.B. | 2014 | $770 | $3.46 | $1,376 | $770 | $98 | $2,383 |
| 2015 (coming-into-force date) | $809 | $3.63 | $1,445 | $809 | $131 | $2,537 | |
| 2015 (July 1) | $833 | $3.74 | $1,488 | $833 | $131 | $2,609 | |
| Reference 3 The 2015 fuel charge is based on the latest 2014 average fuel price of $1.306 and 100 L per trip. | |||||||
| Reference 6 Based on a ship of 439.65 units for Saint John. | |||||||
| Basic Charge | Unit Charge | Minimum Charge | Cancellation Charge | Cost for an Average Ship (see reference 7) (see reference 8) |
||
|---|---|---|---|---|---|---|
| Bay of Exploits, N.L. (see reference 9) | 2014 | $1,048 | $11.03 | $2,151 | $900 | $2,740 |
| 2015 | $982 | $10.33 | $2,014 | $843 | $2,566 | |
| Reference 7 Based on a ship of 153.34 units for Bay of Exploits. | ||||||
| Humber Arm, N.L. (see reference 10) | 2014 | $735 | $9.97 | $1,903 | $735 | $2,645 |
| 2015 | $688 | $9.33 | $1,782 | $688 | $2,476 | |
| Reference 8 Based on a ship of 191.64 units for Humber Arm. | ||||||
Reference 9
One-year surcharge expires causing a 10% reduction before any increase.
Reference 10
One-year surcharge expires causing a 10% reduction before any increase.
Implementation, enforcement and service standards
Section 45 of the Pilotage Act provides an enforcement mechanism for these Regulations in that a Pilotage Authority can inform a customs officer at any port in Canada to withhold clearance from any ship for which pilotage charges are outstanding and unpaid. Section 48 of the Pilotage Act stipulates that every person who fails to comply with the Act or its regulations is guilty of an offence and liable on summary conviction to a fine not exceeding $5,000.
Contact
Captain R. A. McGuinness
Chief Executive Officer
Atlantic Pilotage Authority
Cogswell Tower, Suite 910
2000 Barrington Street
Halifax, Nova Scotia
B3J 3K1
Telephone: 902-426-2550
Fax: 902-426-4004
PROPOSED REGULATORY TEXT
Notice is given, pursuant to subsection 34(1) (see footnote a) of the Pilotage Act (see footnote b), that the Atlantic Pilotage Authority, pursuant to subsection 33(1) of that Act, proposes to make the annexed Regulations Amending the Atlantic Pilotage Tariff Regulations, 1996.
Interested persons who have reason to believe that any charge in the proposed Regulations is prejudicial to the public interest, including the public interest that is consistent with the national transportation policy set out in section 5 (see footnote c) of the Canada Transportation Act (see footnote d), may file a notice of objection setting out the grounds for the objection with the Canadian Transportation Agency within 30 days after the date of publication of this notice. The notice of objection must cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to the Canadian Transportation Agency, Ottawa, Ontario K1A 0N9. The notice of objection must also be filed with the Minister of Transport and the Atlantic Pilotage Authority in accordance with subsection 34(3) (see footnote e) of the Pilotage Act (see footnote f).
Halifax, October 29, 2014
CAPTAIN R. A. MCGUINNESS
Chief Executive Officer
Atlantic Pilotage Authority
REGULATIONS AMENDING THE ATLANTIC PILOTAGE TARIFF REGULATIONS, 1996
AMENDMENTS
| Item | Column 2 Minimum Charge ($) |
Column 3 Unit Charge($/pilotage unit) |
Column 4 Basic Charge ($) |
|---|---|---|---|
| 3. | 2,014.00 | 10.33 | 982.00 |
| Item | Column 2 Minimum Charge ($) |
Column 3 Unit Charge ($/pilotage unit) |
Column 4 Basic Charge ($) |
|---|---|---|---|
| 5. | 1,782.00 | 9.33 | 688.00 |
| Item | Column 2 Minimum Charge ($) |
Column 3 Unit Charge ($/pilotage unit) |
Column 4 Basic Charge ($) |
|---|---|---|---|
| 11. | 1,436.00 | 3.87 | 1,048.00 |
| 12. | 1,479.00 | 2.60 | 666.00 |
| Item | Column 3 Flat Charge, Pilot Boat Used ($) |
|---|---|
| 2. | 1,668.00 |
| Item | Column 3 Minimum Charge ($) |
Column 4 Unit Charge, No Pilot Boat Used ($/pilotage unit) |
Column 5 Basic Charge, No Pilot Boat Used ($) |
Column 6 Unit Charge, Pilot Boat Used ($/pilotage unit) |
Column 7 Basic Charge, Pilot Boat Used ($) |
|---|---|---|---|---|---|
| 3. | 1,813.00 | 8.26 | 786.00 | 9.30 | 884.00 |
| Item | Column 3 Minimum Charge ($) |
Column 4 Unit Charge, No Pilot Boat Used ($/pilotage unit) |
Column 5 Basic Charge, No Pilot Boat Used ($) |
Column 6 Unit Charge, Pilot Boat Used ($/pilotage unit) |
Column 7 Basic Charge, Pilot Boat Used ($) |
|---|---|---|---|---|---|
| 5. | 1,604.00 | 7.46 | 550.00 | 8.40 | 619.00 |
| Item | Column 3 Minimum Charge ($) |
Column 4 Unit Charge, No Pilot Boat Used ($/pilotage unit) |
Column 5 Basic Charge, No Pilot Boat Used ($) |
Column 6 Unit Charge, Pilot Boat Used ($/pilotage unit) |
Column 7 Basic Charge, Pilot Boat Used ($) |
|---|---|---|---|---|---|
| 11. | 1,292.00 | 3.10 | 838.00 | 3.48 | 943.00 |
| 12. | 1,331.00 | 2.08 | 533.00 | 2.34 | 599.00 |
| Item | Column 3 Minimum Charge ($) |
Column 4 Unit Charge ($/pilotage unit) |
Column 5 Basic Charge ($) |
Column 7 Budgeted Fuel Consumption (litres) |
|---|---|---|---|---|
| 1. | 1,445.00 | 3.63 | 809.00 | 100.00 |
| 2. | 1,301.00 | 3.27 | 728.00 | 100.00 |
| Item | Column 3 Minimum Charge ($) |
Column 4 Unit Charge ($/pilotage unit) |
Column 5 Basic Charge ($) |
Column 7 Budgeted Fuel Consumption (litres) |
|---|---|---|---|---|
| 1. | 1,488.00 | 3.74 | 833.00 | 100.00 |
| 2. | 1,339.00 | 3.37 | 750.00 | 100.00 |
| Item | Column 3 Minimum Charge ($) |
Column 4 Unit Charge ($/pilotage unit) |
Column 5 Basic Charge ($) |
|---|---|---|---|
| 3. | 1,301.00 | 2.90 | 647.00 |
| Item | Column 3 Minimum Charge ($) |
Column 4 Unit Charge ($/pilotage unit) |
Column 5 Basic Charge ($) |
|---|---|---|---|
| 3. | 1,339.00 | 2.99 | 666.00 |
| Item | Column 2 Flat Charge ($) |
|---|---|
| 4. | 1,069.00 |
| Item | Column 2 Flat Charge ($) |
|---|---|
| 4. | 1,101.00 |
COMING INTO FORCE
11. (1) Subject to subsection (2), these Regulations come into force on January 2, 2015, but if they are registered after that day, they come into force on the day on which they are registered.
(2) Subsections 8(2), 9(2) and 10(2) come into force July 1, 2015.
[45-1-o]