Vol. 143, No. 26 — December 23, 2009

Registration

SOR/2009-333 December 10, 2009

PILOTAGE ACT

Regulations Amending the Atlantic Pilotage Tariff Regulations, 1996

RESOLUTION

Whereas the Atlantic Pilotage Authority, pursuant to subsection 34(1) (see footnote a) of the Pilotage Act (see footnote b), published a copy of the proposed Regulations Amending the Atlantic Pilotage Tariff Regulations, 1996, in the annexed form, in the Canada Gazette, Part I, on November 7, 2009;

Therefore, the Atlantic Pilotage Authority, pursuant to subsection 33(1) of the Pilotage Act (see footnote c), hereby makes the annexed Regulations Amending the Atlantic Pilotage Tariff Regulations, 1996.

Halifax, November 16, 2009

CAPTAIN R. A. MCGUINNESS
Chief Executive Officer
Atlantic Pilotage Authority

P.C. 2009-1996 December 10, 2009

Her Excellency the Governor General in Council, on the recommendation of the Minister of Transport, pursuant to subsection 33(1) of the Pilotage Act (see footnote d), hereby approves the annexed Regulations Amending the Atlantic Pilotage Tariff Regulations, 1996, made by the Atlantic Pilotage Authority.

REGULATIONS AMENDING THE ATLANTIC PILOTAGE TARIFF REGULATIONS, 1996

AMENDMENTS

1. Section 5 of the Atlantic Pilotage Tariff Regulations, 1996 (see footnote 1) is replaced by the following:

5. The charge for a ship, other than a dead ship or an oil rig, for a one-way trip in a compulsory pilotage area set out in column 1 of an item of Schedule 2 is the sum of

(a) a fuel charge determined by the following formula:

AFP × AFC

where

AFP = the average fuel price, in dollars per litre, for fuel for the pilot boat, based on invoices received by the Authority for fuel supplied to the pilot boat in the calendar month that is two months before the month in which the one-way trip is completed, and

AFC = the average fuel consumption set out in column 6 of that item, or 0 if column 6 of that item indicates that the average fuel consumption is not applicable, and

(b) the greater of

(i) the sum of the minimum charge set out in column 2 of that item and the pilot boat replacement surcharge set out in column 5 of that item, and

(ii) the sum of

(A) the greater of the product obtained by multiplying the pilotage unit by the unit charge set out in column 3 of that item, and the product obtained by multiplying the gross tonnage by a tonnage charge of $0.01 per gross ton, and

(B) the sum of the basic charge set out in column 4 of that item and the pilot boat replacement surcharge set out in column 5 of that item.

2. Section 7 of the Regulations is replaced by the following:

7. The charge for a ship, other than a dead ship or an oil rig, for a movage in a compulsory pilotage area set out in column 1 of an item of Schedule 4 is the sum of

(a) a fuel charge determined by the following formula:

AFP × AFC

where

AFP = the average fuel price, in dollars per litre, for fuel for the pilot boat, based on invoices received by the Authority for fuel supplied to the pilot boat in the calendar month that is two months before the month in which the movage is completed, and

AFC = the average fuel consumption set out in column 9 of that item, or 0 if column 9 of that item indicates that the average fuel consumption is not applicable, and

(b) either

(i) if a flat charge is applicable, the flat charge set out in column 2 of that item, or

(ii) if a flat charge is not applicable, the greater of

(A) the sum of the minimum charge set out in column 3 of that item and the pilot boat replacement surcharge set out in column 8 of that item, and

(B) the amount determined by the following formula:

(PU × UC) + BC + BR

where

PU = the pilotage unit,

UC = the unit charge set out in column 4 of that item if a pilot boat is not used, or in column 6 of that item if a pilot boat is used,

BC = the basic charge set out in column 5 of that item if a pilot boat is not used, or in column 7 of that item if a pilot boat is used, and

BR = the pilot boat replacement surcharge set out in column 8 of that item.

3. Section 8 of the Regulations is replaced by the following:

8. The charge for a ship, other than a dead ship or an oil rig, for a trip or a movage that is in the Saint John compulsory pilotage area and that is set out in column 1 of an item of Schedule 5 is the sum of

(a) a fuel charge determined by the following formula:

AFP × AFC

where

AFP = the average fuel price, in dollars per litre, for fuel for the pilot boat, based on invoices received by the Authority for fuel supplied to the pilot boat in the calendar month that is two months before the month in which the trip or movage is completed, and

AFC = the average fuel consumption set out in column 7 of that item, or 0 if column 7 of that item indicates that the average fuel consumption is not applicable, and

(b) either

(i) if a flat charge is applicable, the sum of the flat charge set out in column 2 of that item and the pilot boat replacement surcharge set out in column 6 of that item, or

(ii) if a flat charge is not applicable, the greater of

(A) the sum of the minimum charge set out in column 3 of that item and the pilot boat replacement surcharge set out in column 6 of that item, and

(B) the sum of

(I) the greater of the product obtained by multiplying the pilotage unit by the unit charge set out in column 4 of that item, and the product obtained by multiplying the gross tonnage by a tonnage charge of $0.01 per gross ton, and

(II) the sum of the basic charge set out in column 5 of that item and the pilot boat replacement surcharge set out in column 6 of that item.

4. Schedules 2 to 5 to the Regulations are replaced by the Schedules 2 to 5 set out in the schedule to these Regulations.

COMING INTO FORCE

5. These Regulations come into force on January 1, 2010.

SCHEDULE
(Section 4)

SCHEDULE 2
(Sections 4.1, 5 and 14)

COMPULSORY PILOTAGE AREAS — ONE-WAY TRIPS

Item	Column 1 Compulsory Pilotage Area	Column 2 Minimum Charge ($)	Column 3 Unit Charge ($)	Column 4 Basic Charge ($)	Column 5 Pilot Boat Replace- ment Surcharge ($)	Column 6 Average Fuel Consumption (litres)
1.	Miramichi, N.B.	n/a	6.06	543.00	n/a	n/a
2.	Restigouche (Zone A, Dalhousie and Zone B, Campbellton), N.B.	2,650.00	8.98	2,100.00	n/a	n/a
3.	Bay of Exploits (Botwood and Lewisporte), N.L.	1,725.00	8.85	841.00	n/a	n/a
4.	Holyrood, N.L.	1,638.00	5.19	528.00	n/a	n/a
5.	Humber Arm, N.L.	1,400.00	7.33	541.00	n/a	n/a
6.	Placentia Bay, N.L.	2,650.00	4.67	2,000.00	n/a	600
7.	St. John’s, N.L.	1,638.00	5.19	528.00	n/a	n/a
8.	Stephenville, N.L.	1,725.00	8.85	841.00	n/a	n/a
9.	Cape Breton (Zone A, Sydney), N.S.	1,725.00	5.01	841.00	n/a	n/a
10.	Cape Breton (Zone B, Bras d’Or Lake), N.S.	1,980.00	8.76	1,410.00	n/a	n/a
11.	Cape Breton (Zones C and D, Strait of Canso), N.S.	1,200.00	2.98	962.00	n/a	n/a
12.	Halifax, N.S.	1,125.00	2.14	454.00	67.00	130
13.	Pugwash, N.S.	n/a	5.17	438.00	n/a	n/a
14.	Charlottetown, P.E.I.	n/a	3.49	355.00	n/a	n/a

SCHEDULE 3
(Section 6)

COMPULSORY PILOTAGE AREAS — TRIPS THROUGH

Item	Column 1 Compulsory Pilotage Area	Column 2 Flat Charge, No Pilot Boat Used ($)	Column 3 Flat Charge, Pilot Boat Used ($)	Column 4 Unit Charge ($)	Column 5 Basic Charge ($)
1.	Cape Breton (Zone B, Bras d’Or Lake), N.S.	n/a	n/a	8.76	1,410.00
2.	Cape Breton (Zone C, Strait of Canso), N.S.	n/a	1,479.00	n/a	n/a
3.	Confederation Bridge, P.E.I.	450.00	1,200.00	n/a	n/a

SCHEDULE 4
(Sections 4.1 and 7)

COMPULSORY PILOTAGE AREAS — MOVAGES

Item	Column 1 Compulsory Pilotage Area	Column 2 Flat Charge ($)	Column 3 Minimum Charge ($)	Column 4 Unit Charge, No Pilot Boat Used ($)	Column 5 Basic Charge, No Pilot Boat Used ($)
1.	Miramichi, N.B.	598.00	n/a	n/a	n/a
2.	Restigouche (Zone A, Dalhousie and Zone B, Campbellton), N.B.	n/a	2,120.00	7.18	1,680.00
3.	Bay of Exploits (Botwood and Lewisporte), N.L.	n/a	1,380.00	7.08	673.00
4.	Holyrood, N.L.	n/a	1,474.00	4.15	422.00
5.	Humber Arm, N.L.	n/a	1,120.00	5.86	433.00
6.	Placentia Bay, N.L.
	(a) between Whiffen Head and Come By Chance terminals	n/a	1,325.00	2.34	1,000.00
	(b) any other area	n/a	2,385.00	3.74	1,600.00
7.	St. John’s, N.L.	n/a	1,474.00	4.15	422.00
8.	Stephenville, N.L.	n/a	1,553.00	7.08	673.00
9.	Cape Breton (Zone A, Sydney), N.S.	n/a	1,553.00	4.01	673.00
10.	Cape Breton (Zone B, Bras d’Or Lake), N.S.	n/a	1,782.00	7.01	513.00
11.	Cape Breton (Zones C and D, Strait of Canso), N.S.	n/a	1,080.00	2.38	770.00
12.	Halifax, N.S.	n/a	1,013.00	1.71	363.00
13.	Pugwash, N.S.	472.00	n/a	n/a	n/a
14.	Charlottetown, P.E.I.	384.00	n/a	n/a	n/a

Item	Column 1 Compulsory Pilotage Area	Column 6 Unit Charge, Pilot Boat Used ($)	Column 7 Basic Charge, Pilot Boat Used ($)	Column 8 Pilot Boat Replacement Surcharge ($)	Column 9 Average Fuel Consumption (litres)
1.	Miramichi, N.B.	n/a	n/a	n/a	n/a
2.	Restigouche (Zone A, Dalhousie and Zone B, Campbellton), N.B.	8.08	1,890.00	n/a	n/a
3.	Bay of Exploits (Botwood and Lewisporte), N.L.	7.97	756.00	n/a	n/a
4.	Holyrood, N.L.	4.67	475.00	n/a	n/a
5.	Humber Arm, N.L.	6.60	486.00	n/a	n/a
6.	Placentia Bay, N.L.
	(a) between Whiffen Head and Come By Chance terminals	n/a	n/a	n/a	n/a
	(b) any other area	4.20	1,800.00	n/a	600
7.	St. John’s, N.L.	4.67	475.00	n/a	n/a
8.	Stephenville, N.L.	7.97	757.00	n/a	n/a
9.	Cape Breton (Zone A, Sydney), N.S.	4.51	757.00	n/a	n/a
10.	Cape Breton (Zone B, Bras d’Or Lake), N.S.	7.88	577.00	n/a	n/a
11.	Cape Breton (Zones C and D, Strait of Canso), N.S.	2.68	866.00	n/a	n/a
12.	Halifax, N.S.	1.93	409.00	67.00	130
13.	Pugwash, N.S.	n/a	n/a	n/a	n/a
14.	Charlottetown, P.E.I.	n/a	n/a	n/a	n/a

SCHEDULE 5
(Sections 4.1 and 8)

SAINT JOHN COMPULSORY PILOTAGE AREA — TRIPS AND MOVAGES

Item	Column 1 Trip or Movage	Column 2 Flat Charge ($)	Column 3 Minimum Charge ($)	Column 4 Unit Charge ($)	Column 5 Basic Charge ($)	Column 6 Pilot Boat Replacement Surcharge ($)	Column 7 Average Fuel Consumption (litres)
1.	One-way trip	n/a	1,050.00	3.29	474.00	100.00	75
2.	Movage with pilot boat	n/a	945.00	2.96	427.00	100.00	75
3.	Movage without pilot boat	n/a	945.00	2.63	379.00	n/a	n/a
4.	Trip through	900.00	n/a	n/a	n/a	100.00	n/a

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issue

The amendments to the Atlantic Pilotage Tariff Regulations, 1996 (the Regulations) are intended to allow the Authority to remain financially self-sufficient. The tariff adjustments will also offset inflationary pressures, will provide funding to maintain pilot resources in some ports, will allow for improvement of pilot boat services in some ports, and will alleviate cross-subsidization amongst ports.

The Authority has been affected by a significant decline in activity in some ports over several years. The Authority has explored reducing costs for those ports, but the customers in the individual ports have clearly indicated that the service delivery is paramount, and that they do not support a reduction in the number of pilots available at this time, or in the reliability of the pilot boat service. Approximately 90% of all costs are operating expenditures incurred directly in the provision of the pilotage service, so the Authority’s ability to reduce costs without a reduction in the number of pilots or pilot boats is very limited.

Objectives

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. The Authority is required to prescribe tariffs of pilotage charges that are fair and reasonable and consistent with providing revenues sufficient to permit the Authority to operate on a self-sustaining financial basis. In accordance with recommendations from the Canadian Transportation Agency and its customers, the Authority strives to be self-sufficient on a port-by-port basis, as well as for the Authority as a whole. The Authority is consequently amending tariff charges for 2010 in seven compulsory pilotage areas: Saint John in New Brunswick; Halifax, Strait of Canso, Bras d’Or in Nova Scotia; and St. John’s, Holyrood and Placentia Bay in Newfoundland and Labrador. In addition, the Authority is amending the variable charge calculation within its tariff structure, and implementing a variable fuel charge to reflect the actual cost of fuel for its pilot boats in three areas.

Description

After suffering losses for four consecutive years, the Authority will have a modest positive return in 2009. However, the worldwide economic downturn has had an impact on the Authority as the financial results will be under budget. While the results have been disappointing, the measures taken by the Authority in establishing an improved tariff structure for 2009 have been successful in preventing a more serious financial situation. This positive return is required as the financial performance from 2005 to 2008 has eroded the Authority’s financial position, and it must strive to remain in a positive position. At the end of 2008, the Authority was in a negative cash position with no investments or cash reserves available.

Without the tariff amendments contained herein, the Authority would be susceptible to reverting to a loss position. The Authority must remain in a positive cash position as it has to make significant capital investments in the near future. The Authority is operating with three pilot boats in their fourth decade of service, and will not be able to use these vessels as primary boats indefinitely. In order to continue to provide a reliable pilotage service, the Authority must replace the boats in Saint John, New Brunswick, and Halifax, Nova Scotia. In addition to the increase in costs incurred where the Authority operates its own vessels, the cost of pilot boat contracts has increased.

The fuel charge is intended to reduce the Authority’s exposure to variances in commodity prices and allow for more transparency within the tariff for the users. To this end a variable fuel charge is being implemented for 2010 in three ports in which the Authority operates its own pilot boats (Placentia Bay, Halifax, and Saint John). As a result of consultations with customers, the Authority will introduce a variable fuel price based on the actual fuel costs, and no longer estimate a fuel cost in the basic charge in those ports. In two of the ports, Placentia Bay and Halifax, the basic charge for the area will be reduced to partially offset the variable fuel charge.

These tariff amendments continue the Authority’s initiative to address inequities that have developed over time in the tariff system. For 2010, the Authority will amend its variable charge to have the greater of the unit charge or new gross tonnage charges apply to all ships. It has become apparent in recent years that as new generations of ships are built, some of the traditional measurements no longer give a fair representation of the capacity of the ship to earn revenue. This is particularly evident with cruise ships, where in many cases the newer generations of vessels, although much larger in size than preceding generations, have a much smaller unit measurement. By basing the variable charge on a formula that considers the greater of the unit charge or a gross tonnage charge, the Authority is attempting to address these anomalies. At the same time, the level of the unit charge is such that it will only affect some vessels calling at Halifax at this time. In future years, the tonnage charge will be increased to more fully address the tariff discrepancies.

In the tariff amendments put into effect on January 1, 2009, the Authority addressed another inequity within the tariff structure in which smaller vessels were not paying their fair share of pilotage charges within ports. Minimum charges were established in seven areas, and increased in those areas that already had a minimum charge. These charges are now adequate in all areas except Saint John, New Brunswick. Saint John has by far the lowest minimum charge of any port, and the amendment will establish a charge for this area that is in the same range as other ports. The Authority is also addressing the rates for movages within the port of Saint John to have this rate structure conform to that found in other ports.

In the Bras d’Or Lake in Cape Breton, there are two pilotage zones with separate charges for each zone. The majority of commercial vessels transiting this area enter both zones, thereby invoking both rates. However, some pleasure yachts enter the Lake through St. Peter’s Canal and spend a significant amount of time cruising in one zone with a pilot on board. This is a significant use of pilotage resources without adequate compensation to the Authority. The Authority is combining the two zones into one, and amending the charges for the one zone accordingly. In addition to this amendment, the Authority is increasing the tariff in this area.

The Authority continues to consult widely with their customers in various ports, and to address concerns expressed by them. During 2009, the Authority sponsored 15 meetings with users in various locations, and has attended many meetings sponsored by other parties. In all areas, our customers have indicated that they understand the rationale for the tariff amendments, and there has been general agreement with most parties.

The amendment involving the gross tonnage charge will theoretically apply to all areas, but at the introductory level will initially impact only a segment of the business in one port. In actual fact, seven areas will see amendments to their tariff structures. These amendments will be described in more detail below.

Regulatory and non-regulatory options considered

Several alternatives were considered in determining tariff charges required by the Authority.

The Authority could have maintained tariffs at the status quo in all ports. This alternative would have resulted in the Authority being in danger of slipping back into a loss position and would not have been conducive to the goal of self-sufficiency, or to avoiding cross-subsidization among ports. The Authority would not be in a position to maintain its day-to-day operations without incurring increased debt; a situation that is not sustainable over time. The Authority rejected this alternative because an increase in tariff charges is necessary to reflect the actual costs for pilotage services being performed, and to ensure that the Authority maintains its financial self-sufficiency while minimizing cross-subsidization among ports.

The Authority has attempted to keep costs at a minimum. Approximately 90% of the Authority’s expenses are on pilot salaries, pilot boat expenses, and direct operating expenses, and approximately 10% are on administrative overhead.

The Authority could have attempted to reduce costs by decreasing the number of pilots employed in those areas affected by the increase. The effect of this approach would very likely be delays to ships as the number of pilots would be decrease. This reduction in service would not be acceptable to customers. The Authority’s stakeholders customers have requested that the current level of personnel resources be maintained to reduce delays in service and the Authority has worked diligently to meet this request. The current contingent of pilots in these ports is the minimum necessary to provide the service considering the physical size of the territory covered, the level of traffic in the ports, and the necessity to have coverage for illnesses and vacations.

The Authority could have attempted to reduce pilot boat costs by reducing maintenance, running boats at slower speed, delaying or cancelling our pilot boat replacement program, or attempting to get concessions from pilot boat contractors. Any attempt to reduce the maintenance or contracting costs of pilot boats could impact on the safety and reliability of pilot boat service. The Authority owned boats are aging, and are nearing the end of their useful life, and further delay in replacing the boats would seriously compromise the Authority’s ability to provide the service. These alternatives would reduce the quality of service provided by the Authority. Therefore, these alternatives would be unacceptable to both the Authority and its customers. The Authority has also worked closely with its customers and employees to ensure that pilot boat service remains safe and efficient in all ports served.

The Authority’s administration costs are kept at the lowest possible level. There are a total of 10 employees in the head office, including executive officers. This staff administers a pilotage service that covers four provinces and approximately 33 000 km of coastline in Atlantic Canada. Reductions in personnel would not be feasible in maintaining an effective administration.

Benefits and costs

The tariff adjustments are intended to create a fairer structure in which all customers will pay their fair share of the cost of providing the pilotage service. During our meetings with customers, it was repeatedly emphasized to the Authority that the provision of the service when required with minimal delay is of the primary importance. The increase in tariffs will allow the Authority to maintain the level of service required by its customers. We will discuss the fundamental change for the variable charge, followed by a discussion of the new fuel charge, and then each port will be addressed individually.

Gross tonnage charge

The Authority uses a combination of basic (fixed) charge and unit (variable) charge in most of its tariff calculations. The unit charge is based on a formula that utilizes vessel measurements (length, breadth, and moulded depth) to calculate vessel units, which is then multiplied by a set per unit charge to determine the variable rate. In newer generations of some types of vessels, the moulded depth is much smaller than in older generations due to the configuration of the design of the ship. In some instances, ships that are approximately twice as large as older vessels, with the capacity to carry almost three times as many passengers, have a lower unit measurement and are paying a lower tariff charge than the much smaller older vessel.

In order to address this discrepancy, the Authority is amending the Regulations to assess the variable charge for all ports according to the greater of a calculation based on the unit charge, and a calculation of the gross tonnage of the ship multiplied by a factor of 1 cent per gross ton (gt). To illustrate, using measurements from ships that call at Halifax and using the Halifax tariff rate, the following will be the effect of this change:

Ship “A” cruise ship of 55 451 gross tons; 456.56 pilotage units; 1 266 passengers.

Variable charge = greater of (456.56 units ´ $2.14 per unit) or (55,451 gt ´ 1 cent per gt)

Variable charge = greater of (unit charge of $977.04) or (gt charge of $554.51)

Variable charge = $977.04 unit charge.

Ship “B” cruise ship of 101 672 gross tons; 384.09 pilotage units; 3 340 passengers.

Variable charge = greater of (384.09 units ´ $2.14 per unit) or (101,672 gt ´ 1 cent per gt)

Variable charge = greater of (unit charge of $821.95) or (gt charge of $1,016.72)

Variable charge = $1,016.72 gt charge.

In this illustration, Ship “B” is a much larger vessel than “A”, with the capacity to earn much more revenue because of its ability to carry two and a half times more passengers.

While the gross tonnage charge will apply to all areas, at the introductory level the only immediate impact will be on Halifax because the unit charge in Halifax is lower than in other ports.

Fuel charge

The Authority is vulnerable to fluctuations in fuel costs because traditionally fuel costs have been estimated and included in our tariff submission as part of the basic (fixed) charge. In discussions with customers, they have indicated that they would prefer to have our fuel costs charged separately outside of the fixed tariff structure. The practice in the marine industry is for fuel charges to be passed on to the customer, and there is a general acceptance of this principle.

The Authority operates pilot boats in four compulsory areas: Halifax, Nova Scotia, Saint John, New Brunswick, Placentia Bay, Newfoundland and Labrador, and Sydney, Nova Scotia. Fuel is not a significant cost factor in Sydney, but it is in each of the other three ports. The Authority is indicating the budgeted fuel usage in the tariff regulations, and adding a fuel charge to each assignment in which a pilot boat is used based on the budgeted usage and the actual average fuel price according to invoices for the month two months prior to the assignment. To partially offset the implementation of the fuel charge, the Authority will decrease the existing basic charge in Halifax and Placentia Bay. Column 3 in the table below estimates the new fuel charge:

Fuel Expense Charge Estimate for 2010
Location	Column 1	Column 2	Column 3	Column 4
	Budgeted Consumption in litres	Estimated Average Price per Litre	Estimated Fuel Charge per Assignment	Offsetting Reduction in Basic Charge
Halifax	130	$0,750	$98	$(50)
Saint John	75	$0,910	$68	$0
Placentia Bay	600	$0,700	$420	$(100)

Placentia Bay

The Authority has experienced a significant decline in activity in Placentia Bay. In comparison to 2004, pilotage assignments in 2009 have declined by more than 37%. Traffic is expected to rebound somewhat in 2010, but the volatility of traffic in the port combined with the large proportion of fixed costs in Placentia Bay exposes the Authority to significant losses during any downturn. At the same time, the customers in Placentia Bay have clearly indicated that any delay in providing pilotage service is not acceptable. During consultations with the customers in the port, they expressed their preference to move to a variable fuel charge as described above. The Authority agreed that this would be useful to reduce the exposure to volatility in fuel prices while adding to the transparency and fairness of the tariff. The fuel expense charge will be implemented and the basic charge will be reduced by $100. This should provide the Authority with an increase in revenue required to maintain the service and reduce the risk presented by the volatility in traffic. The following table illustrates the effect of this amendment.

Location	Year	Basic Charge	Unit Charge	Minimum Charge	Cancellation Charge	Estimated Fuel Charge*	Cost for an Average Ship**
Placentia Bay, NL	Current	$2,100	$4.67	$2,650	$900	n/a	$5,281
	2010	$2,000	$4.67	$2,650	$900	$420	$5,601
	*Based on 2009 average fuel price of $0.70 and 600 litres per trip
	**Based on a ship of 681.25 units for Placentia Bay

St. John’s

After suffering years of consecutive losses, the port is expected to have a small return on revenue in 2009. Traffic is expected to decrease in 2010, and a tariff increase of 3% is required to offset this reduction in traffic and to cover inflationary increases. The following table illustrates the effect of this amendment.

Location	Year	Basic Charge	Unit Charge	Minimum Charge	Cancellation Charge	Cost for an Average Ship*
St. John’s, Newfoundland and Labrador	Current	$513	$5.04	$1,590	$513	$1,590
	2010	$528	$5.19	$1,638	$528	$1,638
	* Based on a ship of 112.5 units for St. John’s

Holyrood

The level of activity in Holyrood has declined to an average of less than one ship per month. The port is usually serviced by pilots from St. John’s, and the tariff rate in this port is being maintained at the same level as that in St. John’s. The following table illustrates the effect of this amendment.

Location	Year	Basic Charge	Unit Charge	Minimum Charge	Cancellation Charge	Cost for an Average Ship*
Holyrood, Newfoundland and Labrador	Current	$513	$5.04	$1,590	$513	$2,375
	2010	$528	$5.19	$1,638	$528	$2,445
	* Based on a ship of 369.43 units for Holyrood

Halifax

The vessel traffic in the port of Halifax has declined to the lowest level since the mid-1990’s. The port was in a loss position for eight years before achieving marginal returns in 2008 and 2009. The port has been operating with pilot boats that were built in the mid- 1970’s. The Authority has reduced the number of pilots through attrition, from a high of 14 pilots to the current level of 10 pilots. The Halifax customers have requested that the pilot resources remain at the current level. The amended tariff is intended to implement the variable fuel charge while offsetting a portion of this charge with a reduction in basic charge in the port.

The implementation of the gross tonnage charge will have a slight impact on revenue in the port of Halifax during 2010. At the introductory level, the revenue raised will represent less than one half of 1% of the overall revenue for the port.

For many years, the port of Halifax has enjoyed by far the lowest overall tariff rate in the Authority because of the economy of scale. With the decline in assignments in recent years, much of this advantage has been reduced, but Halifax will continue to have the lowest tariff rates in the Authority in 2010. The variable fuel charge will be implemented and the basic charge will be decreased by $50. The variable fuel charge will be based on the average actual cost according to invoices for the two months prior to the assignment. The customers of the port have expressed overall agreement with the tariff adjustments in Halifax.

The following table indicates the effect of this amendment, assuming the ship is not subject to the gross tonnage charge.

Location	Year	Basic Charge	Unit Charge	Minimum Charge	Cancellation Charge	Estimated Fuel Charge*	Costs for an Average Ship**
Halifax, Nova Scotia	Current	$504	$2.14	$1,125	$504	n/a	$1,437
	2010	$454	$2.14	$1,125	$454	$98	$1,485
	* Based on 2009 average fuel price of $0.75 and 130 litres per trip
	** Based on a ship of 436 units for Halifax

Strait of Canso

From the beginning of 2006 through 2008, the Authority increased the pilot contingent in Cape Breton from 7 pilots to 10 pilots in order to provide improved service in the area. While these pilots will work throughout Cape Breton, the Canso area has by far the largest share of the workload. At the end of 2007, a new contract pilot boat was utilized in the Canso area, which increased productivity and provides service in a larger weather envelope than did the previous boats. This improved boat service, as well as the increased number of pilots, comes at a higher cost to the Authority.

To maintain a positive financial position in the port, the basic charge and minimum charge in Canso will each be increased by $100. In the port of Canso, the customers have expressed overall agreement with the tariff increase. The following table illustrates the effect of the amendment.

Major Ports
Location	Year	Basic Charge	Unit Charge	Minimum Charge	Cancellation Charge	Estimated Fuel Charge	Cost for an Average Ship**
Strait of Canso, Nova Scotia	Current	$862	$2.98	$1,100	$862	n/a	$2,544
	2010	$962	$2.98	$1,200	$900	n/a	$2,644
	** Based on a ship of 564.4 units for Strait of Canso

Bras d’Or

Traffic in the Bras d’Or Lakes has been in decline, from 111 assignments in 2003 to 37 in 2009. This area benefits from being part of the larger Cape Breton district. If pilots and pilot boats had to be provided exclusively for the area, the tariff rates required would be much greater than they are at present. The area has been in a loss position for several years now, and requires increases in tariffs to eliminate the deficit. The basic charge, unit charge, and minimum charge will require a 10% increases to be able to provide the service to the level required by our customers. The Authority is also combining Cape Breton Zones B-1 and B-2 into a single Cape Breton Zone B. The following chart indicates the effect of the amendment.

Location	Year	Basic Charge	Unit Charge	Minimum Charge	Cancellation Charge	Cost for an Average Ship*
Bras d’Or, Nova Scotia	Current	$1,282	$7.96	$1,800	$900	$3,154
	2010	$1,410	$8.76	$1,980	$900	$3,470
	*Based on a ship of 235.12 units for Bras d’Or
	Most ships at Bras d’Or enter both zones. The Authority is combining Zones B-1 and B-2 into a single Cape Breton Zone B.

Saint John

Saint John had a large operating loss in 2008, as traffic from the new liquefied natural gas (LNG) plant did not materialize as expected. The activity at the LNG has continued to be well below expectations, and the anticipated level of activity will not be achieved in the foreseeable future. Due to the lower than expected LNG activity, the Authority is projected to have an operating loss in the port of 3.7%, or $100,000, in 2009. This will mean that the Authority would have lost money in the port for three of the last four years. The amendments are intended to provide the required revenue to return the port to a profitable position. Included in these amendments is a 6.5% increase to the basic charge and unit charge. The minimum charge in this area is less than that required to pay for the pilot boat service, and this charge has also been increased. The variable fuel charge will also be implemented in this port to offset the cost of fuel in the pilot boat operated by the Authority. The following table illustrates the effect of the amendment.

Location	Year	Basic Charge	Unit Charge	Minimum Charge	Cancellation Charge	Estimated Fuel Charge*	Cost for an Average Ship**
Saint John, New Brunswick	Current	$445	$3.09	$791	$445	n/a	$1,574
	2010	$474	$3.29	$1,050	$474	$68	$1,744
	* Based on 2009 average fuel price of $0.91 and 75 litres per trip
	** Based on a ship of 365.25 units for Saint John
	Saint John had several stated rates for movages. We are amending these rates to conform with the norm, 80% of trip rate when no pilot boat, and 90% with pilot boat.

Overall increase in revenue

The Authority requires a revenue increase in 2010 in order to remain financially self-sufficient and limit cross-subsidization. The tariff adjustments contained herein are projected to provide an overall increase in revenue of 6.17% if in place for the entire year of 2010. This number also assumes a fuel expense similar to that experienced in 2009.

The Authority carefully reviewed each compulsory pilotage area, and considers the amended tariffs here to be fair and reasonable. Each area is being targeted to provide a return, which will greatly reduce the potential for cross-subsidization. Each area has been reviewed individually, with the amendments intended to address inequities among ports in the way that tariffs are charged.

Strategic environmental analysis

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals of 1999 and the Transport Canada policy statement on strategic environmental assessment, a strategic environmental assessment (SEA) of these amendments was conducted, in the form of a preliminary scan. The SEA concluded that the amendments are not likely to have important environmental effects.

Consultation

Consultation in various forms has taken place with the parties affected by these amendments. The parties consulted include the Shipping Federation of Canada, the Canadian Shipowners Association, the Halifax Pilotage Committee, the Saint John Pilotage Committee, the Strait of Canso Pilotage Committee, the St. John’s Pilotage Committee, shipping lines, port authorities, and local port agents and users. The consultation took the form of numerous meetings, as well as written, personal, and telephone communications with individuals. The pilotage committees in each area are made up of all customers in the port, and all customers are encouraged to attend. Alternatives to tariff increases were presented, where applicable, and participation from the attendees was encouraged. When meeting with customers, the Authority provided an analysis of the situation and solicited responses.

The response of those consulted has varied, but the majority of our customers accept that the increases are fair and reasonable.

These amendments were pre-published in the Canada Gazette, Part I, on November 7, 2009, to provide interested persons with the opportunity to make comments or to file a notice of objection. No notices of objection were filed with the Canadian Transportation Agency.

By implementing the new tariff, the Authority will limit its financial losses and avoid the need to borrow.

Subsection 34(2) of the Pilotage Act (the Act) provides that interested persons having reason to believe that any charge in a proposed tariff pilotage charge is prejudicial to the public interest may file an objection with the Canadian Transportation Agency (CTA).

Pursuant to subsection 34(4) of the Act, where a notice of objection is filed, the CTA makes such investigation of the proposed charge, including the holding of public hearings, as in its opinion is necessary or desirable in the public interest.

If, however, the CTA recommends a charge that is lower than that prescribed by the Authority, the Authority shall reimburse, to any person who has paid the prescribed charge, the difference between it and the recommended charge with interest in accordance with subsection 35(4) of the Act.

Implementation, enforcement and service standards

Section 45 of the 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, and the customs officer must do so. Section 48 of the Act stipulates that every person who fails to comply with Part I of the Act or 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

Footnote a
S.C. 1998, c. 10, s. 150

Footnote b
R.S., c. P-14

Footnote c
R.S., c. P-14

Footnote d
R.S., c. P-14

Footnote 1
SOR/95-586

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