Parties Get Technical at PSC Hearing on Ferry Boat Fares

Representatives of the Public Services Commission, the V.I. Unity Day Group (UDG) and ferry boat companies Varlack Ventures and Transportation Services hashed out technical accounting details at a Wednesday evening, September 2, hearing at the St. John Legislature.

The hearing was called following UDG’s appeal of an April ruling by the PSC to increase the adult one-way ferry fare between St. John to Red Hook from $5 to $7, and to decrease the one-way fare between St. John and Charlotte Amalie from $10 to $8. The UDG asked for a stay until October 15, 2009, citing several errors in the ferry boat companies’ accounting records.

Proceedings began half an hour later than the scheduled 6:30 p.m. start time due to an impromptu private meeting between the parties, resulting in agreement on several issues.

“The parties cut the issues in half prior to the meeting,” hearing examiner Jennifer Jones told the audience of nearly 100 residents as she called the hearing to order.

One of the issues the parties could not agree on was the ferry boat companies’ use of total assets, which UDG asserts is inconsistent with accounting principles and resulted in an overstatement of the companies’ return on investment.

In particular, the UDG took issue with the companies declaring gross receipts taxes as an expense when one of the companies has not paid this tax for the past eight years, explained UDG President Lorelei Monsanto.

“Expenses can’t be considered expenses if they are not paid,” she said.

To prove their point, the UDG cited a prior case in their complaint, which ferry boat companies attorney Claudette Ferron moved to have stricken.

“This prior case has been overturned and is over 40 years old,” said Ferron. “The UDG is unfamiliar with the use of case law in these proceedings. The prior case is of little to no value and has nothing to do with utilities or public services commissions.”

Jones concurred that the case was old; however, she allowed references to it to be made in UDG’s testimony.

“I will not be very strict with making sure every case cited has to go through rigorous reviews, but I will look to make sure they are applicable,” said Jones as she denied Ferron’s motion to strike.

Just two residents testified at the hearing, one who suggested the ferry boat companies approach the government for a subsidy, and one who questioned whether the companies are actually losing money.

The ferry boat companies initially requested the change in fares due to alleged financial losses. The companies entered a franchise agreement with the Virgin Islands Government to provide transportation between St. Thomas and St. John in 1985.

Under laws governing the franchise, the companies are entitled to a minimum rate of return of 6 percent, according to Ferron.

“The ferry boats are losing $1 million per year,” she said. “This is an unacceptable situation and a violation of the law.”

The families which own the companies have been using their personal funds to stay afloat, the attorney continued.

“The families have been donating their assets to the government and the people of the Virgin Islands,” said Ferron. “It would be wonderful if the government stepped in to do its part. The boats have been used by the government and the public without just compensation.”
The last time the St. John-Red Hook route rates were raised was 2005.

The two-part hearing will continue on St. Thomas on Monday, September 14 at 6 p.m. at the PSC conference room in Barbel Plaza.