Order No. 2002-W-340

August 20, 2002

IN THE MATTER OF the Pilotage Act, R.S.C., 1985, c. P-14;IN THE MATTER OF the proposed tariff of pilotage charges published by the Laurentian Pilotage Authority in the Canada Gazette Part I edition of July 6, 2002; andIN THE MATTER OF the notices of objection filed by the Chamber of Maritime Commerce, the Canadian Shipowners Association and the Shipping Federation of Canada.

File No. W 9250-3-7

Notices of objection to the proposed tariff of pilotage charges as published by the Laurentian Pilotage Authority (hereinafter the Authority) have been filed with the Canadian Transportation Agency (hereinafter the Agency).

The Agency is, pursuant to section 34 of the Pilotage Act, required to make an investigation of the tariff proposal against which a notice of objection has been filed.

The Agency, in the proper discharge of its investigation, requires certain information, particulars and documents relating to the operation and administration of the Authority.

Pursuant to section 18 of the National Transportation Agency General Rules, SOR/88-23:

1. The Authority shall produce and file with the Agency, by September 3, 2002, the tariff justification described in the attached Schedule "A" and all information, particulars and documents listed in the attached Schedule "B"; and
2. The tariff justification described in Schedule "A" shall be copied to the objectors and the information, particulars and documents listed in Schedule "B", which are not considered to be of a confidential nature, shall be made available, if requested, to the parties of record with the reproduction cost and delivery to be borne by the party making the request.

SCHEDULE "A"

TARIFF JUSTIFICATION TO BE PROVIDED BY THE LAURENTIAN PILOTAGE AUTHORITY

1. Describe all financial and operational measures taken by the Authority from January 1, 2001 to the present to reduce costs and improve economic efficiency. As well, describe any initiatives taken by the Authority to reduce pilotage costs for the user industry. Specifically, provide comments on the following items as well as any others deemed relevant by the Authority:
   
   1. Assessment of the consolidation of the two dispatching centres and the Authority's intentions regarding their consolidation.
   2. Steps to remove the bonus payment clause from the District 1 service contract.
   3. Assessment of other possible fee structures.
   4. Consultations with users on financial, operational and planning issues which have an impact on user charges. Identify who the LPA met with in May 2002 as indicated in the Regulatory Impact Analysis Statement and indicate whether the meetings were held to provide information about the proposed rate increases for 2003 and 2004 or for discussion of possible rate increases.
2. Explain how the tariff proposal of a 3.95 percent rate increase for 2003 was developed. Given that this proposed rate increase was included in the 2001 to 2005 Corporate Plan which was developed on the basis of annual traffic increases, explain the proposed rate increase in light of declining traffic.
3. Indicate the impact that the proposed rate increase is expected to have on revenue in 2003. Provide an assessment of what revenues and expenses would be in 2003 without the proposed tariff increase.
4. Describe the methodology for forecasting the number of assignments and describe what steps are taken to verify the forecasts.
5. Provide a comparison of actual administrative costs of the Authority for 2000, 2001 and the first 6 months of 2002 along with expected administrative costs for 2003. Explain any significant changes in annual administrative costs.
6. Indicate whether the Authority continues to have outstanding bank loans to cover past operating losses, and if so, the impact this has on its operations and indicate when the Authority expects to be able to repay such bank loans.
7. Provide an explanation of the number of apprentice pilots in training in all Districts which objectors allege is not justified in light of declining traffic.
8. Indicate whether the Authority has explored alternatives regarding apprentice pilot training costs in Districts 1 and 2; i.e., sharing such costs with the pilot corporations or shifting the burden of these costs to the corporations as raised by the objectors.
9. Indicate the status of negotiations with the District 1 and 2 corporations regarding the service contracts which expire in 2003.

SCHEDULE "B"

DOCUMENTS TO BE PRODUCED BY THE LAURENTIAN PILOTAGE AUTHORITY

1. Copies of the Authority's annual report to the Minister of Transport for each of the years 2000 and 2001.
2. A copy of the Authority's most recent Corporate Plan.
3. Summaries of actual revenues and expenses by District for each of the years 2000, 2001 and the first 6 months of 2002 along with a forecast of 2002 year-end revenues and expenses based on results from the first 6 months.
4. Forecasts of revenues, expenses and capital expenditures, by District and for the Authority as a whole, for the year 2003.
5. Number of pilotage assignments by type (movement, trip, anchorage, docking, undocking, detention, etc.), by District and for the Authority as a whole, for each of the years 2000, 2001 and the first 6 months of 2002 along with a forecast of total assignments for 2002 based on results from the first 6 months.
6. Projections of pilotage assignments, by District and for the Authority as a whole, for the year 2003.
7. For the pilot boats owned and operated by the Authority, annual pilot boat expenses by major expense category for each of the years 2000, 2001 and the first 6 months of 2002 along with a forecast of 2002 year-end pilot boat expenses based on the results from the first 6 months. Indicate the pilot boat charge levied on users in each of these years.
8. For the pilot boats owned and operated by the Authority, forecasts of pilot boat expenses by major expense category for the year 2003. Indicate the expected pilot boat charge that will be levied on users in this year.
9. Number of pilot boat trips (transshipments) for pilot boats owned and operated by the Authority and for each contracted pilot boat service for each of the years 2000, 2001 and the first 6 months of 2002.
10. Copies of contracts drawn up between the Authority and pilot boat contractors covering the years 2000, 2001 and 2002, including the payments made to each contractor in each of 2000, 2001 and for the first 6 months of 2002 and projected payments for the remaining 6 months of 2002.
11. Copies of service contracts drawn up between the Authority and the District 1 and 2 Pilot Corporations covering the years 2000, 2001 and 2002, including the annual payments made to each pilot corporation in 2000, 2001 and for the first 6 months of 2002 and projected payments for the remaining 6 months of 2002. Provide copies of draft service agreements, if any, under discussion with the pilot corporations.
12. Copies of the collective agreements drawn up between the Authority and the employee pilots of District 1-1 covering the years 2000, 2001 and 2002.
13. For each District, the number of active pilots on duty, the number of apprentice pilots in training and the number of pilot retirements for each of the years 2000, 2001 and 2002.
14. For each District, the expected number of active pilots on duty, of apprentice pilots in training and of pilot retirements for the year 2003.