The Public Services Commission voted to strip V.I. SeaTrans of its exclusive franchise to operate a ferry between St. Thomas and St. Croix at a meeting Monday, allowing other companies to restart the route that has been dormant for over a year.
The PSC also recertified Choice Wireless and Vitelco to receive Universal Service Funds, leveled annual assessments on the territory’s utilities, and raised the Levelized Energy Adjustment Clause (see related link below).
On March 28, 2012, the V.I. Department of Justice filed a complaint against SeaTrans with the PSC seeking the forfeiture of the franchise. Attorney Lorin Kleeger was appointed hearing examiner and heard arguments from SeaTrans, Justice and the public.
He presented his findings and recommendations to the PSC at Monday’s meeting.
Kleeger said he found ample cause for the franchise to be revoked.
He said the act that awarded SeaTrans the franchise in 2007 stipulated that it could be terminated if SeaTran “abandoned” the route, and Kleeger pointed out that since the ferryboat Royal Miss Belmar ran aground on July 4, 2011, SeaTrans has only operated the route on four occasions with a leased vessel.
The act also allows for forfeiture if SeaTrans fails to pay its annual PSC assessment. Kleeger found that SeaTrans had not made the payments from 2008-2010 and owes the commission $20,634.86 for those fees as well as additional fines.
Kleeger also questioned whether the ferry service was being operated up to standards. He found 192 instances of trips being canceled without a stated reason prior to the loss of the ferry. He also pointed out that the ferry service had operated at a loss every year of its operations and that, at the time of the accident, SeaTrans was two months delinquent in payments on its lease of the vessel.
Furthermore, Kleeger said he found that repairs to the Royal Miss Belmar were completed in February 2012, but SeaTrans failed to pay what it owed on the lease of the vessel or bring it back into service.
SeaTran owner Capt. Marjorie Smith appeared at the meeting to defend her company’s record. She said it was to be expected that the ferry service ran at a loss, citing a 2002 feasibility study conducted by the government that found the route could only be operated if subsidized.
Smith said the legislature stopped paying SeaTrans its subsidy after the accident, and the loss of revenue has stymied her attempts to restore service. She also said the planned purchase of a ferry for the route by the Department of Public Works has been delayed for too long.
“It’s not an abandonment of service by V.I. SeaTrans,” she said. “If we were to see an abandonment, it’s an abandonment of the government of the Virgin Islands to provide affordable transportation between St. Thomas and St. Croix.”
Smith said her company had located a 149-passenger vessel capable of resuming the route on a limited basis beginning sometime near the end of October and that she was eager to retain the franchise.
In his report, Kleeger rejected Smith’s arguments that lack of government support was to blame for SeaTrans’ current predicament.
He pointed out that SeaTrans had received more than $2.14 million dollars in subsidies between 2007 and 2011 and that “there was no evidence that the government had an obligation to provide unlimited subsidies or that the franchise obligations were contingent on open ended government funding of the ferry operation.”
As the commission voted to accept Kleeger’s findings and revoke the franchise, Tanisha Bailey-Roka, attorney for the commission, pointed out that the vote did not bar SeaTrans from operating the route; it only deprived the company of its exclusive franchise.
Smith replied that she did not think the route was feasible without the franchise and that she doubted another company would attempt daily service without the promise of exclusivity and subsidies.
She added that without the franchise, SeaTrans would likely only provide passage between St. Thomas and St. Croix on special occasions like Carnival.
In other business, the commission levied budgetary assessments totaling $1,563,367 against the territory’s utilities for the new fiscal year.
Claudius Moore, the commission’s accountant, reported that there was a considerable amount of money still owed the PSC from past assessments.
According to his report, the V.I. Water and Power Authority owes $398,350, Transportation Services Inc. owes $43,445, and SeaTrans owes a total of $27,091.
Vice Chairman M. Thomas Jackson expressed frustration that these accounts remained unresolved, as he said many notice letters had already been sent. Some utilities are taking the PSC for granted, Jackson said.
“I think it’s time that we start enforcing some of the orders we send out, and stop playing around with people who have a cavalier attitude about how this agency should run,” he said.
The commission voted to send the accounts to the attorney general’s office for collection.
Both Choice Wireless and Vitelco, which operates under the name Innovative, were recertified to receive Universal Service Funds, a federal fund that distributes money for infrastructure improvements.
Walter Schweikert of Georgetown Consulting Group, a company hired by the commission to assess the certification petitions, admonished Vitelco, however, for ongoing service quality issues, including the time it takes to answer phone calls, complete repairs and establish service.
“Although some improvement was reported over the reporting period, Vitelco rarely met any of the objectives that had been set by the PSC in agreement with the company. Based on these metrics, it’s apparent that the company is not providing the high quality basic services we expect.”
Schweikert also reprimanded Vitelco for not providing a complete five-year plan with its recertification petition as is mandated by the PSC. Representatives for the company explained that they and the commission’s consultants disagreed about the amount of detail that should be included in the report, but that they would work with the commission to resolve the issue.
Schweikert said he recommended Vitelco be recertified this year, but urged the commission to threaten to withhold certification next year if the service quality and five-year plan issues were not resolved.
The commission was scheduled to elect officers on Monday, but Jackson moved that they be delayed because only three commissioners were present with a fourth attending over the phone.