Discussion
The requested 35% rate increase for regular overnight service is significant, but it must be viewed in context-the length of time since Applicant was last granted a rate increase and the events that have occurred in the intervening period. Applicant provides a valuable service to Island residents, businesses, public agencies, and visitors, who do not have many other options for the transportation of freight from and to the Mainland. Applicant does not operate in a highly competitive environment. We seek to ensure that Applicant's customers are charged reasonable rates and that the rates are adequate to sustain Applicant as a viable service. As Applicant indicates, it is entitled to earn a reasonable return on its investment in the vessel carrier operation. Applicant has demonstrated that it requires rate relief. We therefore will approve the requests to increase rates and to make other adjustments to the rate structure.
Applicant's revenue projections under the increased rates are premised on a reduction in the fuel surcharge from 20% to 10%. In the absence of a marked upswing in fuel prices, we expect Applicant to adjust the surcharge as it has indicated.
Notice of filing of the application appeared in the Commission's Daily Calendar on May 11, 2009. Applicant served a copy of the application to Los Angeles County and the Cities of Avalon and Los Angeles.
In Resolution ALJ 176-3234 dated May 21, 2009, the Commission preliminarily categorized this application as ratesetting, and preliminarily determined that hearings were not necessary. No protest has been received. Given this status, public hearing is not necessary, and it is not necessary to alter the preliminary determinations made in Resolution ALJ 176-3234.
This is an uncontested matter in which the decision grants the relief requested. Accordingly, pursuant to Pub. Util. Code § 311(g)(2), the otherwise applicable 30-day period for public review and comment is being waived.
1. Applicant holds a certificate to operate as a VCC to transport freight between Los Angeles Harbor and points on Santa Catalina Island.
2. Applicant's current rates were authorized by D.03-08-053.
3. Applicant is assessing a surcharge of 20% as authorized by Resolution TL-19094 to recover increased fuel costs.
4. Applicant reports experiencing declining revenues and increased costs of operations.
5. A drop in the number of visitors to the Island has resulted in less demand for freight transportation by hotels, restaurants, and construction-related businesses.
6. Revenue from Applicant's vessel services for the period October 2008 through March 2009 fell $264,000 (20.6%).
7. Applicant experienced a pretax loss of $118,000 in the first quarter of 2009.
8. Under current rates, Applicant projects an operating ratio of 106.6% for 2009.
9. Applicant requests to increase rates for it regular overnight service an average of 35%.
10. Applicant requests to charge a 12.5% premium over regular rates to transport items requiring special handling and storage in refrigerated and frozen storage units.
11. Applicant requests authority to establish a special flat rate of $3,850 per round trip for large trucks and construction equipment.
12. Applicant requests approval to establish a new minimum shipment weight of 112 pounds.
13. Applicant will reduce its fuel surcharge to 10% if the requested rate increases are approved.
14. With the increased rates, and a reduction in the fuel surcharge, Applicant projects 2009 revenues of $3,329,000, expenses of $3,115,000, and an operating ratio of 93.6%.
15. Applicant's requests are justified and will result in reasonable rates.
16. No protest to the application has been filed.
17. A public hearing is not necessary.
1. The application should be granted.
2. Since the matter is uncontested, the decision should be effective on the date it is signed.
IT IS ORDERED that:
1. Catalina Freight Line, Inc. (Applicant), a corporation, is authorized to establish the increased rates and to make the other changes to its rate structure proposed in the application.
2. To implement the increases authorized in this order, Applicant shall, on or after the effective date of this order, file revised tariff pages in accordance with General Order 117-Series. The revised pages and the rates listed in them shall be made effective no earlier than 10 days after the date of filing.
3. Unless there is a marked increase in fuel prices, at the same time Applicant files tariff changes implementing the rate increases authorized by this decision, it shall reduce its fuel surcharge to not more than 10%.
4. The Application is granted as set forth above.
5. This proceeding is closed.
This decision is effective today.
Dated August 20, 2009, at San Francisco, California.
MICHAEL R. PEEVEY
President
DIAN M. GRUENEICH
JOHN A. BOHN
RACHELLE B. CHONG
TIMOTHY ALAN SIMON
Commissioners
