Zone of Rate Freedom

Applicants seek a ZORF of 15% above and below its filed tariff rates. It points to Catalina Channel Express, Inc., D.98-12-016, to show that the Commission has extended the concept of ZORF from land transportation to vessels to promote competition. Applicant is accurate in its statements that we encourage competition, and have utilized ZORF as a means of enhancing it. However, Applicant has failed to show that competition exists.

The essence of its case, and the position of the City of Avalon, is that Applicant proposes a unique service. It offers a slow vessel and a much-reduced rate when compared with other cross-channel carriers. Applicant sponsored Exhibit 21,which is a tariff of Catalina Channel Express, Inc. That tariff permits operation of a vessel of less than 19 knots speed for a fare of $30.50. (Tr. 445-446.) Applicant claims that this is competition justifying a ZORF. We disagree. Applicant's President Nielsen admitted that Catalina Channel Express, Inc. does not actually provide this service and that its fare to Santa Catalina Island on the boats that it does operate is approximately $41.00. (Tr. 493.) Thus, competition is theoretical at best. At such time as Applicant can show that there is real competition we will consider an application for a ZORF