Block Islanders like Brad Marthens, co-owner of the Atlantic Inn hotel, expected ferry operator Interstate Navigation Co. Inc. to seek rate hikes in 2013 after running year-round service to the island under the same state-controlled price structure for the last six years.
But the nature of the changes – which would entice more cars and end discounts for island residents – turned out to be more radical than Marthens and other local business owners were ready for.
“The ferry does a great job for the island, and they are talking about a new high-speed service from Newport, which is great, but what concerns me personally is the number of cars we have here already and why you would want to lower rates for them,” Marthens said about Interstate’s proposal to the state Public Utilities Commission seeking a $1.3 million, or 13 percent, total increase in revenue from conventional, slow-speed ferry rates. “And if you [exclude] the part-time residents, islanders don’t make as much money as people think.”
In addition to the passenger-rate changes, Interstate has also asked for a 65 percent increase in most categories of freight, a possibility that could push prices on the island up substantially.
Now the R.I. Public Utilities Commission will begin the process of deciding how much change Interstate should get and how much islanders can endure.
A central question is how closely the cost of carrying each passenger, car or piece of cargo should match the rates charged, or whether some services, and users, should be charged more than others.
Full-time island residents have long enjoyed a discount on ferry rates while car traffic has been discouraged with a premium on the ferry. Similarly, same-day, round-trip tickets have been discounted over separate one-way tickets.
But Interstate points out that it costs no less to carry an islander across Block Island Sound than a visitor and artificially high automobile rates are leaving the ferry with empty space on many runs.
These incongruities, Interstate said in its rate-change application, have helped drive persistent annual operating losses for the year-round, slow ferry of nearly $500,000 per year.
Estate and Corporate Income Taxes are changing next year, and business owners and executives should know the details. The PBN Summit on November 6th will provide those details and more - including how much Obamacare's Employer Mandate could cost.
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