The Block Island Times

Town reacts to Interstate agreement

"Another nail in the coffin." - said one resident
By Laura Kelly | May 03, 2013

Living on and visiting Block Island will become a bit more expensive this summer, as higher rates for freight and passengers aboard ferries owned by Interstate Navigation Co. get implemented on May 24.

The rate increases will affect everything from the price of meals at a restaurant to items on store shelves to the cost of oil, sewer and water, said Kathy Szabo, executive director of the B.I. Chamber of Commerce.

“I don’t know why they didn’t do this gradually,” Szabo said. “It’s going to hurt.”
Szabo suspects that increased ferry rates will affect tourism too because not only will visitors have to pay increased ferry ticket prices, but they will have to pay more for meals and boarding when on the island.

“Who’s going to eat that extra cost — the business or the consumer?” Szabo asked.
Mary Jane Balser, owner of Block Island Grocery, agrees that higher freight rates will hurt business. Balser’s store, which is open year-round, will most likely have to increase the prices on food and other items in order to absorb the hike in transportation costs.

“It’s absolutely nuts not putting the cost where it belongs — in the summertime,” Balser said. “It’s another nail in the coffin.”

Residents will see a direct effect on their wallets not only on the island but when they travel to the mainland for shopping, said Bill Penn, president of the Block Island Residents Association, which has been a vocal opponent of the freight rate increases.
As an example, Penn cited the increase in the cost of a personal pallet used to transport groceries or other goods on the ferry. Currently the fee for a personal pallet is $7.85, but that price will increase to $10.52 a pallet (or $14.52 each, if the pallet can’t be stacked).

“It will cost 34 percent more for the items bought on shopping trips,” Penn said. “It all adds up.”

Penn said he was frustrated that his and other residents’ comments did not alter the settlement or the company’s approach to increasing revenues.

“The PUC took everything into consideration except those of us who live on Block Island,” Penn said. “We don’t have a voice.”
“I’m very disappointed,” he added. “It seems we have no recourse.”
During testimony before the PUC last week, Interstate Navigation’s Vice President Joshua Linda justified the increase by explaining that freight operations come with increased costs in equipment, labor and time. “Freight is a very labor-intensive part of the operation,” Linda said. “There is no magic solution to freight tariffs … everyone on the island feels it should be billed a different way. I believe [the increase] is fair.”
PUC’s decision

On Monday, a motion to approve the settlement without alteration was quickly approved after months of testimony before the PUC. Alternate finance proposals submitted by the town and B.I. Residents Association were not discussed prior to the vote but prompted questions during a PUC hearing held last week. Those proposals suggested ways for Interstate to raise revenue without increasing freight tariffs. Under the agreement, the freight tariffs alone will increase the company’s revenue by an estimated $272,961.

In previous testimony, town consultant Richard LaCapra told the PUC that Interstate Navigation should keep the existing freight rate, reduce off-season car prices and increase truck transport charges by 3.1 percent. He said that a peak and off-peak rate structure would increase the ferry company’s total revenue by $335,993.
Penn, on behalf of the B.I. Residents Association, told the PUC that increased revenue could be achieved by reducing the amount by which vehicle rates were decreased and leaving freight rates unchanged. If car rates were reduced by not as much, the overall revenue increase could still be achieved without increasing the costs of all goods and services or increasing the number of cars coming to the island, Penn argued.

Penn also suggested that Interstate develop a system of peak and off-peak pricing for vehicles to increase usage during weekdays and maintain higher rates during times of excess demand, such as summer weekends.
On Monday, PUC members made few comments about the various plans but said they did consider all the testimony received.

“We heard a lot of public comments and really kicked the tires off this settlement,” said PUC member Paul J. Roberti. “Going into it, I had concerns … but [this settlement agreement] is within reasonableness.”
The agreement also allows the company to have flexibility in some ticket prices, so that a full hearing won’t be required to increase fares by up to 10 percent or decrease them by not more than 20 percent during the following three-year period. Such flexibility allows Interstate to increase round-trip tickets and non-commuter car trips by up to $5. This provision does not apply to commuters, commuter vehicles and freight trips, the agreement states.

“Competition is always best and I think the company should be given some latitude,” said PUC Chair Elia Germani, prior to the vote. “Lifeline rates will not be affected.”
Interstate Navigation attorney Michael R. McElroy said Monday that he and the Linda family, were “pleased” that the settlement agreement was approved without alteration.

New Shoreham town officials did not attend Monday’s hearing, but Town Manager Nancy Dodge said Tuesday that after attending last week’s final hearing before the board, she was not surprised by the outcome. “At the end of the day, [the PUC] pretty much relied on the Division’s settlement,” Dodge said. “I felt that the town was able to get our thoughts out there.”

Dodge said that, through the settlement with the Division, town officials were able to reduce Interstate’s original proposal filed in November, which sought $1.3 million in revenues, down to the $579,000 amount.
Block Island resident Paul Filippi, who opposed the rate increases, submitted two letters to the PUC seeking more financial information on the company’s operations.

“Interstate has not disclosed the numbers of passengers and automobiles that use its service,” Filippi wrote. “Without knowing the actual number of users it is impossible for the PUC to fairly set rates.”

Filippi also asked that more information be given on income that Interstate receives from chartering its ferries and the company’s operational expenses.

“Although Interstate may be one of the smallest utilities in Rhode Island, it truly is a lifeline to Block Island,” Filippi wrote. “Every person that lives on or visits Block Island is directly or indirectly affected by Interstate’s rates,” he wrote. “Interstate’s failure to provide the most basic data – data that is normally disclosed by publically regulated utilities – prevents a fair rate from being established.”

According to the settlement, the new passenger prices for the ferry from Point Judith to Block Island, include an adult round-trip fare increase by $4.30, from $18.30 to $22.60; a child round-trip fare increase by $2.20, from $9.10 to $11.30; and a commuter-round trip fare increase by $5.50, from $10.50 to $16. Travel costs for non-commuter vehicles will decrease about 20 percent. Price increases on individual freight items are listed in the full application, which can be found at, under Commission Docket Menu, Docket No. 4373.

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