[Filed February 15, 2023, 8:51 a.m., effective February 15, 2023, 8:51 a.m.]
Effective Date of Rule: Immediately upon filing.
Purpose: The purpose of this emergency rule is to amend WAC 468-300-080 related to the ferry fare fuel surcharge for Washington state ferries (WSF). Under the emergency rule, the fuel surcharge may only be implemented with approval of the Washington state transportation commission (WSTC), as opposed to it being automatically triggered.
This is the third emergency filing in sequence for WAC 468-300-080. On October 12, 2022, WSTC filed the CR-101 preproposal statement of inquiry to begin the regular full rule-making process.
Citation of Rules Affected by this Order: Amending WAC 468-300-080.
Under RCW 34.05.350
the agency for good cause finds that immediate adoption, amendment, or repeal of a rule is necessary for the preservation of the public health, safety, or general welfare, and that observing the time requirements of notice and opportunity to comment upon adoption of a permanent rule would be contrary to the public interest.
Reasons for this Finding: In addition to the conditions identified above, RCW 34.05.350
(1)(c) states in part:
In order to implement the requirements or reductions in appropriations enacted … in an omnibus transportation appropriations act for the 2021-2023 biennium related to setting toll rates or ferry fares, which necessitates the need for the immediate adoption, amendment, or repeal of a rule, and that observing the time requirements of notice and opportunity to comment upon adoption of a permanent rule would be contrary to the fiscal needs or requirements of the agency, the agency may dispense with those requirements and adopt, amend, or repeal the rule on an emergency basis.
The current WAC policy sets forth an automatic trigger for the fuel surcharge when specified thresholds are met. Under the current provisions, there is no subsequent review by WSTC, nor the ability to stop, delay, or modify the way in which the surcharge is applied.
Given current economic challenges which directly impact the state and public financially, assessment of further charges upon ferry riders must include full review and approval by WSTC before it is implemented to ensure all current efforts, including WSF's fuel hedging program, are fully considered in the assessment. In support of this assessment, this rule change will enable WSTC to consider factors such as the revenue requirements of the ferry system, available funding, and impacts on ferry riders and local communities when determining whether to implement the fuel surcharge.
Should current fuel market trends continue, it is possible the fuel surcharge could be automatically triggered before a regular rule-making process could be completed. Thus, this emergency rule making is needed to ensure the change is effective immediately, followed by a full rule-making process that will include gathering public input.
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.
Number of Sections Adopted at the Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.
Number of Sections Adopted on the Agency's own Initiative: New 0, Amended 1, Repealed 0.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.
Number of Sections Adopted using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 1, Repealed 0.
Date Adopted: February 15, 2023.
AMENDATORY SECTION(Amending WSR 13-18-019, filed 8/26/13, effective 9/26/13)
WAC 468-300-080Fuel surcharge.
(1) In order to manage the financial risk associated with fuel price volatility, it is hereby declared to be the policy of the Washington state transportation commission ((to))(WSTC) that the WSTC may implement a fuel surcharge as an added component to the regular posted fares for passage on vessels operated by Washington state ferries (WSF) to mitigate the financial impacts associated with unexpected increases in fuel prices which exceed those incorporated in WSF's fuel budget. Upon WSTC approval, the total ferry fare charged will consist of the base fare plus an ((automatic,)) incremental, additional surcharge as calculated according to the formula set forth in this rule.
(2) The method for calculating the fuel surcharge amount shall be as follows:
(a) Determine excess fuel costs for the current quarter by subtracting budgeted fuel costs from actual fuel costs for the quarter. For the purposes of this rule, quarters shall be consistent with the state fiscal year definition of quarters.
(b) To minimize lags in the application of this rule, the quarter will be closed one month prior to the actual end of the quarter, and an estimate of actual costs will be prepared to account for the third month and any lags in accounting for actual purchases.
(c) The estimate of costs for the missing month shall be developed as follows:
(i) Estimated fuel costs for the third month of the quarter will be based on the Oil Price Information Service (OPIS) daily contract average rack prices for ultra low-sulfur dyed diesel fuel for the first ((fifteen))15 days of the missing month as reported by the Washington state department of general administration's office of state procurement for Tacoma and Anacortes fuel price data as of the cutoff date.
(ii) Applicable taxes and fees are added to the Anacortes and Tacoma rack prices to derive total estimated cost per gallon for purchases at Anacortes and Tacoma on the missing days.
(iii) Total price per gallon is multiplied by budgeted gallons of fuel for the missing month in the quarter, where gallons are split into estimated purchases at Anacortes and Tacoma prices based on the year-to-date shares of gallons purchased at Tacoma and Anacortes rack prices.
(d) Net excess fuel costs for the quarter shall be determined on the basis of the current estimate of the excess fuel costs for the quarter plus an accounting for the following:
(i) Any necessary reconciliation from the previous quarter's estimate of actual costs once full accounting of actual costs is complete.
(ii) Any necessary adjustments to ensure actual costs reflect budget assumptions regarding the appropriate share of biodiesel fuel or total diesel gallons to be purchased. Where actual gallons purchased or share of biodiesel vary from the assumptions used to develop the budget, the actual costs shall be reduced by the amount that these variations may have increased costs beyond the amounts assumed in the budget appropriation.
(iii) Subtracting any fuel surcharge revenues collected in the current quarter.
(iv) Adding net excess fuel costs from the previous quarter.
(e) Calculate an excess fuel cost percentage by dividing adjusted excess fuel costs by the current quarter's budgeted fuel costs.
(f) A fuel surcharge amount is then calculated as follows:
(i) Multiply the excess fuel cost percentage by the share of budgeted fuel costs to total operating costs for the current biennium (defined as the specific fuel appropriation divided by the total appropriation made to "Program X - Marine" as provided in the current transportation budget and supporting financial plan); then
(ii) Divide the result by the farebox recovery rate for the current biennium (defined as the fare revenue target divided by total appropriation to "Program X - Marine" as provided in the current transportation budget and supporting financial plan).
(3) A fuel surcharge shall be determined based on the calculation of the surcharge amount (as defined in subsection (2)(f) of this section) and applied to applicable fares as follows:
(a) If the surcharge amount is less than 2.5%, then a fuel surcharge shall not be applied.
(b) Upon final approval by the WSTC, if the surcharge amount is equal to or greater than 2.5%, then the surcharge shall be determined as follows:
(i) Surcharge amount is equal to or greater than 2.5% and less than 5% then the surcharge shall be 2.5% of the applicable fare.
(ii) Surcharge amount is equal to or greater than 5% and less than 7.5% then the surcharge shall be 5% of the applicable fare.
(iii) Surcharge amount is equal to or greater than 7.5% and less than 10% then the surcharge shall be 7.5% of the applicable fare.
(iv) Surcharge amount is 10% or greater, the surcharge shall be 10% of the applicable fare.
(c) In determining final approval for the surcharge, the WSTC may consider factors including, but not limited to, the revenue requirements of the ferry system, available funding, and the impacts on users and local communities.
(d) The surcharge shall be applied to all fares, with resulting fares rounded to the nearest nickel.
(4) WSF shall estimate the need for a fuel surcharge on a quarterly basis, based upon the formula prescribed in this rule((, and if)). If the WSTC approves such a surcharge ((is to be added or modified, then)), the department shall:
(a) Notify ORCA partners and customers of the pending surcharge changes at least ((thirty))30 days prior to implementation of said changes.
(b) Make all surcharge changes effective on the first of the month.
(5) Excess fuel costs shall be reset to zero at the beginning of the biennium.
(6) The amount of any fuel surcharge shall be shown separately on customer receipts.
(7) WSF shall provide an annual report to the legislature, OFM, and the Washington state transportation commission summarizing its fuel cost mitigation activities, including how the department has managed its costs as well as the application, performance and impact of fuel surcharges pursuant to this authority.
(8) To facilitate understanding on the part of WSF customers and to ensure a transparent process, an explanation of how the surcharge is applied, including a summary of the actual calculation of the surcharge percentage, shall be described on the WSF website.
(9) This rule goes into effect on October 1, 2011.