PACIFIC PILOTAGE AUTHORITY West Pender Street Vancouver, B.C. V6E 4A4 (604)

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1 West Pender Street Vancouver, B.C. V6E 4A4 (604) SUMMARY OF THE CORPORATE PLAN Includes: OPERATING BUDGET 2012 CAPITAL BUDGET 2012 Vision Statement: To be a world leader in marine pilotage

2 Executive Summary PACIFIC PILOTAGE AUTHORITY While the Authority has not been immune to the ongoing global economic concerns, 2011 is proving to be a good year from the perspective of number of assignments. Overall the Authority s assignments are up by 430 (7%) at the close of the first six months for the year. While the actual tonnages shipped for products such as grain and coal are very close to the Authority s forecasted figures, there were a few factors that affected the number of assignments, not least being the increase in the number of anchorage movements for vessels handling these products. In Port Metro Vancouver the actual increase in tonnage handled year over year to date is just 1% with decreases being experienced in automobile, sulphur and crude oil exports and only slight gains being made in container tonnages. This is compared to the north where Prince Rupert has posted an 18% increase largely driven by containers and thermal coal exports to China. Asian demand continues to drive increasing tonnage volumes in the coal, forest products and potash sectors and for the first time British Columbia s forestry exports to Asia have surpassed its trade with the United States. With respect to the Authority s mandate of providing a safe, reliable and efficient marine pilotage service in the coastal waters of British Columbia, we believe that our 2010 safety record of 99.98% (2 minor incidents out of 12,400 assignments) speaks for itself. The Authority has spent significant funds on training and development and believes that the present safety record reflects this effort. A more recent addition to our programs of ensuring we are meeting our mandate was the introduction in 2008 of the Enterprise Risk Management (ERM) program that encompasses all of our operations and uses scenario planning to check action plans and identify gaps. The Authority continues to focus on the community outreach program which commenced in The primary objective of this program is to ensure affected communities fully understand the role of the Authority in providing marine pilotage to protect the interests of Canada. A secondary objective is to promote the idea of marine pilotage as the culmination of a sea-going career by broadening the community understanding of the hiring and exam process. On the labour front we recently signed a 6-year agreement with our dispatch and office staff and will continue negotiations with the launch masters and engineers in September. This year will also see the reopening of the service agreement with our primary contractor, the BC Coast Pilots Ltd. The Authority is committed to following the spirit and intent of the government s ongoing cost containment and deficit reduction measures. In 2011, the Authority conducted a thorough review of all discretionary spending and has incorporated all opportunities for operational efficiencies into the 2012 corporate plan

3 The financial information for this plan is based on vessels piloted. When putting this plan together the Authority consults extensively with the ports, terminals and Chamber of Shipping on cargo expectations and trends, however due partly to timing issues with the plan and partly due to the ongoing uncertainty of vessel size it is always a challenge to accurately forecast the number of vessels we will pilot in a given year. As an example, we expect coal in the north to increase by about 6 million tons in If this is handled exclusively by the larger Cape size vessel we will see an increase of about 30 to 35 ships, but if it is handled exclusively by the smaller Panamax vessel will see an increase of 75 to 85 ships. As part of the Authority s ongoing strategic planning sessions we continue to actively monitor all projects proposed in our jurisdiction by working with the proponents to ensure there is a mutual understanding of each other s needs and concerns, and to ensure that we understand the impact on our assignments and pilot count. Our ultimate long term vision is to be recognized as a world leader in marine pilotage and looking ahead to 2016 our effort is focused on achieving this vision

4 Mandate The mandate of the Authority is to establish, operate, maintain, and administer in the interest of safety, an efficient pilotage service within the regions set out in respect of the Authority, on a basis of financial self-sufficiency. Profile of the Authority Background The Pacific Pilotage Authority was established February 1, 1972, pursuant to the Pilotage Act, , Chapter 52. The Pacific Pilotage Authority is a Schedule III, Part I (FAA) Crown corporation, comprised of a Chairman and six Board members appointed by Governor-in- Council. The Authority is not an agent of the Crown. Powers To carry out its responsibilities the Authority has made regulations, approved by Governor-in- Council, pursuant to the Pilotage Act for: 1. Establishing compulsory pilotage areas; 2. Prescribing the ships or classes of ships that are subject to compulsory pilotage; 3. Prescribing classes of pilot s licences and classes of pilotage certificates that may be issued; 4. Prescribing the tariffs of pilotage charges to be paid to the Authority for pilotage services. In addition, the Authority is empowered by the Pilotage Act to: 1. Employ such officers and employees, including licenced pilots, as are required; 2. Contract with a body corporate for the services of licenced pilots; 3. Make by-laws respecting the management of its internal affairs; 4. Purchase, lease, or otherwise acquire land, buildings, pilot launches and such other equipment and assets as may be required and to dispose of any such assets acquired

5 Corporate Objectives The Authority's Corporate Objectives are: 1. To provide safe, reliable and efficient marine pilotage and related services in the coastal waters of British Columbia, including the Fraser River; 2. To provide the services within a commercially-oriented framework, by maintaining financial self-sufficiency, through a combination of cost management and tariffs that are fair and reasonable; 3. To achieve the highest productivity of the Authority's resources in the interest of safe navigation; 4. To implement sustainable practices within the Authority and contribute to government's environmental, social and economic policies as they apply to the marine industry on the Pacific coast of Canada; 5. To assume a leadership role in the marine industry we serve, by facilitating decisions resulting in improvements to navigational safety and the efficiency of marine operations. Vision Statement The Authority s vision statement is To be a world leader in marine pilotage. Mission Statement The Pacific Pilotage Authority is dedicated to providing safe, efficient pilotage by working in partnership with pilots and the shipping industry to protect the interests of Canada. Corporate Values Management and Board members review the Authority s Corporate Values annually to ensure their continued relevance and applicability. The Corporate Values are: 1. Honesty/Integrity - We will ensure honesty and integrity in everything that we do. We share responsibility for being effective, accountable and acting appropriately. We consider the outcome of decisions for all those affected before we implement change. We act with visible integrity and openness, and support each other in these actions. 2. Positive Stakeholder Relations - We will work hard to maintain positive relations with all stakeholders including the shipping industry, the pilots and their respective organizations, our employees, the communities in which we operate and all other related individuals and organizations

6 3. Service Quality - We strive for excellence in all our activities. We continuously learn, develop and improve. We take pride in our work and in the services we provide to our clients and partners. 4. Accountability/Responsibility - We are accountable, as individuals, team members and as an organization for our actions and our decisions. We make effective and efficient use of the resources provided to us. We adhere to our policies and procedures, our mission and objectives, and to the Regulations governing us. When our commitment to innovation is at odds with existing procedures, we will work within the system to achieve positive change and improvement. 5. Adaptability and Innovation - We value innovation and creativity. We encourage and support originality and diversity of thought. As individuals and as teams, working with our internal and external partners, we welcome new ideas and methods to enhance our service and the use of our resources. Description of Operations The Authority is responsible for providing safe, reliable and efficient marine pilotage in the coastal waters of British Columbia, including the Fraser River. The Authority has established five areas subject to compulsory pilotage. When a vessel intends to enter compulsory pilotage waters on the British Columbia coast, it will initiate an order for a pilot at a specified time, date and boarding station. A pilot either contracted to or employed by the Authority will carry out this assignment. Pilots are boarded on vessels by pilot launch or helicopter and are disembarked in similar fashion when a vessel leaves pilotage waters. The head office of the Authority is in Vancouver, British Columbia. Pilots are dispatched to their assignments through a central dispatch office in Vancouver and a traffic coordination office in Victoria. During 2011, a workforce of ninety-four contract pilots (seasonally adjusted) provided coastal pilotage services. Additionally, there are seven employee pilots who pilot vessels on the Fraser River. To provide pilots with water transportation to and from ships, the Authority operates pilot launches at three permanent boarding stations. These stations are Victoria, Prince Rupert and Steveston which have employee-crewed launches

7 Additionally, a contract launch is operated at Pine Island (northern tip of Vancouver Island). This station will perform approximately 300 pilot transfers during 2011, of which the majority will be cruise ship traffic. The cruise industry is the major user of this station since it allows their vessels a high degree of flexibility with regard to the Alaska cruises. The Nanaimo Port Authority is also a contract launch operation carrying out pilot changes off Snake Island in the Nanaimo area. On the west coast of Vancouver Island at Cape Beale, the Authority has a designated boarding station which services the Port Alberni region. Due to a drastic reduction in vessel calls there is no launch contractor for this location. The Authority has the ability to service this station by helicopter or by repositioning a Victoria based launch when required

8 The Authority s jurisdiction covers the entire coastline of British Columbia. Due to the vast size and the fact our coastal pilots are licensed for the entire coast we feel our operation is virtually unique in the world. The most northern port we service is Stewart, with the shaded area to its left representing Alaska. In the southern area below Vancouver, the shaded area represents Washington State

9 Corporate Governance Corporate Governance is the process of establishing and monitoring, the policies and procedures which will ensure the appropriate stewardship of the business and affairs of the Authority, including financial viability. There are seven members on the Authority s Board of Directors, comprising, a Chairman, two pilot representatives, two shipping industry representatives and two representatives of the public interest. This structure provides effective channels of communication and represents a good balance between the major stakeholders. The Canada Marine Review Panel has recommended that the present Board structure be included in the Pilotage Act. The Chairman and three Board members are also designated as members of the Audit Committee. The Audit Committee reviews the financial performance of the Authority and then presents the monthly financial statements to the Board of Directors for formal acceptance. The Authority complies with the Treasury Board guidelines on corporate governance practices. This includes Board self assessments, a nomination committee for prospective Directors and the development of Director s skills criteria. In addition, the Board has constituted several other committees to focus on the major areas of the Authority including safety, risk management, training and emergency preparedness. Launch Stations and Office Facilities In Victoria the Authority leases property from the Greater Victoria Harbour Authority, at Ogden Point, in order to accommodate the pilot launches, floats and a workshop. In addition to the launch operation there is also a dispatch office owned by the Authority that was renovated in The Authority owns the Prince Rupert floats which were upgraded in The Authority relocated to the current Vancouver head office facilities on December 1, 1999 and has recently renewed the office lease through to December 31, Pilot Launches The Authority s pilot launch replacement program that commenced in 2001 is now complete and consists of five specially designed pilot launches. The Authority has implemented an enhanced planned maintenance program, which will ensure all service and safety demands are met in a timely, orderly and cost effective fashion. All launches are on a four-year Transport Canada inspection cycle

10 Pilot Launches Station Date Built Size Overhauled Pacific Pilot #2 Victoria m 2008 Pacific Pilot #4 Prince Rupert m 2010 Pacific Pathfinder Prince Rupert m Pacific Navigator Steveston m Pacific Scout Victoria m The financing of the launch replacement program was formalized during 2009 by way of a borrowing with a Canadian chartered bank. The sum of $4.8 million was secured over a seven year term through to February As per agreement with the Chamber of Shipping, the launch replacement fee of $180 is charged every time a pilot launch is used in our operations. This fee will remain in place until the Authority has recovered all expenditures, including loan interest. Financial projections indicate the fee will be discontinued during the third quarter of Government Policies The Authority continues to comply with the requirements of the Human Rights Commission, the Canadian Multiculturalism Act, the Employment Equity Act, the Official Languages Act, the Equal Opportunity Program, the Federal Identity Program, the Canadian Environmental Assessment Act, the Financial Administration Act Section X and the Access to Information and Privacy Act. Enterprise Risk Management The Authority has endorsed an Enterprise Risk Management (ERM) program. ERM has been incorporated as part of the Authority s strategy with the intention of cultivating a culture of enterprise risk awareness throughout the organization. All areas have been incorporated into this program, including contract and employee pilots, launches, dispatch and administration, along with the Board and management. The ERM Committee is chaired by a Board member and includes representation from each of the areas mentioned above. The Committee reports to the Board, meets quarterly, conducts scenario planning and re-evaluates the risk register with a view to identifying new risks and mitigation measures

11 The Authority categorizes risks on the basis of the following chart. Similar to the risk themselves, the risk limits are reviewed on a regular basis. IMPACTS Financial Operational Strategic Human Property Vessel(s) Environmental Reputation Disruption of Business Extreme 5 Above $10 million cash impact on the Authority Multiple deaths And multiple people with serious longterm injury Intensive care Damage to property is such that it ceases operations for a period of time exceeding one month or financial loss exceeds $10 million Vessel sinks or sustains so much damage that it is a constructive total loss Incident causes sustained long term harm to environment (i.e. damage lasts greater than a month) Sustained front page adverse national media coverage International media coverage Threatens long-term viability of Authority (Operational cessation or major operational issues lasting more than one month) Very High 4 Impact on the Authority between $5 and $10 million Single death And multiple people with serious longterm injury Intensive care Damage to facilities is such that operations cease for up to one month or financial loss of $5million - $10 million Vessel sustains damage significant enough to result in towing to dry dock and loss of operations of up to one month Incident causes sustained medium term harm to environment (i.e. damage lasts up to one month) Front page adverse national media coverage and intermittent international coverage Threatens viability of Authority in the medium Term (Operational cessation or major operational issues lasting up to one month) High 3 $1million- $5million cash impact Some people with serious long-term injury and multiple minor injuries Damage to facilities is such that the operations cease for up to two weeks or financial loss of $1million - $5 million Vessel sustains significant damage with dry docking and loss of operations for two weeks. Incident causes medium term harm to environment (i.e. damage lasts up to two weeks) Intermittent adverse national media coverage Threatens viability of Authority in the short Term (Operational cessation or major operational issues lasting up to two weeks) Medium 2 Between $500,000 to $1million cash impact One person with serious long-term injury Some minor injuries Damage to facilities cause operations to cease for up to one week or financial impact of $500,000 - $1 million Vessel sustains damage resulting in loss of operations for one week. Incident causes short term harm to environment (i.e. damage lasts no greater than one week) Sustained front page adverse local media coverage Board and Ottawa receive complaints from Chamber of Shipping and major clients Operational issues lasting up to one week but no cessation of business Low 1 Up to $500,000 cash impact Single or multiple minor injuries requiring on site first aid and\or off-site treatment. Damage to facilities cause operations to cease for up to 72 hours or a financial impact up to $500,000 Minor damage with no effect or damage resulting in a loss of operations of no more than 72 hours. Incident causes minimal or intermittent harm to environment over a period of time (i.e. damage lasts no greater than a day) Intermittent adverse local media coverage Complaints received from Chamber of Shipping and/or clients No operational issues or operational issues lasting up to 72 hours

12 The following chart shows the current risks and ranking status as of August Priority Risk Title Risk Rating Likelihood Consequence 1 Pilot Liability HIGH MEDIUM EXTREME 2 Occupational Health and Safety Issues HIGH MEDIUM VERY HIGH 3 Recruitment Coastal Pilots HIGH MEDIUM VERY HIGH 4 Operational Issues Impacting Vessel Movements HIGH MEDIUM VERY HIGH 5 Training Coastal Pilots MED LOW VERY HIGH 6 Economic and Financial Conditions MED LOW VERY HIGH 7 Information Technology MED LOW VERY HIGH 8 Recruitment and Training Launch Crew MED LOW HIGH 9 Vessel under Pilot Conduct Involved in an Accident MED LOW HIGH 10 Financial and Administrative Systems and Processes MED LOW HIGH 11 Recruitment and Training River Pilots MED VERY LOW VERY HIGH 12 Legal and Regulatory LOW LOW MEDIUM 13 Efficiency of Resource Usage LOW LOW MEDIUM 14 Security of Physical Assets LOW LOW MEDIUM 15 PPA Launch Involved in an Accident LOW VERY LOW HIGH 16 Disaster, Emergency and Special Events Planning LOW VERY LOW HIGH 17 Human Resource Management for the PPA LOW VERY LOW HIGH 18 Delay of Vessel due to the PPA LOW VERY LOW MEDIUM

13 Sources of Funding Tariff PACIFIC PILOTAGE AUTHORITY In order to finance its activities, the Authority charges users for its services through a tariff. Consistent with pilotage objectives, the tariff is intended to be fair, reasonable and sufficient to allow for a safe and efficient service. The Authority continues to place great emphasis on the full engagement process by consulting at length with industry prior to a tariff application being initiated. Personnel Resources The Authority has 57 full time employees: 7 Fraser River pilots, 11 dispatchers, 26 pilot launch personnel and 13 management and administrative personnel. The Authority contracts with the British Columbia Coast Pilots Ltd. for coastal pilotage services. Currently, there are ninety-four (seasonally adjusted) active pilot members of the BCCP who provide coastal pilotage services. The required complement of coastal pilots is established annually in relation to the projected assignments and announced retirements. Replacement and Training of Pilots In order to ensure a highly qualified and skilled pilot workforce, the Authority places major emphasis upon selection and training of pilots. Depending on a candidate s background, the apprenticeship for a coastal pilot takes place over a minimum period of six and one-half months through to a maximum of twenty-four months. This includes attendance at training courses for ship handling, ship simulation and bridge resource management. The Authority reviews training facilities on a regular basis to ensure the funds expended are spent in the most cost effective manner. At present, the cost for training each apprentice is approximately $130,000, which includes remuneration, travel and course fees and is borne entirely by the Authority. The increase to a twenty-four month apprenticeship period will increase the cost to $340,000 per pilot. The demographics of our current workforce along with apprentice recruitments of recent years have served to highlight potential changes which could benefit this program. To this end, the Authority has modified its strategic plan to include a separate goal relating to a sustainable supply of pilots. The apprenticeship program will be examined in detail including a look at the traditional sourcing of pilots. The Authority expects to train and licence four coastal pilots during the 2012 plan year

14 The Authority has projected the coastal pilots demographics through the plan years and is anticipating starting apprentices in each of the plan years. The following chart details these projections. Future Source of Pilots Pilots 65 and under Number of pilots required Short before hiring Apprentice pilots required Shortfall pilots 65 and under Pilots over The Authority is budgeting funds during each of the plan years to continue funding the Skills Enhancement Program for senior pilots. This program s intent is to train 20% of the senior pilots per annum. The intent is to have twenty senior pilots travel to training facilities in Europe to enhance their skills in ship handling using manned models. The Authority is also forecasting additional funds through the plan years to cover ongoing training for incoming pilots on Integrated Bridge Systems (IBS) and azipod propulsion systems. With these modules being conducted for fourth year pilots, the focus will now turn to courses in Electronic Chart Display Information Systems (ECDIS) and other modules that will facilitate the use of PPUs by all pilots. The Authority has worked closely with a local marine training facility in order to see their simulator upgraded. The intent is to see a reduction in travel expenses by using this facility for future training. For the plan year 2012, the Authority is budgeting coastal training expenses of $450,000 and Fraser River pilot training of $30,000. The Authority holds pilot exams every year to assess candidates who have the necessary experience and skills to perform the job. In addition, pre-exam sessions have been held to inform prospective candidates of the necessary requirements. The Authority also promotes a Familiarization Program, which is intended to further supplement a candidate s coast wide knowledge. The Authority and BCCP have also participated in marine hiring fairs with the intention of increasing the knowledge of suitable candidates with regard to the marine pilotage profession

15 Objectives, Strategies and Performance Measures On an annual basis, the Authority engages in strategic planning sessions involving the Board of Directors and management. The most recent session endorsed the key objectives and strategies which are summarized below. Strategic Goals for 2011 Strategic Goal Description Strategy Measurement \ Actions #1.1 Create a culture of quality service Implementation of Pilot Assessment Program Introduction of standardized procedures #1.2 Continue to cultivate enterprise risk awareness Mitigation plans for high risks in place Company-wide integration #2.1 Maintain financial self-sufficiency Financial reserve of five percent of annual revenues Reserve of five percent or greater #2.2 Cost management Maintain overhead costs at 8.5 percent or less #2.3 Improve competitive edge Review pilotage fees to ensure competitive edge #3.1 Effective and efficient dispatch procedures Implement and integrate ISO system #3.2 Effective and efficient launch operations Implement and integrate ISO system #3.3 Enhance the overall productivity of the Formalize training Authority program for pilots #4.1 Create a culture of sustainability Communicate Sustainability Policy #5.1 Primary source for marine-related Implement stage 2 of information computer database #5.2 Raise the profile of the Authority Management to take on leadership roles Annual increase in operational costs maintained at CPI or less Work with industry and pilots to remain competitive 1) Tracking of delays 2) Standard operating procedures Computerized maintenance system Standardized training for staff Implement practices and procedures Utilize database and website Community Outreach Program

16 Measurement of 2010 Strategic Goals The Authority measures its strategic goals on an annual basis. Strategic Goal #1.1 - Ensure a sustainable supply of pilots Strategy Description Measurement 2009 and (a) Working in partnership with the BCCP, 2009: Regulations were changed and prepare and implement a comprehensive implemented which include deep sea long-term plan to ensure an adequate mariner s time. This will increase the pool of supply of qualified candidates, including qualified candidates. the examination of the sustainability of 2010: Increased the Familiarization Program the present system. maximum candidates from 20 to 40. Marine pilotage was promoted as a career choice at two job fairs. Candidates writing the coastal exam have increased from 22 in 2009 to 29 in 2010 (32% increase). 1.1(b) Working with the Pilotage Training and Examination Committee (PTEC), review the present apprenticeship program, make recommendations and implement agreed upon changes to ensure a consistent and effective training methodology. 2009: The initial part of this review was completed with a number of changes to the sea-time requirements. 2010: Analysis of 2010 exams indicated overall pass rate remained same as prior year. 1.1(c) Working in partnership with the BCCP and the marine industry, develop a financial forecasting model that will allow a more analytical approach to the future manning requirements of the Authority. 2009: The new computer system has facilitated the reporting of trips at the terminal and berth level. This has allowed the Authority to expand its commodity sector analysis and budgeting process. The analysis is shared annually with the industry and pilots. A forecasting model was produced during the year and presented to the Authority s Board of Directors. It has become evident that a viable forecasting model of this sort is difficult to develop due to the complex and multiple variables involved. 2010: Monthly traffic analysis incorporated into financial statement reporting package

17 Strategic Goal #1.2 - Create a culture of quality service Strategy Description Measurement 2009 and (a) Working in partnership with the pilots 2009: Safety level incidents are reported in and the industry we serve, develop a the annual report. program of quality service, based on best Service level service delivery and error practices that ensures we are measured as free dispatches are included in key leaders in a number of areas. performance measurements. Safety level - incident rate A Quality Assurance Program has been Service level - delays to service, developed and is currently under review by responsiveness to client needs the pilots. Predictability-consistently knowing what to expect The system to audit each pilot has been Transparency - open and honest expanded to include port currency, training, communication in everything we incidents, complaints, commendations and do medicals. Training - ongoing relevant and 2010: Train the Trainer course developed. effective training Assessment form amended and awaiting approval from BCCP members. Initial phase implemented - all pilots up to 3 rd year are being assessed. 1.2(b) Working with the launch crew and dispatch personnel to develop a quality assurance program based on industry best practices such as ISO, ISM or any other management tool. 2009: Management has agreed that the most suitable program is the ISO9001. The development of this program was deferred to 2010 due to the cost saving program implemented in : Request tendered and interviews of ISO consultants were completed. Initial information relating to ISO process was sent to all launch employees

18 Strategic Goal #1.3 - Create a culture of enterprise risk awareness Strategy Description Measurement 2009 and (a) Implement an Enterprise Risk 2009: Completed during Management (ERM) Program throughout 2010: Quarterly meetings held with the Authority. departmental representatives. Scenario planning implemented for highly rated risks. Intranet website for employees in place to share ERM information. 1.3(b) Communicate the results of the risk assessments departmentally and company-wide on a semi-annual basis until risk management becomes part of the Authority s culture. 2009: Initial departmental meetings conducted. 2010: Identified risks are being communicated to appropriate parties. ERM updates incorporated into annual staff meetings

19 Strategic Goal #2.1 - Create a culture of cost awareness throughout the Authority Strategy Description Measurement 2009 and (a) Develop cost management programs with 2009: Semi-annual staff meetings include accountability and specific targets for financial targets. every department in the Authority. Enhanced departmental financial statements distributed to users. 2010: Managers input reflected in annual budgeting process. Annual percentage goals developed for year: Coastal travel expenses - 2.0% increase goal, 1.3% increase actual. Launch fixed expenses - 2.0% increase goal, 12.7% decrease actual. 2.1(b) Ensure that the Authority remains competitive and 2010: A cost comparison of pilotage fees for West Coast ports indicates the Authority remains competitive. Strategic Goal #2.2 - The Pacific Pilotage Authority will be financially self sufficient Strategy Description Measurement 2009 and (a) Maintain an adequate financial reserve. 2009: The Authority s financial reserves increased to $2.4 million during the year. No formal objections to the Authority s tariff application for January 1, : Investments increased to 5.2% - goal 5.0%. No formal objections to the Authority s tariff application for January 1,

20 Strategic Goal #3.1 - To become a primary source for pilotage related information within our area of jurisdiction Strategy Description Measurement 2009 and (a) Build a comprehensive one-stop 2009: Dock and passage information posted shopping information system on the to the Authority s website. Authority s web site that will enable our 2010: Tide and current windows for coastal clients to easily access a full suite of berths and invoice estimator put on the services. Authority s website. Tide and current window calculations Pro-forma invoices Dock and passage information including depth limitations and tug requirements On-line pilotage services ordering Strategic Goal #4.1 - Create a culture of sustainability and environmental awareness throughout the Authority Strategy Description Measurement 2009 and (a) Expand the Authority s reporting to include environmental and social performance by utilizing the triple bottom line model. Equity/People - culture of empowerment, caring and acceptance of diversity Environment/Planet - culture of environmental awareness Economy/Profit - profitable through training and productivity 2009: This strategy was deferred to 2010 due to the cost saving program implemented. 2010: Draft of policy and procedures in place

21 Operating Budget 2012 Commentary The 2012 Budget is based upon a tariff revision comprising of: a 0.0% increase in the unit and hourly rates; a 2.5% increase for travel rates effective July 1, 2012; a 1.5% increase for launch rates effective July 1, 2012; The highlights of the 2012 budget are as follows: 1. The Authority is forecasting an income of $30,000 based upon 10,500 coastal and 970 River trips. This income has been adjusted for $950,000 of launch replacement revenue. 2. The launch replacement program will be fully funded in the third quarter of 2012 so the $180 charge per trip will be reduced to $0.00 at that time, as per previous agreement with industry. 3. The major revenue assumption of a 0.0% tariff increase for unit and hourly rates is based upon a successful negotiation with the BCCP in the fall of The 2012 plan is based upon matching revenues and cost drivers therefore their contract increase is budgeted at 0.0% for From a traffic standpoint, the Authority has primarily focused on commodity sectors and their trends. Additionally, terminals and other stakeholders have provided their cargo volume forecasts for the coming year (s). 5. The general revenue tariff category for pilot travel has been budgeted at 2.5% in line with current CPI rates. Since this tariff item will not be adjusted until July 1, 2012 the effective increase for 2012 is estimated at 1.25%. 6. For the Authority s employee crewed launches at Victoria, Steveston and Prince Rupert the tariff charges will be increased by 1.5% (to reflect collective agreement cost increases) effective July 1, The year of 2012 will continue to charge for fuel separately from the balance of the launch charges. This fuel charge is adjusted monthly to reflect fluctuations in market prices. 8. The BCCP payout ratio (BCCP cost divided by pilotage revenue) is forecast at 88%. 9. The budget anticipates four coastal apprentice pilots starting in the 2011 plan year and being licenced during Additionally four more apprentices are budgeted to start in the fall of Training for senior pilots totals $450, The Authority has budgeted for $150,000 for operating projects. This expense account is intended to cover any special projects and initiatives that will require funding in the budget year. 12. Wage increases for the Authority s unionized employees are shown as 2.3% which reflects current labour agreements. 13. All other costs, such as travel and general administration are forecast at a 2.5% annual increase to account for inflation

22 Capital Budget 2012 Commentary PACIFIC PILOTAGE AUTHORITY The Authority s threshold for capitalization is $10,000 per expenditure. The capital expenditures for the budget year of 2012 total $840,000. Buildings and Floats The Authority is budgeting $60,000 for the installation of webcams to provide a visual recording of its launch mooring sites. Due to the nature of our operations, two of our sites can remain unattended for twenty-four hours or more on a regular basis. Pilot Launches, Engines and Gear Sets The Authority is budgeting $350,000 for an overhaul of the Pacific Pathfinder s engines. In order to minimize downtime the Authority purchased two spare engines during 2011 and is budgeting a further $60,000 to purchase two spare gear sets to match the fleet configuration. Communication and Other The Authority has budgeted $80,000 for furniture and office equipment. As part of the Authority s emergency preparedness program the dispatchers have been encouraged to set up home offices. The Authority has budgeted $30,000 for the appropriate equipping of these home offices. Additionally, the Authority is planning furniture and equipment renewal of $50,000. Computers and Software With Stage 1 of the computer system upgrade completed along with the issuance of PPUs to all pilots, the Authority is budgeting for the next stage. Major components of Stage 2 may include consulting, AIS interface, electronic data interchange with pilots and enhanced electronic delivery of invoices to customers. The budget includes seven new PPUs for the Fraser River pilots since their current units are in excess of five years old. Also to be included in this expenditure of $40,000 is five PPU units to be used as spares when units are being repaired or upgraded. Leasehold Improvements The Authority has renewed its office lease for an additional 10 years so a minor office renovation is planned. The Authority is budgeting funds of $100,000 for the plan year

23 Statement of Operations PACIFIC PILOTAGE AUTHORITY For the Years Ended December 31 (000's) ACTUAL FORECAST PLAN PLAN PLAN PLAN PLAN INCOME Coastal pilotage $41,607 $43,442 $41,840 $43,380 $44,870 $46,720 $48,710 River pilotage 2,130 $2,275 2,120 2,170 2,220 2,280 2,340 Travel 6,136 6,227 6,200 6,420 6,640 6,900 7,180 Launch 7,643 8,197 7,970 8,260 8,540 8,880 9,250 Launch replacement fee 1,406 1, Portable pilotage unit fee Interest and other TOTAL INCOME 59,212 61,758 59,200 60,350 62,390 64,900 67,600 OPERATING EXPENSES BCCP contract 35,546 37,844 36,660 38,010 39,320 40,940 42,690 BCCP apprentice wages and training BCCP senior pilot training 1, BCCP PPU software and support Operating projects River wages, benefits and other 2,010 2,147 2,190 2,240 2,300 2,360 2,430 Transportation and travel 4,661 4,804 4,780 4,950 5,120 5,320 5,540 Launch wages, operating and repairs 6,718 7,200 7,280 7,460 7,650 7,840 8,040 Launch bank loan interest Launch and PPU amortization TOTAL OPERATING EXPENSES 51,261 54,060 53,150 55,020 56,740 58,800 61,030 ADMINISTRATIVE EXPENSES Salaries and benefits 1,707 1,688 1,780 1,820 1,870 1,920 1,980 Dispatch salaries and benefits 1,349 1,403 1,480 1,520 1,560 1,600 1,650 Office rental, accom. and supplies Travel, training and miscellaneous Telephone and communications Board meetings and travel Legal, consulting and other Computer Computer and equipment amortization TOTAL ADMINISTRATIVE 4,712 4,741 5,070 5,200 5,350 5,490 5,650 TOTAL EXPENSES 55,973 58,801 58,220 60,220 62,090 64,290 66,680 NET INCOME (LOSS) FOR YEAR $3,239 $2,957 $980 $130 $300 $610 $920 ADJUSTED NET INCOME (LOSS) $1,638 $1,486 $30 $130 $300 $610 $920 (Launch Replacement and Portable Pilotage Unit Revenues deducted)

24 Balance Sheet For the Years Ended December 31 (000's) ACTUAL FORECAST PLAN PLAN PLAN PLAN PLAN ASSETS: CURRENT ASSETS Cash and cash equivalents $6,805 $6,855 $7,364 $7,693 $8,303 $9,152 $10,976 Accounts receivable 5,398 5,400 5,500 5,500 5,500 5,600 5,600 Prepaid expenses TOTAL CURRENT ASSETS 12,418 12,455 13,064 13,393 14,003 14,952 16,776 LONG TERM ASSETS Long term investments 3,059 5,100 5,100 5,100 5,100 5,100 5,100 FIXED ASSETS Buildings and floats Pilot boats 12,682 12,732 13,082 13,212 13,212 13,212 13,212 Engines and gears Communication and other Computers and software 1,915 2,085 2,275 2,375 2,475 2,575 2,675 Leasehold improvements TOTAL CAPITAL COST 15,346 15,816 16,656 16,906 17,026 17,196 17,316 Accumulated amortization 3,784 4,856 5,976 7,096 8,216 9,336 10,456 TOTAL FIXED ASSETS 11,562 10,960 10,680 9,810 8,810 7,860 6,860 TOTAL ASSETS $27,039 $28,515 $28,844 $28,303 $27,913 $27,912 $28,736 LIABILITIES: CURRENT LIABILITIES Accounts payable and accrued liabilities $5,920 $5,000 $5,000 $5,000 $5,000 $5,100 $5,100 Bank indebtedness - pilot launches 3,632 2,969 2,288 1, TOTAL CURRENT LIABILITIES 9,552 7,969 7,288 6,587 5,867 5,226 5,100 LONG TERM LIABILITIES Employee severance benefits 992 1,094 1,124 1,154 1,184 1,214 1,244 TOTAL LONG TERM LIABILITIES 992 1,094 1,124 1,154 1,184 1,214 1,244 EQUITY OF CANADA Contributed capital Retained earnings 12,450 15,689 18,646 19,626 19,756 20,056 20,666 Net income (loss) for year 3,239 2, TOTAL EQUITY 16,495 19,452 20,432 20,562 20,862 21,472 22,392 TOTAL LIABILITIES AND EQUITY $27,039 $28,515 $28,844 $28,303 $27,913 $27,912 $28,

25 Statement of Cash Flows PACIFIC PILOTAGE AUTHORITY For the Years Ended December 31 (000's) ACTUAL FORECAST PLAN PLAN PLAN PLAN PLAN OPERATING ACTIVITIES: Cash receipts from customers $58,493 $61,610 $58,980 $60,230 $62,270 $64,680 $67,480 Cash paid to employees and suppliers (54,170) (58,326) (56,790) (58,810) (60,670) (62,770) (65,280) Other income received Interest paid (111) (91) (80) (60) (40) (20) 0 Employee severance payments (126) (115) (200) (200) (230) (250) (250) Cash flows provided by operating activities 4,228 3,224 2,030 1,280 1,450 1,760 2,070 INVESTING ACTIVITIES: Purchase of investments (3,313) (5,945) (4,000) (4,000) (4,000) (4,000) (4,000) Proceeds on disposal of investments 2,672 3,904 4,000 4,000 4,000 4,000 4,000 Acquisition of property and equipment (1,525) (470) (840) (250) (120) (170) (120) Cash flows from (used in) investing activities (2,166) (2,511) (840) (250) (120) (170) (120) FINANCING ACTIVITIES: Repayment of bank loan (644) (663) (681) (701) (720) (741) (126) Bank indebtedness Cash flows from (used in) financing activities (644) (663) (681) (701) (720) (741) (126) Increase (decrease) in cash and cash equivalents 1, ,824 Cash and cash equivalents, beginning of year 5,387 6,805 6,855 7,364 7,693 8,303 9,152 Cash and cash equivalents, end of year $6,805 $6,855 $7,364 $7,693 $8,303 $9,152 $10,

26 Statement of Capital Expenditures For the Years Ended December 31 (000's) FO RECAST PLAN PLAN PLAN PLAN PLAN BUILDINGS AND FLO ATS Victoria floats and office building 50 Prince rupert floats 80 Web cams for 3 launch stations 60 PILO T BO ATS Pacific Pathfinder - engine overhaul 350 Pacific Scout - engine overhaul 130 Thermal imaging cameras (3) 50 ENGINES Spare engines and gears for PPA fleet CO MMUNICATIO N AND O THER Furniture and office equipment Telephone voice recording upgrade 30 CO MPUTERS AND SO FTWARE Web site re-write and enhancements 40 Tide and draft calculator onto web site 80 Dispatch and billing Software 150 Portable Pilotage Units Launch fleet management software 50 LEASEHO LD IMPRO VEMENTS Vancouver TO TAL CAPITAL EXPENDITURES $470 $840 $250 $120 $170 $

27 Assignment Analysis and Pilot Productivity For the Years Ended December 31 PACIFIC PILOTAGE AUTHORITY ACTUAL FORECAST PLAN PLAN PLAN PLAN PLAN COASTAL: Number of contract pilots - BCCP Number of coastal assignments 11,446 11,646 11,200 11,330 11,434 11,614 11,814 Average assignments per pilot FRASER RIVER: Number of employee pilots - Fraser River Number of River assignments 997 1, Average assignments per pilot SAFETY: Incident free assignments % Adjustments to Berths and Terminals in plan years: Annual trips added to plan base: Ridley Island Coal - terminal capacity upgrade Kitimat LNG - new terminal 104 Enbridge Kitimat - new terminal

28 Incident Reporting The Authority categorizes incident and accident reporting into three types of investigations. An incident or accident will not be classified until sufficient facts are available to assess the potential for safety improvements and may require on-site evaluation or interviews. Class A Investigations Defines an investigation that has a high probability of improving navigation safety, in that there is a significant potential for reducing the risk to persons, vessels or the environment. Class B Investigations Defines an investigation that has a medium probability of improving navigation safety, in that there is a moderate potential for reducing the risk to persons, vessels or the environment. Class C Investigations Defines an investigation that has a low probability of improving navigation safety, in that there is a limited potential for reducing the risk to persons, vessels or the environment. The following table shows the actual number of incidents the Authority has recorded over the last five years. Exhibit 8 Incident Free Total Year Assignments Incidents Class A Class B Class C % % % % %

29 Human Resources For the Years Ended December 31 Actual Forecast Plan Plan Plan Plan Plan Executive Administrative Employee pilots (Fraser River) Dispatchers Pilot launch crews Total full time equivalents Contract pilots (BCCP) (seasonally adjusted) Total resources