While we at LMOGA have worked to protect the well-being of our citizens - many of whom are employees of the oil and gas, petrochemical and allied industries - problems in the business sector have been overlooked as Louisiana's economy has struggled through the pandemic.
LORI LEBLANC, Vice President, LMOGA
LORI LEBLANC, Vice President, LMOGA
Maintaining industrial activity has not been easy over the past year because the pandemic has caused uncertainty in the marketplace, but companies and their valued employees continue to move forward to meet the needs of Louisiana.
One example of a very serious concern to businesses struggling to continue providing services is the recent request by the Crescent River Port Pilots Association to impose a rate increase to set their target salaries per pilot at $697,000 annually - a whopping 47-percent increase over the current approved target of $473,692. By comparison, this target has grown from $388,448 in 2010 and $314,100 in 1999. This concerns all industrial ratepayers required to utilize state-commissioned river pilots' services to move product on the Mississippi River.
The New Orleans Times-Picayune published an award-winning expose in 2001 that said river pilot monopolies were in danger of strangling Louisiana's economy through excessive and largely unchecked salary-based upcharges to shippers. "The pilots have had their way for 164 years now. It's time the public interest is served instead," the report stated.
In 2004, under Gov. Kathleen Blanco, Louisiana's shipping, industrial, agricultural and business communities negotiated legislation that consolidated the regulatory commissions into a single, statewide fee commission with a regulatory board to handle matters that had long been mired in regulatory and legal quagmires. Prior to the negotiations, there were eight pilot-controlled fee regulatory commissions, each controlled by one of four state-granted monopolies.
Gov. Blanco later said the landmark reform was one of her administration's crowning achievements in the 2004 legislative session.
The reforms were supposed to institute impartiality between pilots charging fees for their services and ratepayers who pay the tab with no choice in their service provider. Three of the commission's voting members were supposed to be "noninterested" parties. Reformers assumed the inclusion of noninterested parties would help keep service rates reasonable and that the salary system, which has increased by more than 35 percent since then, would level out. The new commissions have provided more ratepayer dialogue in the process, but there is more potential to protect ratepayers who are forced to use monopolized services from sharp rate increases and shield ratepayers from substantial costs in disputed expenses incurred by pilot groups.
Most businesses only profit by keeping expenses reasonably low and charging a fair price for goods and services, while appealing to customers on the price and quality of goods and services. The rates paid for pilot services within these monopolies, however, are determined through a combination of salary, expenses and legacy costs (such as retirement), which are divided among the number of customers expected to navigate vessels through state-chartered territory.
For this system to work, the commissions that regulate the monopolies must operate as intended, providing for safe pilotage and working toward the ultimate goal of fairly compensating state-chartered pilots while also protecting ratepayers from excessive charges for the monopoly service.
A global pandemic is not the time to request a substantial pay hike for services from already highly compensated pilots. Louisiana's penchant for protecting the few in systems such as these governing pilots should be examined once again. Perhaps it is time to look at modifying this system. Industry continues to struggle to provide services and employment to Louisiana citizens; at what point will we heed the warning of killing the golden goose?
For more information about Louisiana's oil and gas industry and LMOGA's work to protect and grow the industry, visit www.lmoga.com or call (225) 387-3205.
