Location: Atlantic Canada
Key messages:
- The Confederation Bridge fulfils Canada’s constitutional obligation to provide a year-round transportation link between PEI and the mainland. The Bridge is a federally owned asset operated by Strait Crossing Bridge Limited.
- As a strategic interprovincial corridor for Prince Edward Island’s economy, the Government of Canada has interest in keeping the bridge affordable for users, particularly for Prince Edward Island residents and businesses.
- In an effort to support recovery from the pandemic and Hurricane Fiona, the Government of Canada has taken steps to provide relief to Islanders. Since 2021, the Government has implemented revenue shortfalls and inflation relief measures to restrain toll increase. In doing so, tolls remain at the 2022 rate of $50.25 per passenger vehicle.
- The Government also makes an annual subsidy payment toward the cost of designing, financing, building, operating, and maintaining the Bridge, adjusted annually for inflation. In 2023, a subsidy payment of $77.18M was made.
- The Premier of PEI has publicly requested that tolls on the Confederation Bridge be reduced to $20 and the creation of a working group to discuss the future of tolls. The Government of Canada is looking into a longer-term solution for the future of Bridge tolls to keep transportation to/from PEI affordable.
Summary of Issue / Background:
- The Northumberland Strait Crossing Act provides the necessary authorities to the Minister of Public Works to enter into agreements relating to the Bridge to protect the interests of Canadians. In 1999, the powers, duties and functions of the Minister of Public Works were transferred to the Minister of Transport.
- The relationship between the Government of Canada and Strait Crossing Development Inc. (SCDI, the Operator) is governed by a number of agreements such as the Annual Subsidy Agreement and Bridge Operating Agreement. In 1993, SCDI signed agreements with Canada to design, build, finance, operate and maintain the 12.9 km bridge at a cost of approximately $1B.
- The toll rates and structure are governed by the Bridge Operating Agreement (the Agreement). SCDI has exclusive rights to impose and collect tolls and is permitted to increase tolls annually by an amount equal to 75% of the Consumer Price Index. SCDI also has the right to recover any shortfall below the toll revenue floor, a guaranteed minimum revenue for the developer. This has led the toll rates to grow since the construction of the bridge of tolls from $35 in 1997 to over $50 today.
- The Government of Canada has made efforts to curb toll increases relating to the pandemic and to ensure the re-start of the economy is not negatively impacted by high inflation. As such, since 2021 the Government of Canada has implemented revenue shortfall and inflation relief measures to restrain toll increases.
- TC issued one-time payments in 2021 in the amount of $2.87M to recover a toll revenue shortfall for 2020. TC issued another one-time payment in 2022 for $1.62M for a 2021 shortfall. SCDI has confirmed there was no revenue shortfall in 2022 that would affect tolls in 2024.
- In addition to the toll shortfall, TC negotiated a payment of $2.5M at the end of 2022 in return of SCDI waving rights to increase 2023 tolls. 2023 toll rates are now frozen at 2022 levels - $50.25 per passenger vehicle.
- Members of the public and industry groups regularly express concerns over the current toll rates. In particular, there has been steady criticism of the toll rate since the Government’s decision in 2015 to not charge tolls to users of the Champlain Bridge in Montreal. Regular critics include PEI Senator Percy Downe, the PEI Fishermen’s Association (PEIFA), and the Summerside Chamber of Commerce in PEI.
- Stakeholders expressing concerns with the cost of tolls is not new. However, the measures to bring economic relief during the pandemic, in particular increasing federal funding to reduce toll increases, have emboldened local elected officials to request that tolls not only be frozen but also reduced.