BC Ferries will be able to raise its fare about four per cent in each of the next three years, the independent regulator has ruled.

The B.C. Ferry Commission announced Monday that it has set a price cap of 4.1 per cent in 2013, 4.0 per cent in 2014, and 3.9 per cent in 2015. The price cap determines the maximum permitted weighted average fares for all route groups.

Approval from the independent regulator for the ferry service also comes with a target aimed at BC Ferries to find more than $54 million in efficiencies, including service cuts.

BC Ferries has faced financial woes in recent years, blaming a rise in the cost of fuel and a decline in vehicle and passenger trips. (Chuck Stoody/Canadian Press)

Transportation Minister Mary Polak says she's worried increasing fares will result in decreasing ridership and more cuts to service.

"We share that concern with the ferry commissioner and it is the reason that we will be involved in significant consultation with the public as BC Ferries now seeks to adjust their route service to save additional funds," she said.

"We can't afford to have ferries travel empty or travel with fewer passengers than staff on the ship. So we are going to have to wrestle with those challenges."

BC Ferries has already eliminated 98 round trip sailings on its major routes between now and March.

The corporation's year-end financial report included losses of more than $16 million, with vehicle traffic at a 13-year low and the fewest passengers in 21 years. The ferry corporation blames its woes on rising fuels costs and a steep decline in vehicle and passenger trips linked to a drop in tourism.

On Monday, the commission also ordered BC Ferries to submit a plan for the use of alternate fuels and a plan for reducing fuel consumption, due in the next 30 days. Fuel procurement costs are the second-largest expenditure for BC Ferries.

The ferry corporation announced earlier this year it was cutting 98 sailings on its major routes over the fall and winter in order to reduce the number of near empty sailings.

BC Ferries was originally seeking to cut 400 sailings from its schedule, but the province stepped into stop the cuts with an $80-million subsidy over the next four years.

The province currently provides BC Ferries with another $150 million annually, while Ottawa contributes about $26 million a year.

Critics say BC Ferries’ financial woes are due in part to the high salaries paid to its senior management.

With files from The Canadian Press