An application to raise Lower Mainland transit fares by up to 12.5 per cent has been rejected, TransLink Commissioner Martin Crilly announced Wednesday.

In announcing the ruling, Crilly said TransLink has improved service dramatically in the past decade, and is committed to delivering even better and wider service coverage for the future.

"As to funding from transit riders, TransLink now seeks fare increases outpacing inflation. The fare box is a crucial and sustainable funding source, and there is much to be said in favour of the user-pay principle," Crilly said.

"The ruling ... sets targets for cost-saving by TransLink — but without trimming or deferring service improvements."

The price of monthly transit passes and fare books will stay the same, but the ruling allows for a 10 per cent increase in cash fares at fare boxes.

This allows a one-zone adult cash fare to rise to $2.75 from $2.50, a two-zone fare to increase to $4.10 from $3.75 and a three-zone fare to rise to $5.50 from $5.00.

TransLink challenged to find cost savings

The last across-the-board fare increase was in 2008, although monthly passes went up in 2010.

The fare increase would have produced an extra $48 million in revenue for TransLink in 2013, which the transit authority says would pay for new projects including the Evergreen Line. The commission’s ruling is projected to reduce this figure by up to $28 million.

The TransLink Commission also completed an efficiency review on the transit authority, challenging TransLink to find cost savings of $40 to $60 million between 2013 and 2015, and growing to five per cent of annual expenditures by 2021.

The review made 33 recommendations for in-house efficiencies that would save money, including bus maintenance and overhead.

"All savings should be achievable without cutting current or planned services, projects or programmes to which TransLink has already committed," said the commission.

TransLink orders audit

In a written statement, TransLink CEO Ian Jarvis said he needed time to review the report, but said TransLink's board of directors has asked for an audit that will take Crilly's recommendations into account.

"We move more than one million passengers each day through the transportation network; our priority is to deliver quality service that is efficient and reliable for customers, is fiscally responsible and provides value for money," Jarvis said.

"The commissioner confirmed we are well run and manage costs and that a fare increase is not unreasonable, but reduces our proposed increase at this time."

Miranda Lawton, who takes transit between Vancouver from Surrey every day, said she'll consider driving herself if prices continue to rise.

"[It's] ridiculous for prices to go up. It's already super expensive," said Lawton.

Transit user Larry Johnson agrees.

"It does drive a lot of people to commuting by car," he said. "They feel there is a bit of uneasiness to waiting for buses and being in public places, and the increased fare just makes it more so."

But taking transit is still cheaper than driving solo.

By a rough estimate, the cost of gas for a return trip between downtown Vancouver and Surrey is $7 a day. With insurance and parking, the cost can add up to $20 a day, without factoring in wear and tear on the vehicle and the imminent introduction of bridge tolls.

The provincial government has ordered its own audit of the transit authority and has expressed approval of TransLink's decision not to award its top executives 15-per-cent bonuses pending a review of the bonus policy.

With files from the CBC's Renee Filippone