OTTAWA, Dec. 16, 2013 /CNW/ - The Canadian Transportation Agency today
issued Decision No. 461-R-2013 ruling that the revenues of the Canadian National Railway Company (CN)
are under its maximum revenue entitlement and that the Canadian Pacific
Railway Company (CP) has exceeded its revenue cap for crop year
CN's grain revenue of $556,589,140 was $6,346,256 below its revenue cap
CP's grain revenue of $ 544,222,877 was $177,961 above its revenue cap
In the 2012-2013 crop year, just over 32.4 million tonnes of western
grain were moved, which is 2.0 percent lower than the volume moved
during the previous crop year. As well, the average length of haul of
944 miles was 8 miles, or 0.8 percent lower than the previous crop
CP now has 30 days to pay the amount by which they exceeded their
2012-2013 revenue cap, in addition to a five percent penalty of $8,898.
Government regulations stipulate that such payments must be made to the
Western Grains Research Foundation, a farmer-financed and directed
organization set up to fund research that benefits Prairie farmers.
Determining the Revenue Cap
The Canada Transportation Act requires the Agency to determine each railway company's revenue cap
annually and whether each cap has been exceeded. The revenue cap is a
form of economic regulation that enables CN and CP to set their own
rates for services, provided the total amount of revenue collected
remains below the ceiling set by the Agency.
Revenue caps are calculated using a formula containing numerous elements
which are established by the Act. The Volume-related Composite Price
Index (VRCPI) is one of these elements and is determined by the Agency,
no later than April 30 every year. The VRCPI is an inflation index
which reflects forecasted price changes for railway labour, fuel,
material and capital purchases by CN and CP, the two
federally-regulated railways. The index, along with the actual tonnage
of grain that was hauled and the average length of haul during the crop
year for each railway, is used to determine the annual revenue caps.
The Canadian Transportation Agency is an independent administrative body
of the Government of Canada. It performs two key functions within the
federal transportation system:
As a quasi-judicial tribunal, the Agency, informally and through formal
adjudication, resolves a range of commercial and consumer
transportation-related disputes, including accessibility issues for
persons with disabilities. It operates like a court when adjudicating
As an economic regulator, the Agency makes determinations and issues
authorities, licences and permits to transportation carriers under
SOURCE: Canadian Transportation Agency
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