OTTAWA, Dec. 19, 2012 /CNW/ - The Canadian Transportation Agency today
issued its Decision No. 477-R-2012, ruling that the revenues of the Canadian National Railway Company (CN)
and the Canadian Pacific Railway Company (CP) for the movement of
western grain have exceeded their revenue caps for crop year 2011-2012
by less than 0.1 percent.
CN's grain revenue of $542,756,316 was $240,185 above its cap of
CP's grain revenue of $494,436,705 was $400,132 above its revenue cap of
In the 2011-2012 crop year, 33.1 million tonnes of western grain were
moved, which is 6.2 percent higher than the volume moved during the
previous crop year. As well, the average length of haul of 952 miles
was 13 miles, or 1.3 percent lower than the previous crop year.
CN and CP now have 30 days to pay the amount by which they exceeded
their 2011-2012 revenue cap, in addition to a five percent penalty of
$12,009 and $20,006, respectively. 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
For further information:
For more information on the Agency's revenue cap determinations since 2000-2001, please see the Western Grain Revenue Cap Statistics Backgrounder.
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