OTTAWA, April 30 /CNW Telbec/ - The Canadian Transportation Agency today announced a seven percent increase in the Volume-Related Composite Price Index (VRCPI) to be used to establish Canadian National Railway (CN) and Canadian Pacific Railway (CPR) revenue caps for the movement of Western grain. This Decision No. 159-R-2010 sets the index at 1.1384 for the upcoming 2010-2011 crop year beginning August 1.
The VRCPI is essentially an inflation factor that reflects forecasted price changes for railway labour, fuel, material and capital purchases by CN and CPR. Over the last few crop years this index has seen significant fluctuations as a result of changing fuel prices and, in one instance, a legislatively mandated adjustment:
- The 7.0% increase just announced for crop year 2010-11 is largely
attributable to higher fuel prices.
- In 2009-2010, the VRCPI fell by 7.4%, with most of the decrease again
attributable to lower fuel prices.
- The 2008-2009 VRCPI rose by 8.0%, mostly due to higher fuel prices.
- The 2007-2008 VRCPI fell by 5.4%, largely due to a one-time 8.4%
reduction to reflect lower hopper car maintenance costs.
In the course of determining the index, the Agency consults with parties in the grain handling and transportation industries including producer representatives, the Canadian Wheat Board, shipper organizations, railway companies, grain companies, other federal government departments, and provincial and municipal governments.
The revenue cap is a form of economic regulation that enables CN and CPR to set their own rates for services, provided the total amount of revenue collected remains below the ceiling set by the Agency. The caps are calculated using a formula containing numerous factors which are established by the Canada Transportation Act. The VRCPI, one of these factors, is determined annually by the Agency no later than April 30.
Under the Act, the Agency must determine annual revenue caps for CN and CPR and whether or not each cap has been exceeded by the railway company. The caps apply to the movement of grain from Prairie elevators or U.S. origins, to terminals at Vancouver, Prince Rupert, Thunder Bay, as well as movements of grain up to Thunder Bay or Armstrong, Ontario destined to Eastern Canada.
About the Agency
The Canadian Transportation Agency is an independent administrative body of the Government of Canada. It acts as both a quasi-judicial tribunal and an economic regulator for various modes of transportation under federal jurisdiction, including rail, air and marine. The Agency deals with, among other things, rate and service complaints arising in the rail industry; disputes between railway companies and other parties; applications for certificates of fitness for the proposed construction and operation of railways; approvals for railway line construction; regulated railway interswitching rates; and revenue caps for the movement of Western grain by rail.
For more information on the revenue caps, please visit the Agency's Web site at www.cta.gc.ca.
SOURCE Canadian Transportation Agency
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