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Review of Railway Cost of Capital Methodology
A review of the Canadian Transportation Agency's (Agency) cost of capital methodology is currently in progress. The review is being conducted in two phases: a study phase and a hearing phase. In the study phase, an independent consultant will examine existing cost of capital methodologies and principles. The consultant will also review the Agency's current cost of capital methodology and the cost of capital methodologies used by other economic regulatory bodies. When this phase has concluded, there will be a hearing phase during which a panel of Agency Members will consider the consultant's report and gather evidence from railway companies, shippers and other interested parties to ascertain if there is a potentially superior methodology or methodologies, or improvements that should be made, to the Agency's current "benchmark" methodology. During the study phase, interested parties will be given the opportunity to provide feedback at specific points in the process as outlined in the Terms of Reference. Submissions should be forwarded to:
Canadian Transportation Agency
Ottawa, Ontario
K1A 0N9
Attention: Dale McKeague
Facsimile: 819-953-5564
Or by electronic mail to: consultations@otc-cta.gc.ca
All material relevant to the review is being posted on the Agency's Web site during the course of the review process. It is possible to subscribe for automatic notification of updates to this Web site through the Agency's Subscription Service.
Review Process Milestones To Date
Phase I – Study Phase
May 13, 2010 – Consultant Chosen and Regulatory Bodies Selected
Following a competitive bidding process and a thorough evaluation of the proposals received, the Agency has chosen the Brattle Group (http://www.brattle.com) – with offices in Cambridge Mass., Washington D.C., San Francisco, Brussels, London and Madrid – as the independent consultant to undertake the study phase of the Cost of Capital Review. The Brattle Group will identify and examine a variety of existing cost of capital methodologies and models, including an analysis of their strengths and weaknesses, as well as an assessment of any potential issues and implications associated with the implementation of such models.
On a related matter, the following regulatory organizations have agreed to share information with the Agency regarding their cost of capital methodology: the Canadian Radio-television and Telecommunications Commission, the Ontario Energy Board, the U.S. Surface Transportation Board, the U.K. Office of Rail Regulation, and the U.K. Competition Commission. Agency's staff are still searching for a sixth and last regulatory body for this exercise.
February 8, 2010 – A request for proposals (RFP) has been posted on MERX.
- Name of RFP: Study - Cost of Capital Methodology for Federally Regulated Railways
- Reference Number: 190592
- Solicitation Number: CTA000016
- Closing date: March 16, 2010
- Closing date for questions: February 25, 2010
The posting can be accessed by going on https://www.merx.com and entering the above mentioned reference number.
January 18, 2010 – Final Terms of Reference Distributed to Stakeholders
- Correspondence from the Agency Secretary – January 18, 2010
- Distribution List
- Final Terms of Reference [PDF]
September 24, 2009 – Deadline for Comments on Draft Terms of Reference
Submissions Received from Interested Parties Regarding Draft Terms of Reference
The following material has been submitted by organizations not subject to the Official Languages Act and is provided to the public solely in the original language.
Submissions from external organizations posted on this page are generally posted in the original format as provided to the Agency. If a document is not accessible to you because of its format, please contact the Agency at the above coordinates.
- Canadian Wheat Board [PDF]
- Canadian Pacific Railway Company [PDF]
- Teck Resources Limited [PDF]
- Canadian National Railway Company [PDF]
- Rail America [PDF]
- Forest Products Association of Canada [PDF]
- Western Canadian Shippers' Coalition [PDF]
- Coalition of Rail Shippers [PDF]
- Wild Rose Agricultural Producers [PDF]
Disclaimer: If a discrepancy exists between the version of a submission on the CTA Web site and the official version, the official version prevails.