CN and CP exceed their Western Grain Revenue Entitlements for the 2015-2016 Crop Year
OTTAWA – December 22, 2016 – In a determination issued today, the Canadian Transportation Agency ruled that revenues of the Canadian National Railway Company (CN) and the Canadian Pacific Railway Company (CP) have exceeded their Western grain revenue entitlements for the 2015-2016 crop year.
- CN’s grain revenue of $685,791,606 was $1,041,913 above its entitlement of $684,749,693.
- CP's grain revenue of $681,266,322 was $3,386,483 above its entitlement of $677,879,839.
CN and CP now have 30 days to pay the amount by which they exceeded their 2015-2016 revenue entitlements, in addition to a five percent penalty of $52,096 for CN and $169,324 for CP. The Railway Company Pay Out of Excess Revenue for the Movement of Grain 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.
CN and CP moved 2.2 percent less grain this crop year
In the 2015-2016 crop year, 40,393,402 tonnes of Western grain were moved—2.2 percent less than the volume moved during the previous crop year. The average length of haul of 951 miles was four miles, or 0.4 percent, higher than the previous crop year.
Determining the Maximum Revenue Entitlement
The Canada Transportation Act (Act) requires the Agency to determine each railway company's annual maximum revenue entitlement and whether each entitlement has been exceeded. The maximum revenue entitlement 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 from their shipments of Western grain remains below the ceiling set by the Agency.
Entitlements are calculated using a formula containing numerous elements that 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 that reflects forecasted price changes for railway labour, fuel, material and capital purchases by CN and CP, the two federally-regulated railway companies. 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 company, is used to determine the annual entitlements.
The Canadian Transportation Agency is an independent, quasi-judicial tribunal and regulator with the powers of a superior court. The Agency has three core mandates: keeping the national transportation system running efficiently and smoothly, protecting the human right of persons with disabilities to an accessible transportation network and providing consumer protection for air passengers. To help advance these mandates, the Agency makes ground rules that establish the rights and responsibilities of transportation service providers and users and level the playing field among competitors. It also resolves disputes using a range of tools from facilitation and mediation to arbitration and adjudication and ensures that transportation providers and users are aware of their rights and responsibilities and how the Agency can help them.
For more information on the Agency’s maximum revenue entitlement determinations since 2000-2001, please see the Western Grain Maximum Revenue Entitlement Statistics Backgrounder.
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