Western Grain Railway Revenue Cap Interpretations

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OTTAWA - March 16, 2001 - The Canadian Transportation Agency released a decision today establishing the interpretation of the new rules by which the Agency will determine western grain revenue under the new Revenue Cap regime for Canadian National and Canadian Pacific railways.

The Canada Transportation Act requires the Agency to determine each railway's revenue cap annually for western grain movements and to determine whether the railways have exceeded their respective caps. The legislation sets out the formula to be used by the Agency in its determination of each railway's revenue cap and lists certain items that are to be considered by the Agency when it determines a railway's grain revenues. If a railway exceeds its revenue cap, the legislation includes provisions for the pay out of any excess amount plus any applicable penalty in accordance with the regulations currently being developed by Transport Canada.

Effective August 1st, 2000, a new "revenue cap" regime for the movement of western grain by a prescribed railway company (currently CN and CP), replaced the former rate-setting regime for such movements. Consequently, CN and CP can price their western grain movements in response to market conditions. However, their grain revenues must not exceed a certain entitlement, which is referred to as the "revenue cap".

The interpretations contained in the Agency decision, Decision No. 114-R-2001, will affect the determination of railway grain revenues beginning with crop year 2000-2001, the Agency's first year for revenue cap determinations. A crop year begins on August 1st of one year and ends on July 31st of the following year. The Agency is required to determine whether the railways exceeded their revenue caps for crop year 2000-2001 on, or before, December 31, 2001.

In the course of interpreting items that might affect the railways' grain revenue, the Agency consulted with parties in the grain handling and transportation industry including producer representatives, grain companies, federal and provincial governments, western municipal organizations, and the railways.

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Information: Jim Riegle, (819) 997-6542

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