CN, CP must pay for exceeding grain revenue entitlements

by World Grain Staff
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OTTAWA, ONTARIO, CANADA — The Canadian Transportation Agency ruled on Dec. 29 that revenues of the Canadian National Railway Company (CN) and the Canadian Pacific Railway Company (CP) have exceeded their Western grain revenue entitlements for crop year 2014-15.

CN's grain revenue of C$745 million was C$6.8 million above its entitlement of C$738 million.
CP's grain revenue of C$724 million was C$2.1 million above its entitlement of $722 million.

CN and CP now have 30 days to pay the amount by which they exceeded their 2014-15 revenue entitlements, in addition to a 5% penalty of C$343,330 for CN and C$106,858 for CP. 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.

In the 2014-15 crop year, 41,306,191 tonnes of Western grain were moved — 7.4% more than the volume moved during the previous crop year. The average length of haul of 947 miles was two miles, or 0.2% higher, than the previous crop year.

In submissions made this fall, CN asked the transportation agency to accept a total of six adjustments that it applied to the preliminary Grain Traffic Database (GTDB) CN had originally filed in June 2015. After examining the details of CN's request, CN was informed that four of the six proposed adjustments were routine and would be accepted.

Two of the requested adjustments were more complex and constitute material changes that require more detailed examination. They are therefore not considered in this year's determination.

Given the potential significance of the changes requested, the agency intends to first consult with industry stakeholders, including railway companies, grain shippers, producer groups and associations, provincial governments, and municipal associations.

The Canada Transportation 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.

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