CP over limit on Prairie grain revenue

Canadian Pacific Railway is over its limit for Prairie grain revenue, the Canadian Transportation Agency has ruled. (Dave Bedard photo)

Canadian Pacific Railway will have to give as well as receive this winter, by way of a $1.31 million contribution to Prairie grain research, federal officials have ordered.

The Canadian Transportation Agency on Thursday found Calgary-based CP’s total grain handle for the 2010-11 crop year came in at $443,822,775, or $1,252,034 above the railway’s CTA-imposed revenue cap.

The revenue cap is a regulation that allows CP and Canadian National Railway (CN) to set their own rates for Prairie grain handling services in a given crop year — as long as the total revenue collected that year stays below the cap.

In years where a railway exceeds its cap, the overage, plus a five per cent penalty, is required to be paid to the Western Grains Research Foundation.

This marks the first year in which CP exceeded its revenue cap since 2007-08, when the CTA sharply reduced its Volume-Related Composite Price Index (VRCPI), removing an amount "embedded" in the index for grain hopper car maintenance costs, replacing them with "current, actual" hopper car maintenance costs.

CP, which that year was ruled to have topped its cap by $33.6 million, came in under the cap each year afterward until now.

CP now has 30 days to pay the overage to the WGRF, plus the penalty of $62,602.

Average haul

CN, meanwhile, came in with Prairie grain handling revenue of $508,403,510 in 2010-11, $913,447 below its CTA-imposed cap. The Montreal company last exceeded its cap in 2008-09, by $683,289.

The CTA determines the cap each year based on factors including the VRCPI it sets each April, along with the grain tonnage hauled and average length of haul.

CP’s 2010-11 cap was based on its total handle of 14.69 million tonnes of Prairie grain and an average haul of 913 miles, down from 16.14 million tonnes and 916 miles in 2009-10.

CN’s cap was based on a grain handle of 16.44 million tonnes and an average haul of 1,010 miles, compared to 15.77 million tonnes and a haul of 1,040 miles in the previous crop year.

In all, 31.1 million tonnes of Prairie grain were moved in 2010-11, down 2.5 per cent, with an average length of haul of 965 miles, down 1.2 per cent.

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