OTTAWA — The Canadian Transportation Agency today announced a 7.4 percent decrease in the Volume-Related Composite Price Index (VRCPI) to be used to establish Canadian National Railway (CN) and Canadian Pacific Railway (CPR) revenue caps for the movement of Western grain. This Decision No. 176-R-2009 sets the index at 1.0638 for the upcoming 2009-2010 crop year beginning August 1.
The VRCPI is essentially an inflation factor that reflects forecasted price changes for railway labour, fuel, material and capital purchases by CN and CPR. Over the last few crop years the index has not followed the typical pattern of an inflation index of relatively small increases. Instead it has fluctuated significantly as a result of changing fuels prices and a legislatively mandated adjustment:
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The 2007-2008 VRCPI fell by 5.4% because it incorporated an 8.0% reduction to reflect lower hopper car maintenance costs.
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The 2008-2009 VRCPI rose by 8.0% with most of the increase attributable to higher fuel prices.
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The 2009-2010 VRCPI is forecasted to fall by 7.4% with most of the decrease attributable to lower fuel prices.
In the course of establishing the index, the Agency consults with parties in the grain handling and transportation industries including producer representatives, the Canadian Wheat Board, shipper organizations, railway companies, grain companies, other federal government departments, and provincial and municipal governments.
The revenue cap is a form of economic regulation that enables CN and CPR to set their own rates for services, provided the total amount collected remains below the ceiling set by the Agency. The caps are calculated using a formula containing numerous factors which are established by the Canada Transportation Act. The VRCPI, one of these factors, is determined annually by the Agency no later than April 30.
Under the Act, the Agency must determine annual revenue caps for CN and CPR and whether or not each cap has been exceeded by the railway company. The caps apply to the movement of grain from Prairie elevators or U.S. origins, to terminals at Vancouver, Prince Rupert, Thunder Bay, Churchill, as well as movements of grain up to Thunder Bay or Armstrong, Ontario destined to Eastern Canada.
The Canadian Transportation Agency is a Government of Canada administrative tribunal with quasi-judicial powers that is responsible for helping achieve an accessible and efficient transportation system. The Agency deals with, among other things, rate and service complaints arising in the rail industry; disputes between railway companies and other parties; applications for certificates of fitness for the proposed construction and operation of railways; approvals for railway line construction; regulated railway interswitching rates; and revenue caps for the movement of Western grain by rail. The Agency also develops costing standards and regulations, and audits railway companies' accounting and statistics-generating systems.
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For further information, please contact:
News Media Enquiries: Natalie Hanson at 819-934-9042
General Public Enquiries: info@otc-cta.gc.ca; 1-888-222-2592
For more information on the February 19, 2008 VRCPI Decision, please visit the "February 19 News Release and Backgrounder."
The Canadian Transportation Agency is online at www.cta.gc.ca
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