The Canadian Transportation Agency announces redetermined 2018-2019 Volume-Related Composite Price Indices for CN and CP
GATINEAU – October 26, 2018 – The Canadian Transportation Agency (CTA) has redetermined the 2018-2019 Volume-Related Composite Price Index (VRCPI) for each of CN and CP, which will be used in determining the maximum revenue entitlement for the Canadian National Railway Company (CN) and the Canadian Pacific Railway Company (CP) for the movement of western grain in the 2018-2019 crop year. Originally issued on April 25, 2018, the VRCPI was redetermined based on a provision included in the Transportation Modernization Act (Bill C-49), which received Royal Assent on May 23, 2018.
Increases of 2.1% for CN and 5.7% for CP
The CTA re-determined CN's and CP's VRCPI for the 2018-2019 crop year to include:
- establishing a distinct VRCPI for each of CN and CP;
- adjusting the VRCPI to remove costs associated with activities that will no longer be included as revenues for the purposes of the Maximum Revenue Entitlement (MRE) program; and,
- changes to the VRCPI to reflect costs incurred by the railway companies to obtain and maintain hopper cars that are to be used for the movement of western grain.
The larger percentage increase in CP's VRCPI—as compared to CN—is primarily attributable to CP's costs associated with the use of a greater number of its subsidiary companies' hopper cars. Prior to the passage of Bill C-49, the cost to use those hopper cars was only recognized to the extent that they were intended to replace government-owned hopper cars.
The VRCPIs will be applied when the CTA makes its grain revenue entitlement determinations by December 31, 2019 for the 2018–2019 crop year.
About the Volume-Related Composite Price Index (VRCPI)
Essentially an inflation factor, the VRCPI reflects a composite of the forecasted prices for railway labour, fuel, material and capital purchases. The VRCPI is one of the numerous factors included in the formula used to calculate the MRE for CN and CP. The MRE is essentially a statutory limit on the overall revenue they can earn from the movement of western grain.
For more information on the CTA’s maximum revenue entitlement determinations since 2000–2001, please see Western grain: Maximum Revenue Entitlement program.
About the Canadian Transportation Agency
The Canadian Transportation Agency is an independent, quasi-judicial tribunal and regulator that has, with respect to all matters necessary for the exercise of its jurisdiction, all the powers of a superior court. The CTA has three core mandates: helping to keep the national transportation system running efficiently and smoothly, protecting the fundamental right of persons with disabilities to accessible transportation services, and providing consumer protection for air passengers. To help advance these mandates, the CTA makes and enforces ground rules that establish the rights and responsibilities of transportation service providers and users and level the playing field among competitors, 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 CTA can help them.