Determination No. R-2021-105

APPLICATION

[1] On May 21, 2021, CN filed an application seeking an adjustment to its 2020-2021 VRCPI to account for additional costs incurred in retaining its fleet of G3 hopper cars for the remainder of the 2020–2021 crop year for use in transporting grain.

[2] This determination addresses the following issue:

Should the Agency, pursuant to paragraph 151(4)(c) of the CTA, adjust CN’s 2020–2021 VRCPI to recognize the costs incurred by CN in retaining its fleet of G3 hopper cars for the movement of grain?

THE LAW

[3] Paragraph 151(4)(c) of the CTA states:

the Agency shall make adjustments to each prescribed railway company’s index to reflect the costs incurred by the prescribed railway company to obtain hopper cars for the movement of grain and the costs incurred by the prescribed railway company for the maintenance of those hopper cars.

[4] Subsection 151(6) of the CTA states:

Despite subsection (5), the Agency shall make the adjustments referred to in paragraph (4)(c) at any time that it considers appropriate and determine the date when the adjusted index takes effect.

ANALYSIS AND DETERMINATIONS

[5] CN states that it is seeking this adjustment to recognize additional costs that it will incur during the 2020–2021 crop year. CN indicates that, given notable grain volume increases this crop year, it decided to retain its fleet of leased G3 hopper cars for a longer period rather than return them at the end of April 2021 as previously planned and accounted for. The net difference in costs for retaining the fleet for an additional 3 months is the subject of this adjustment.

[6] In support of its application, CN provided a copy of the revised lease Agreement substantiating the extended lease period for the G3 hopper cars.

[7] Given the revised, extended arrangement described above, the Agency finds that CN will have incurred an additional cost in retaining these cars between May 1, 2021, and the end of the 2020–2021 crop year, a cost that was not accounted for when the current 2020–2021 VRCPI was last set and that these additional costs justify an adjustment to CN’s 2020–2021 VRCPI pursuant to paragraph 151(4)(c) of the CTA.   

CONCLUSION

[8] In light of the above, the Agency, pursuant to paragraph 151(4)(c) of the CTA, adjusts CN’s 2020–2021 VRCPI set in Determination No. R-2021-45 from 1.4433 to 1.4441.

[9] The Agency makes this adjustment effective as of August 1, 2020, pursuant to subsection 151(6) of the CTA.

[10] The Agency will use this adjusted value in determining CN’s Maximum Revenue Entitlement for the 2020–2021 crop year, which the Agency must issue by December 31, 2021.