Determination No. R-2021-173

November 24, 2021

DETERMINATION by the Canadian Transportation Agency (Agency) regarding the Canadian Pacific Railway Company’s (CP) application for an adjustment to its 2021–2022 Volume‑Related Composite Price Index (VRCPI) pursuant to paragraph 151(4)(c) of the Canada Transportation Act, SC 1996, c 10 (CTA).

Case number: 
21-12512

APPLICATION

[1] On September 21, 2021, CP filed an application seeking an adjustment to its 2021-2022 VRCPI to account for additional costs to be incurred in purchasing 1,400 new hopper cars for use in transporting western grain.

[2] This determination addresses the following issue:

Should the Agency, pursuant to paragraph 151(4)(c) of the CTA, adjust CP’s 2021‑2022 VRCPI to recognize the costs to be incurred by CP in purchasing new hopper cars for the movement of western 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] CP is seeking this adjustment to recognize additional costs that it will incur during the 2021–2022 crop year. CP indicates that it is exercising its option to purchase 1,400 new hopper cars, a subset of which will be delivered to CP for use in transporting Western grain during the 2021–2022 crop year. The cost incurred by CP in purchasing these cars is the subject of this adjustment.

[6] In support of its application, CP provided a copy of the fully executed Form of Option Notice pursuant to its Purchase Agreement, which calls for the production of the additional hopper cars along with a delivery schedule outlining the timing for the provision of those cars. The cars will be delivered over the period beginning in December 2021 and ending in December 2022.

[7] Based on the information filed in CP’s submission, the Agency finds that CP will have incurred additional costs in purchasing new hopper cars that were not accounted for when the current 2021–2022 VRCPI was last set and that these additional costs justify an adjustment to CP’s 2021–2022 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 CP’s 2021–2022 VRCPI set in Determination No. R-2021-64 from 1.4787 to 1.4826.

[9] The Agency makes this adjustment effective as of August 1, 2021, pursuant to subsection 151(6) of the CTA.

[10]The Agency will use this adjusted value in determining CP’s Maximum Revenue Entitlement for the 2021–2022 crop year, which the Agency must issue by December 31, 2022.

Member(s)

Elizabeth C. Barker
J. Mark MacKeigan
Heather Smith
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