Determination No. R-2022-28

APPLICATION

[1] On January 27, 2022, CN filed an application seeking an adjustment to its 2021-2022 VRCPI to account for additional costs it has incurred during the 2021-2022 crop year in obtaining 1,075 hopper cars through various purchase and leasing arrangements for use in the movement of regulated western grain.

[2] This determination addresses the following issue:

Should the Agency, pursuant to paragraph 151(4)(c) of the CTA, adjust CN’s 2021‑2022 VRCPI to recognize the costs it has incurred in obtaining 1,075 hopper cars for the movement of regulated 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] CN seeks this adjustment to recognize additional costs that it has incurred during the 2021–2022 crop year. In a news release issued on May 7, 2021, CN announced its plans to purchase 1,000 new hopper cars. CN indicates in its application that it has now obtained a subset of those cars. In addition, CN indicates that it has entered into leasing arrangements to obtain additional hopper cars for the movement of western grain. The costs incurred by CN in obtaining these cars are the subject of this adjustment.

[6] In support of its application, CN provided copies of fully executed agreements outlining the details of the various purchase and leasing arrangements.

[7] Based on the information filed in CN’s application, the Agency finds that CN has incurred additional costs in obtaining hopper cars for the movement of western grain that were not accounted for when CN’s 2021–2022 VRCPI was set and that these additional costs justify an adjustment to CN’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 CN’s 2021–2022 VRCPI set in Determination R-2021-64 from 1.4505 to 1.4572.

[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 CN’s Maximum Revenue Entitlement for the 2021–2022 crop year, which the Agency must issue by December 31, 2022.