Determination No. R-2024-124

Application

[1] On June 3, 2024, CN filed an application seeking an adjustment to its 2024–2025 VRCPI to account for additional costs that it will incur in the 2024–2025 crop year. These costs are associated with the acquisition of 1,694 hopper cars through purchase and leasing arrangements for use in the movement of regulated western grain. These are the same cars that were the subject of an adjustment to CN’s 2023–2024 VRCPI as per Agency Determination R-2024-123.

[2] This determination addresses the following issue:

Should the Agency, pursuant to paragraph 151(4)(c) of the CTA, adjust CN’s 2024–2025 VRCPI to recognize the costs that it has incurred in obtaining 1,694 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 the costs that it will incur during the 2024–2025 crop year for the 1,694 cars initially obtained in the 2023–2024 crop year as described in Agency Determination R-2024-123.

[6] The costs that CN will incur in the 2024–2025 crop year in obtaining the purchased and leased cars are the subject of this adjustment.

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

[8] Based on the information filed in CN’s application, the Agency finds that CN will incur additional costs in obtaining hopper cars for the movement of western grain that were not accounted for when CN’s 2024–2025 VRCPI was set and that these additional costs justify an adjustment to CN’s 2024–2025 VRCPI pursuant to paragraph 151(4)(c) of the CTA.

[9] The Agency further finds that the additional costs of obtaining the hopper cars should be prorated based on the number of months that the cars will be available for use in transporting grain within the 2024–2025 crop year.

Conclusion

[10] In light of the above, the Agency, pursuant to paragraph 151(4)(c) of the CTA, adjusts CN’s 2024–2025 VRCPI set in Determination R-2024-63 from 1.9281 to 1.9401.

[11] The Agency makes this adjustment effective as of August 1, 2024, pursuant to subsection 151(6) of the CTA.

[12] The Agency will use this adjusted value in determining CN’s Maximum Revenue Entitlement for the 2024–2025 crop year, which the Agency must issue by December 31, 2025.