CTA ruling: CN under, CP over grain revenue cap in latest crop year

The Canadian Transportation Agency (CTA) recently ruled that CN's grain revenue of $556.6 million in crop year 2012-13 remained under its revenue cap by $6.3 million, while Canadian Pacific's revenue of $544.2 million only slightly exceeded its cap, by $177,961.

During the crop year, more than 32.4 million tons of western grain was moved, which is 2 percent lower than the volume transported in the previous crop year. The 944-mile average length of haul was eight miles, or 0.8 percent, lower than the previous crop year, CTA officials said in a press release.

CP now has 30 days to pay the amount by which it exceeded the revenue cap in addition to a 5 percent penalty of $8,898, they said. Government regulations stipulate that such payments must be made to the Western Grains Research Foundation, a farmer-financed and directed organization.

The Canadian Transportation Act requires the CTA to set each railroad's revenue cap annually and determine whether each cap was exceeded in a given crop year. Calculated via a formula containing numerous elements, the revenue cap is a form of economic regulation that enables CN and CP to set their own rates, provided the total amount of revenue they collect remains below the set ceiling, CTA officials said.

A year ago, the CTA determined that both CN and CP exceeded their revenue caps for crop year 2011-12.