Canada’s two largest railway companies will be required to pay more than $7.1 million to the Western Grains Research Foundation because the freight revenues they collected for moving western Canadian grain exceeded the revenue cap.
According to an online document dated Dec. 21, the Canadian Transportation Agency has determined that Canadian National Railway exceeded its revenue cap, also known as the maximum revenue entitlement, by more than $5.75 million in 2016-17.
CN freight revenues derived from moving regulated grain amounted to $808.2 million in 2016-17.
Under the federal government’s regulated freight regime for grain, CN was only entitled to collect revenues of $802.4 million, based on the number of tonnes shipped and the distance the grain was moved.
CN is obligated to repay the excess revenues and penalties amounting to nearly $6.1 million.
Canadian Pacific Railway also exceeded its revenue cap.
CP collected freight revenues of nearly $725.5 million in 2016-17, roughly $1.1 million more than was allowed under the revenue cap formula.
Barring a successful appeal, CP will be obligated to repay excess revenues of $1.078 million and a penalty of approximately $45,000 for a total of $1.13 million.
The CTA uses a complex formula to determine how much revenue Canada’s Class 1 railway companies are allowed to generate through the movement of western Canadian grain over regulated shipping routes.
If the railways exceed maximum allowable revenues, they are required by law to repay the excess, along with a monetary penalty ranging from five percent of the excess to 15 percent.
The money collected will be used to conduct farmer-directed ag research projects approved by the research foundation.