Canadian National Railway has exceeded its federally imposed railway revenue cap by nearly $5 million.
In a decision handed down Dec. 18, the Canadian Transportation Agency determined that CN revenues generated by hauling western Canadian grain amounted to $672.1 million in the 2013-14 crop year.
That is $4.981 million more than the railway’s maximum revenue entitlement (MRE).
CN has until mid-January to repay that amount, plus a five percent penalty, to the Western Grains Research Foundation. The total payment will be more than $5.2 million.
Canadian Pacific Railway made $623.6 million in 2013-14, about $1.65 million less than its maximum revenue entitlement.
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“As a producer, I would prefer that the railways stay below their maximum revenue entitlements,” said WGRF chair Dave Sefton.
“However, when these entitlements are exceeded, WGRF and its board of directors will invest these funds into field crop research to the benefit of all western Canadian farmers.”
The foundation is planning to invest $9 million from its endowment fund in 2015, up from $5.8 million in 2014.
The revenue cap is calculated using a complex formula that considers the amount of grain moved, the distance grain is hauled and the railways’ operating costs.
In its Dec. 18 decision, the CTA reported that CN and CP together moved nearly 38.5 million tonnes of western grain, an increase of nearly 19 percent from the previous crop year.
CN spokesperson Mark Hallman said in an email that CN is reviewing the CTA’s calculations.
He said CN revenue generated from moving western Canadian grain was less than one percent more than the company’s revenue cap.
He also said CN moved 19.2 million tonnes of western Canadian export grain in the 2013-14 crop year, which was 12 percent more than the company’s previous highest tonnage under the revenue cap regime. In 2011-12, CN moved 17.1 million tonnes of western grain.
The CN email said western Canadian grain is the only CN commodity that is subject to a revenue cap imposed by government legislation.
