For the second year in a row, the Western Grains Research Foundation is in line for a big payday.
The Canadian Transportation Agency announced last week that Canadian Pacific Railway exceeded its allowable grain hauling revenue under the revenue cap for 2006-07 by $3.76 million.
That means farmers shipping on CPR last year were in effect overcharged by that amount.
As a result the railway is required by law to pay that amount, plus a five percent penalty, for a total of $3.95 million, to the farmer-run research funding agency within 30 days.
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However the foundation won’t be making plans to spend that money until any potential appeal by the railway against the ruling has been settled.
“It sounds like great news,” said WGRF president Keith Degenhardt.
However, he added that experience has taught the foundation not to count on receiving the full amount.
A year ago, the CPR and Canadian National Railway were a combined $4.2 million over the cap and had to pay $4.4 million to the WGRF, increasing the $9 million endowment fund by 50 percent.
However, in October 2007 the foundation was told it had to repay $871,000 to CPR after the railway won a court appeal of the CTA’s original order.
In its decision, the transport agency reported:
- CPR took in revenue of $437.1 million hauling grain in 2006-07, above its cap of $433.3 million. It’s the third time CPR has exceeded its cap since it was introduced in 2000.
- CN took in revenue of $416.9 million, below its cap of $419 million.
Officials with CPR could not be reached for comment in time for this issue’s deadline.
In its decision, the CTA highlighted a number of contentious issues involved in the annual calculation of railway revenue for purposes of the revenue cap, including how to account for incentives, discounts and penalties available under the railways’ multi-car block loading programs.
Jim Riegle, manager of the CTA’s grain division, said that since the revenue cap was introduced, a number of issues have arisen related to defining revenue and determining what the railways are allowed to deduct.
“We need a general review of a number of issues,” he said.
