For the second time in a month, the Western Grains Research Foundation is cutting a cheque for Canadian Pacific Railway.
The foundation is returning $205,896 to the railway, following an adjustment in the 2007-08 rail revenue cap.
In April, the WGRF returned $415,550 to the railway after an adjustment in the 2006-07 revenue cap.
That refund was triggered by a Federal Court of Appeal ruling in February that the Canadian Transportation Agency erred when it calculated CPR’s revenues for 2006-07.
The court said the agency wrongly included penalties paid by shippers under one of CPR’s shipping programs and ordered the agency to recalculate CPR’s revenue.
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In light of that ruling, the CTA recalculated the 2007-08 cap taking the court decision into account, and reduced CPR’s revenue by $179,040. A 15 percent penalty that had been applied at the time brought the total to $205,896.
The WGRF had been holding the CPR payment money in a trust account pending the outcome of any appeals by the railway so will have no trouble making the repayment.
“It’s just something we have to watch for every year,” said Lanette Kuchenski, executive director of the WGRF.
“We always wait for the CTA’s final calculation before doing anything with the money.”
A spokesperson for the CTA said the issue that resulted in the 2006-07 and 2008-09 recalculations won’t arise again because the Federal Court of Appeal decision has established a precedent for future revenue calculations.
The specific issue was whether money collected by CPR from shippers who failed to meet the 24-hour unloading condition under its multi-car block incentive program could be characterized as a performance penalty.
If so, then the amounts would not qualify as revenue in calculating the cap. If not, they would be considered revenue for cap purposes.
The court ruled that they are performance penalties and therefore should not be included in the revenue determination for purposes of the cap.
