The railways shouldn’t be penalized for exceeding their grain revenue cap, says Ray Foot, CP’s assistant vice-president for grain.
The railway is prepared to repay money it takes in excess of the legislated cap, he said, but penalties beyond that are another matter.
“Generally speaking, we don’t think there should be a penalty at all,” he said last week.
Transport Canada has proposed that if a railway exceeds the cap by one percent or less, it would pay a penalty equal to five percent of the excess revenue. If it exceeds the cap by more than one percent, the penalty would be 15 percent.
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Foot said the railways could be pushed over the cap by factors that are unpredictable and out of their control, such as how much use customers make of incentive rates, market share and average length of haul.
If there is to be any penalty, said Foot, it shouldn’t be triggered unless the railway has exceeded the cap by such a large amount that it was obviously deliberate and avoidable.
Jim Feeny of CN Rail said the rules need to be clarified as quickly as possible: “We need to know what the rules are. Regulators need to realize it will be very difficult to adjust some of these things this late in the crop year.”
