Canadian Pacific Railway has exceeded its grain revenue cap for the second straight year but the company shouldn’t be viewed as a repeat offender, says a spokesperson.
In the seven years since the cap was put in place, CPR has collected less money in grain freight than what was allowed under the revenue cap more often than it has exceeded it and by a greater dollar amount.
“Since this program was instated in the 2000-01 crop year, we’ve actually been under the revenue cap by a net total of $14 million,” said CPR’s Breanne Feigel.
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And while this year’s excess of $3.76 million was a record, it represents only 0.87 percent over CPR’s 2006-07 cap of $433.3 million.
Feigel said the railway was under the cap by more than twice that amount in the 2001-02 crop year when revenues fell $8.7 million short of the number set by the Canadian Transportation Agency.
She noted that coming within one percent of the cap either way is a remarkable accomplishment given the “hundreds of permutations” in the calculation and the fact that the target is set before the railways know a number of factors like where they will be moving grain to and from and what kind of distances and costs will be involved.
CPR is obliged by law to remit the amount earned in excess of the cap plus a five percent penalty, a total of $3.95 million, to the Western Grains Research Foundation within 30 days of the Dec. 28 ruling by the transportation agency.
“That’s definitely something that we will comply with,” said Feigel.
But the company also has 30 days to decide whether it will appeal the CTA ruling to the Federal Court of Canada. CPR successfully appealed the previous year’s ruling, recouping $871,000 of the $1.5 million it was ordered to pay to the foundation.
“We are still determining whether or not we’re going to appeal (the Dec. 28 decision),” said Feigel.
Canadian National Railway did not have to forward any money to the foundation this year. The railway took in revenue of $416.9 million in the 2006-07 crop year, which was below its cap of $419 million.
CN appealed last year’s CTA ruling that it had exceeded the cap by $2.7 million. That case is still before the courts.
