GATINEAU, QC, April 30, 2020 /CNW/ - The Canadian Transportation Agency (CTA) has announced its determination of the Volume-Related Composite Price Index (VRCPI) for the Canadian National Railway Company (CN) at 1.4202 and the Canadian Pacific Railway Company (CP) at 1.4205 for the 2020–2021 crop year beginning August 1st. This is a decrease in the VRCPI over the last crop year of -2.04 percent for CN and -7.22 percent for CP.
This index is used in determining CN's and CP's Maximum Revenue Entitlement (MRE) for the movement of western grain. The Maximum Revenue Entitlement is a limit on the overall revenue that can be earned by CN and CP for shipping regulated grain.
The changes in the 2020–2021 VRCPIs stem primarily from expected declines in fuel and labour costs. The larger decline in CP's VRCPI is attributed to the inclusion of debt raised for the purposes of share buyback. This activity is accounted for in determining both railway companies' cost of capital, which is part of the VRCPI calculation.
What is the VRCPI?
The VRCPI is an inflation factor. It reflects a composite of the forecasted prices for railway labour, fuel, material and capital purchases. As part of the process of determining the annual VRCPI, the CTA examines and verifies detailed railway submissions.
The VRCPI will be applied when the CTA makes its Maximum Revenue Entitlement determinations by December 31, 2021, for the 2020–2021 crop year.
The determination of separate VRCPIs for CN and CP is a result of changes to the Maximum Revenue Entitlement program under the Canada Transportation Act as amended in 2018 by the Transportation Modernization Act.
For more information
For more information on the CTA's maximum revenue entitlement determinations since 2000, please see Western grain: Maximum Revenue Entitlement program.
About the CTA
The Canadian Transportation Agency is an independent, quasi-judicial tribunal and regulator that has, with respect to all matters necessary for the exercise of its jurisdiction, all the powers of a superior court. The CTA has three core mandates: helping to keep the national transportation system running efficiently and smoothly, protecting the fundamental right of persons with disabilities to accessible transportation services, and providing consumer protection for air passengers. To help advance these mandates, the CTA makes and enforces ground rules that establish the rights and responsibilities of transportation service providers and users and level the playing field among competitors, resolves disputes using a range of tools from facilitation and mediation to arbitration and adjudication, and ensures that transportation providers and users are aware of their rights and responsibilities and how the CTA can help them.
SOURCE Canadian Transportation Agency
Media Relations, Canadian Transportation Agency, [email protected], 819-934-3448
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