OTTAWA, April 30, 2013 /CNW/ - The Canadian Transportation Agency has announced a 1.8 percent decrease in the Volume-Related Composite Price Index (VRCPI), which is used in determining the revenue caps for the Canadian National Railway Company (CN) and the Canadian Pacific Railway Company (CP) for the movement of western grain. Decision No. 161-R-2013 sets the index at 1.2691 for the 2013-2014 crop year beginning August 1.
Essentially an inflation factor, the VRCPI reflects a composite of the forecasted prices for railway labour, fuel, material and capital purchases. The VRCPI is one of the numerous factors included in the formula used to calculate the revenue caps. In determining the annual VRCPI, the Agency examines and verifies detailed railway submissions and collects and analyzes various data to develop the forecasts. The VRCPI of 1.2691 will be applied when the Agency makes its revenue cap determinations by December 31, 2014 for 2013-2014 crop year.
The net decrease of 1.8 percent from 2012-2013 is largely attributable to the actual price of diesel fuel being lower than the forecast in last year's determination.
The VRCPI has tracked up and down since the beginning of the Revenue Cap Program. In recent years, exceptional fluctuations have reflected the volatility of fuel prices, the hopper car adjustment in 2007-2008 and, last year, the application of new methodologies to better recognize the cost of capital and the effect on the labour price index of the substantial payments made by CN and CP to their pension funds.
The VRCPI has grown at an average annual rate of 2.0 percent since the 2000-2001 crop year.
About the Agency
The Agency is an independent administrative body of the Government of Canada. It performs two key functions within the federal transportation system:
- As a quasi-judicial tribunal, the Agency, informally and through formal adjudication, resolves a range of commercial and consumer transportation-related disputes, including accessibility issues for persons with disabilities. It operates like a court when adjudicating disputes.
- As an economic regulator, the Agency makes determinations and issues authorities, licences and permits to transportation carriers under federal jurisdiction.
SOURCE: Canadian Transportation Agency
For more information on the Agency's revenue cap determinations since 2000-2001, please see the Western Grain Revenue Cap Statistics Backgrounder.
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