Ruling on Cost of Capital Rate for 1997-98 Maximum Annual Grain Rate Scale
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OTTAWA -- April 3, 1997 -- The Canadian Transportation Agency announced today that the cost of capital rate (CoC rate) for the transportation of western grain for the crop year 1997-98 will be 12.9%, down from the current 13.1% rate .
Changes in CoC rates are one of the elements considered in the development of the maximum annual grain rate scale. In accordance with the Canada Transportation Act, the Agency will make its final determinations on the upcoming 1997-98 rate scale by April 30, 1997.
The development of the new CoC rate follows the principles established in the Agency Decision No. 125-R-1997, issued March 6, 1997, which dealt specifically with the publication/methodology used to calculate the CoC rate.
That decision eliminated the risk reduction factors to equity costs for the use of railway capital assets in grain transportation. Both the one percent grain risk and 0.5 percent rail business risk adjustments were removed for the upcoming 1997-98 crop year. The Agency will continue to monitor the need for any grain and rail business risk adjustments on an annual basis.
The reduction of the overall CoC from last year is mainly due to lower interest rates in late 1996 and early 1997, as well as other financial factors.
For more information: Charles Mojsej at (819) 953-9961