The Maximum Revenue Entitlement (MRE), often referred to as the “revenue cap”, has been in effect since August 1, 2000. It is a dynamic and elastic regulation that ensures the two major railways derive a profit and are compensated for their investments related to transporting Western Canadian grains to export positions. The complicated nature of the MRE causes a great deal of misunderstanding about how it works and perpetuates a number of misconceptions about rail service in Canada. Below we set the record straight on the MRE.
Myth 1: The MRE sets a fixed shipping rate for grain shipped to a port
This is not the case. In fact, railways can apply differential rates to regulated grain movement as long as the overall ‘average’ revenue per tonne, as established under the MRE, is not exceeded. It is proportional, in that the more grain moved, the more revenue earned. In the 2013-14 crop year, the two major railways moved almost 38.5 million tonnes of regulated grain, with an average haul of 1,520 kilometres earning them $33.69 per tonne for a combined revenue of almost $1.3 billion.