6. For the purposes of the calculation of actual loss under sections 252 to 258 and 260 and 261 of the Act, the following categories of costs shall be shown in the cost submissions, with a separation between “labour” and “material and other” costs and, in the case of branch lines, a separation between “on-line” and “off-line” costs:

• (a) “Category I cost” being all expenses that can be directly identified with the branch line or with the passenger-train service through company records;

• (b) “Category II cost” being transportation and maintenance expenses that would be avoided if the line were abandoned or the service discontinued and that are shared in common with other traffic or other services, including the off-line costs of traffic originating or terminating on the branch line;

• (c) “Category III cost” being all other expenses that would be avoided if the branch line were abandoned or the passenger-train service discontinued and that are not included in Categories I and II, including, where appropriate,

  • (i) superintendence expense,

  • (ii) traffic expense,

  • (iii) general expense,

  • (iv) communications expense, and

  • (v) non-revenue freight expense; and

• (d) “Category IV cost” being the cost of capital calculated on the basis set forth in subsections 5(4) and (5).

7. For the purposes of sections 264, 272, and 276 to 278 or for other purposes pertaining to rates for the carriage of goods,

• (a) costs shall be variable costs based either on the expense accounts maintained under the Uniform Classification of Accounts and accounts reconcilable therewith or on such special studies of items and factors of costs as the Committee orders pursuant to section 46 of the National Transportation Act, and shall include the increases or decreases in rail operations expenses resulting from changes in the volume of traffic, after allowing a reasonable period of time for adjustment in view of the traffic to be handled;

• (b) there shall be included in the variable costs an allowance for cost of capital based on a rate of return, including an allowance for income tax, that, in the opinion of the Committee, is appropriate for CP Rail (a Division of Canadian Pacific Limited) applied to the variable portion of the net book value of the assets related to the movement of the traffic; and

• (c) variable costs shall be shown in the cost submissions separated between “labour” and “material and other” costs, in the categories identified in the costing manuals filed pursuant to any order of the Committee.

8. Whenever specific costs are known or can be readily determined from company records, such costs shall be used in lieu of averaged or allocated costs.

9. Cost submissions made pursuant to these Regulations shall be prepared in accordance with such costing manuals as the Committee shall, by order, require.

10. Railway companies shall make available to the Committee all unit costs, output units and other statistical and supporting information required by order from time to time by the Committee in determining whether cost submissions are acceptable for purposes of the Act.