Mileage Equalization ACACSO November 2011

Introduction DEFINITION OF MILEAGE EQUALIZATION MILEAGE ADJUSTMENTS MONTHLY PROCESSING SAMPLE REPORT 10 YEAR TREND CANADIAN EQUALIZATION

Definition of Mileage Equalization Mileage Equalization is the process by which RR’s are compensated for the movement of excessive empty routing of cars Implemented as part of an agreement on how RR’s will be compensated for private car moves In the US it applies to only Tank cars and is covered under Tariff 6007 In Canada it is covered under individual tariffs by CN and CPRS There is no equalization in Mexico

Definition of Mileage Equalization US mileage equalization is covered under tariff 6007 Item 187 Rate is set annually in September retroactive to the first of each year and is determined by the formula in the Ex. Parte 328 agreement between RR’s and tank car owners Equalization invoices are issued by Railinc in July for movements during the previous year

Mileage Adjustments Adjustments to equalization miles are sent to the RR’s and can be made for up to three years Adjustments for the current accounting year, including any adjustments for prior accounting years must be reported by May 20, of each year Adjustments made after May 20 will be reported in the current year, not the year of the adjustment

Mileage Adjustments – Car Owners If RR’s do not automatically adjust discrepancies, then report discrepancies to RR’s in writing, copy to AAR Carriers have 30 days to make adjustments. Advise car owner when adjustment made – ALSO ADVISE AAR IF OWNER REQUEST FOR ADJUSTMENT SHOWS COPY TO AAR AAR will make adjustments if the Rail carrier fails to respond to your request (This is done prior to year end)

Monthly Processing RR’s report loaded and empty mileage data on the CHDX file to Railinc Type 900 Summary records indicates all mileage that should be included in the equalization account Railinc pulls Equalization records from the CHDX and creates Equalization Registers Registers are sent to Car Owners and RR’s monthly Registers are accumulated by Car Mark Owner Data is accumulated on an annual basis Railinc prepares and sends annual equalization invoices

Monthly Processing - Calculation Accumulated by Car Mark Owner; reported by RR and month Aggregate Equalization Loaded Miles Aggregate Equalization Empty Miles Multiply Loaded Miles by 1.06 (106%) Subtract Adjusted Loaded Miles from Empty Miles Result is Excess Empty Miles Multiply Excess Empty Miles by Equation Rate Result is Equalization Amount Due

Sample Report USING YTD MILEAGE @ 0.67/MI – TOTAL BILL $1,279.03 Equalization of Private Tank Car Mileage March 2011 Year to Date by Paid-To Owner: DEFX DEF Tank Car Company Paid To Paying Paying Date Loaded Empty Empty Miles Over Percentage Mark Owner Mark Earned Miles Miles 106% of Loaded Variance DEFX ABCD ABCD 1101 772 1974 1102 1804 6 1103 575 3270 DEFX 3151 5250 1909 166.6 OWNER TOTAL YTD 3151 5250 1909 166.6 USING YTD MILEAGE @ 0.67/MI – TOTAL BILL $1,279.03

Sample Report 3341 USING YTD MILEAGE @ 0.67/MI – TOTAL BILL $1,279.03 Equalization of Private Tank Car Mileage March 2011 Year to Date by Paid-To Owner: DEFX DEF Tank Car Company Paid To Paying Paying Date Loaded Empty Empty Miles Over Percentage Mark Owner Mark Earned Miles Miles 106% of Loaded Variance DEFX ABCD ABCD 1101 772 1974 1102 1804 6 1103 575 3270 DEFX 3151 5250 1909 166.6 OWNER TOTAL YTD 1.06x 3151 5250 1909 166.6 3341 USING YTD MILEAGE @ 0.67/MI – TOTAL BILL $1,279.03

Sample Report 3341 USING YTD MILEAGE @ 0.67/MI – TOTAL BILL $1,279.03 Equalization of Private Tank Car Mileage March 2011 Year to Date by Paid-To Owner: DEFX DEF Tank Car Company Paid To Paying Paying Date Loaded Empty Empty Miles Over Percentage Mark Owner Mark Earned Miles Miles 106% of Loaded Variance DEFX ABCD ABCD 1101 772 1974 1102 1804 6 1103 575 3270 DEFX 3151 5250 1909 166.6 OWNER TOTAL YTD 1.06x 3151 5250 1909 x$.67 166.6 3341 USING YTD MILEAGE @ 0.67/MI – TOTAL BILL $1,279.03

US Tank Car Equalization – 10 Year Trend

Canadian Mileage Equalization Canadian equalization covers moves within Canada and are determined by tariffs by CN and CPRS CN Equalization: Covered under CN Tariff 6544 for moves within Canada All private marked cars – despite car type are covered under the tariff Mileage Adjustments should be made under the rules as outlined in US tariff RIC-6007 Allowance = 6% Rate = CDN $1.00 CPRS Equalization: Covered under CPRS Tariff 6 for moves within Canada Applies to covered hoppers and Tank cars only Disputes to mileage/invoice must be made within the terms of the invoice Allowance = 6% Rate = CDN $1.10

Questions? FURMAN: I will be pleased to take questions after we finish the formal part of this meeting. LEAVE SLIDE ON. 13