STB
Shippers Score Rare STB Wins
The Surface Transportation Board has handed a pair of rare victories to shippers, ruling that one railroad must fix the way it compensates a co-op and ordering another to pay $100 million in reparations and rate reductions to an Oklahoma IOU.
In a July 23 decision, the panel said BNSF Railway Co. did not use the proper methodology in setting coal shipment rates for Basin Electric Power Cooperative, Bismarck, N.D., and Western Fuels Association.
In February, the board found for Basin Electric and Western Fuels in a five-year-long rate case, and directed reparations and rates that it estimated at about $345 million to benefit electricity consumers in nine states.
In implementing that decision, though, BNSF erred in the way it set new rates, the board said in its latest ruling. BNSF must re-establish those rates for transporting about 8 million tons of coal annually from Wyoming to a plant that Basin Electric operates.
BNSF has estimated that it now owes Western Fuels roughly $112 million in reparations, but the board said that number is “too conservative,” given the new finding that the railroad set excessive rates for shipments from the Wyoming coalfields.
“Once BNSF establishes updated rates, WFA should calculate the precise amount of reparations due and submit its statement of damages to BNSF,” the board said.
Meanwhile, the board said Union Pacific imposed unreasonably high rates this year to ship coal to a plant owned by Oklahoma Gas & Electric Co., and set new rates that could net the IOU about $10 million annually through 2018.
The verdict sprung from rates that Union Pacific charged after two contracts to haul coal about 1,000 miles from 12 mines to an Oklahoma Gas & Electric plant expired at the end of 2008.
At that time, the IOU requested common carrier rates and service terms for its traffic, starting on Jan. 1, 2009.
The utility and railroad agreed that the common carrier rates should not exceed a certain threshold, but they disagreed on how to calculate it.
Observers noted that the board has backed shippers’ rate challenges at the same time Congress is considering legislation to reform its regulatory process and lift the antitrust exemption for railroads.
Tags: Captive Shipper, Coal, Railroad Reform, Surface Transportation Board