CURE Applauds Congressional Plan to Level Railroad Playing Field
Washington, DC–A broad coalition working to establish an effective rail system for America On March 6 heralded bipartisan legislation introduced by Senators Herb Kohl (D-Wis.), Norm Coleman (R-Minn.), Russ Feingold (D-Wis.), David Vitter (R-La.) and Jay Rockefeller (D-W.Va.) that would level the playing field by subjecting railroads to the same rules of competition as other industries and the customers they serve.
As introduced, the Railroad Antitrust Enforcement Act of 2007 would promote competition by eliminating the obsolete antitrust exemptions that are contributing to a growing rail crisis threatening America’s economy.
“Our nation’s rail system is broken; it is not meeting the economic needs of our country,” said Glenn English, former U.S. Congressman and chairman of Consumers United for Rail Equity (CURE).
Rail shippers do need something more than the typical stonewalling they are getting at the STB. I’m not sure how anti-trust implementation will eventually affect the current rail scene. Would it lead to breakup into smaller integrated railroads, keep the current Big 6 but separating infrastructure from operations, or just going back to utility-style regulation, or a little of each?
I think right now a bigger issue is just getting more competitive rail capacity built. Period.
A bigger question is how a break up of the operations from the infrastructure would lead to more construction. The Infrastructure Co. doesn’t care if traffic is flowing well, all it cares about is that someone is paying to use it. 100 percent utilization is to be aimed for, 80 percent and its time to pull up some capacity.
CURE is the lobbying group for various electric utilities despite the fancy title (not an unusual practice). They’re looking for a break on the rates they pay but don’t expect a corresponding break on the rates they charge if their wishes are granted.
That being said, I don’t expect their proposal to get very far, even in the current Congress. Even if it does pass, the only people who would benefit will be antitrust attorneys.
Large corporations appear to be slipping into the reserved seating for private citizens. The Grainger Movement sans Graingers…substitute utilities. Imminent Domain…substitute railroads for municipalities. DM&E Expansion…insert Mayo Clinic…We all must be busy watching American Idol…CURE = Corporate Utility Rate Equity…Consumers United?..give me a break…shades of Rochester Coalition…Hiding behind PR flak and propaganda…here we go again…
Most of these electric utilities are regulated; some are even co-ops. Their customer charges are formula-driven, i.e. cost based. Under that system, a “corresponding break on rates they charge” is exactly what happens when their costs go down.
Based on your comment, is it fair to expect railroads to do the same? Or do you favor different standards for railroads?
“William Berg, president of the La Crosse-based Dairyland Power Cooperative electric generation and transmission cooperative, said Dairyland experienced a 13 percent shortfall of scheduled coal shipments in 2005, “yet we were hit with a 93 percent (railroad) rate increase beginning in 2006 - resulting in about $35 million of increased cost.” That’s the main reason why Dairyland’s average wholesale electric rate for its members increased more than 20 percent, he said.” September 29, 2006, Brotherhood of Locomotive Engineers and Trainmen Newsletter.
In 2004, Union Pacific failed to deliver more than 25 percent of scheduled, contracted shipments to Dairyland, requiring Dairyland to resort to natural gas to supplement the shortfall causing Dairyland’s fuel budget to jump 10 percent, with corresponding rate increases. Union Pacific refused to honor the contract provisions regarding penalties for breach of the contract which would have protected the consumers from the rate increases.
After the rate increases, …
“Wisconsin Reps Attacking High Railroad Costs”, The Capital Times, February 22, 2006
By Anita Weier,
"If you think your heating costs have risen far too quickly, consider this: the
The “incentive” to build more capacity (or not to) isn’t much different between the integrated model and the separated model, except that under the separated model all the income is based on use and volume. If demand goes up, increasing capacity = increased volume = increased revenues.
But I’ll tell you where the greatest potential for increased rail capacity would come from with separation - if the infrastructure is treated as a utility, then public entities will be more willing to participate in rail capacity expansion. Right now, there’s little incentive to aid a Class I if the same Class I engages in captive shipping discrimination. That only chases away prospective rail shippers, and we can spend all our discretionary tax-funded outlays on improving the lot of a Class I monopolist and still not get the desired service (check all those localities who wish to establish intermodal terminals but can’t get the railroad to commit to serving the proposed facility).
With the option of competitive rail transporters, the incentiv
"Spokesman John Sumi said the group wants the federal Surface Transportation Board, which regulates rail rates, to make it easier for shippers to challenge higher rates. If that doesn’t work, he said, the industry should lose its antitrust exemption.
“When railroads talk about their level of investment, these are big numbers,” Sumi said. “What of this investment is helping Wisconsin and the upper Midwest? Or, is the investment more aimed at taking containers off ships from China to Wal-Mart distribution centers?”
"Dairyland Power Cooperative of La Crosse hiked its electricity rates last year by 20 percent to help offset a 93 percent increase in coal shipping rates in 2006, said Brian Rude, the cooperative’s external relations director.
“We understand the railroads need to make a profit,” he said. “We understand their need to invest in their rails. Right now, it just seems one-sided.”
"The PSC last month approved a $14 million electricity rate increase for Northern States Power Co., a subsidiary of Xcel Energy, and 40 percent of the increase was attributed to higher coal shipping costs. Coal provides 60 percent of the state’s energy.
"Wisconsin Electric Power Co. of Milwaukee is suing Union Pacific, claiming the railroad overcharged the utility for coal shipping by $7.3 million and failed to deliver about 700,000 tons of coal over a three-year period.
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Marv Balousek, “Rail Rates Face Increasing Scrutiny”, Wisconsin State Journal, February 1, 2007.
Unlike many maintream railroad commentators (both amatuer and professional), John Sumi has actually done the research vis-a-vis rail capacity investments basically aiding importers but not necessarily aiding domestic rail shippers.