From Railway Age Magazine Web Site January 27, 2006
"Otter Tail Power loses coal rate challenge
The Surface Transportation Board announced today that it has dismissed a complaint by Otter Tail Power Co. challenging the reasonableness of rates charged by BNSF Railway for moving coal from Wyoming’s Powder River Basin to the Big Stone Generating Station near Milbank, S.D.
Otter Tail filed the complaint on Jan. 2, 2002, after BNSF replaced a transportation contract with common carrier rates. The power company used the STB’s SAC (stand-alone cost) methodology in trying to prove the rates to be unreasonably high.
“The development of the evidentiary record in this case has been complex,” the STB noted in a lengthy decision dated Jan. 25 and posted on the Board’s website on Jan. 27. But, said the Board: “After all other disputed issues are resolved, we conclude that Otter Tail’s SAC presentation does not support a finding that the challenged rate is unreasonable under the SAC constraint. The evidence must demonstrate that, under the challenged rate, Otter Tail is cross-subsidizing parts of BNSF’s rail network from which Otter Tail derives no benefit, or is paying for inefficient service. Here, however, Otter Tail has failed to demonstrate that it is paying for more than is needed for the 1,108 miles of infrastructure required to connect the Big Stone plant to the PRB. To the contrary, Otter Tail’s presentation relies on a cross-subsidy of that infrastructure by PRB traffic that does not use or benefit from that portion of BNSF’s network, but instead moves south from the PRB region. Accordingly, its complaint against BNSF is dismissed.”
The full report and order can be found on the Surface Transportation Board web site.
That someone is also gonna get upset when the court case here follows where a certain electric utility abused its emminent domain rights and rendered a rail corridor unusable because the utility was too cheap to acquire a corridor the proper way which takes time and $$$$$.
The framers of Staggers decided over 25 years ago that the wanted government out of rate setting for railroads, truckers and airlines. Some shippers were afraid of deregulation so Congress patted them on the head with provisions to make them feel good but were meaningless.
I wonder when some power companies and others will realize that and stop wasting their money on lawyers arguing before the STD?
Obviously, the only people who should be upset are the electric rate payers.
Hmmmm, who here pays for electricity?
Evidently, not professional railroaders, who must be lighting their Cubans with $20 bills. Oh, that ye should take a walk in the real world once in a while!
Ole futuremodal will be on here in a while to tell us that the STB is nothing more than minions of GW Bush, who will do and rule anyway he and his ilk tells them too.
Man, dont you hate it when the US President has both minions and ilk, at the same time…just aint fair, I been looking for some minions myself, and there just isn’t any to be found at a reasonable price!
FM is just trying to guarantee revenue adequacy of the electric utilities at the expense of the railroads. (You notice he NEVER brings up some of the gaudy operating ratios that the utilities can get away with)…
Other nations are beginning to view the US Model as a failed deregulatory model.
Canada Transport Act, Review Panel, December 29, 2001:
“Inappropriateness of the U.S. Model: Railroad deregulation in the U.S. has had adverse effects on rail-dependent customers, and may be a factor in eventual government subsidization or ownership. It has failed to retard market abuse and in some ways, has actually fostered such abuse. Criteria employed to make determinations of such provisions as revenue adequacy and maximum allowable rates have been fraught with methodological and practical deficiencies. The U.S. model provides evidence that the type of regulation which focuses on precise market determinations is not as effective as regulatory provisions which promote competition.”
Although it is probably not remarkable, Alfred Kahn, one of the early advocates of deregulation, who had a substantial hand in designing the Staggers Act, and knows more about what Congress “intended,” disagrees with Bob Wilcox.
"…my consistent advocacy of "bottleneck” railroads being required to offer captive shippers access to those facilities at stand-alone costs, with corresponding trackage rights to competitive carriers (Kahn 1996c).
…
"The Staggers Act, deregulating the railroads, was predicated upon the universal recognition of their need for greater freedom to discriminate in their charges for different kinds of traffic, if they were to have an opportunity to recover both their heavy sunk costs and their large element of fixed and common costs, even on a forward-looking basis.
"At the same time, there was concern about the danger of the railroads’ exploiting the very large amounts of captive traffic, where they concededly had and still enjoy a large amount of monopoly power. The central question, therefore, concerned the proper upper limit for permissible price discrimination. The Staggers Act had itself adopted a standard approximately the same as the
I do not think this is an accident; it is what the policy makers in Democratic and Republican Congreses plus Carter, Reagan, Bush, Clinton and the second Bush administrations intended for transportation policy. Herman Kahn my say what he thought the intent was but look at government action over the last quarter century!