Here is an article from an energy e-zine. Some interesting facts and opinions on energy cost surcharges and railroads… a little long
Jim
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Railing in Coal Transporters
May 31, 2006
Coal may be abundant. But, transportation is not. And therein lay the dilemma: Coal generators nationally are at the beck and call of rail operators to deliver their essential commodities. As such, transportation costs are rising while some power facilities are experiencing fuel shortages and subsequently higher costs.
At issue are fuel adjustments that are linked to the consumer price index. Utilities and others are not necessarily opposed to such rate increases to keep pace with climbing fuel prices. But, they are against what they say are arbitrary price hikes that are meant to increase profits. The rail companies deny such practices and say that they are unable to move coal fast enough because of limitations in the nation’s infrastructure.
What to do? Well, Congress is now considering a proposal to give the railway companies a 25-percent tax credit for investments in rail infrastructure. Fine, say utilities, so long as it is part of a broader legislative package to increase capacity – or, the number of lines to carry coal to their generators.
“Railroads impose fuel surcharges not simply to recover their unanticipated and uncontrollable increases in the cost of fuel, but rather in excess of their increased fuel costs in such a manner as to enhance their net revenues,” says Steve Sharp, principal engineer with the Arkansas Electric Cooperative Corp., at a hearing before the Surface Transportation Board.
Fuel surcharges are a relatively new phenomenon. In 2002, for example, they were small at 2 percent of freight charges. But, now, and specifically from coal supplies delivered from the Powder River Basin in Wyoming that is t